The Florida Only Homeowners’ ‘PUP’ Insurance Company versus the ‘Big Dog’ Nationwide As a graduate of The Sobelsohn School of Insurance, I was licensed by New York State as an Insurance Broker. Residing in Florida for 12 years I have become critical of The Florida Only ‘PUP’ Homeowner Insurance Companies which began when insurance companies threatened to leave the Florida market because of exposure to hurricanes. The concept of the ‘Pup’ Insurance company defies the time-honored principle of ‘The Law of Large Numbers’ which assesses all claims against the total premiums derived from policyholders nationally, now known as ‘The Big Dog’. The total premiums derived from policyholders on a nationwide basis create an actuarial advantage/hedge against claims, generating a profit/net asset margin, which has been the enduring principle since the inception of insurance. The principle of ‘The Law of Large Numbers’ was reversed to that of ‘The Law of Low Numbers’ (Florida’s total premiums which is approximately 2% or 1/50th of an insurance company’s national premiums). A mathematical scenario was created to show a potential loss, and the Public Service Commission (PSC) allowed premiums to increase dramatically with the approval of the Superintendent of Insurance and of the Legislature. The non-occurrence of any hurricane losses in 8 years since Hurricane Josephine on September 15, 2004, has not spawned the return of premiums to the policyholder, or lowered premiums. There have been over 410 disasters, many considered as major, outside of Florida during the first 3 months of 2012. ‘The Law of large Numbers’ has prevailed in the other 49 states and the insurance companies have still recorded profits. Consider the following analogy where the total number of casino slot machines is ‘The Law of Large Numbers’, and one casino slot machine is ‘The Law Of Small Numbers’. The profit margins of casinos are electronically predictable and approved by the states with an electronic chip installed in every slot machine, called a ‘Random Generator Number’ (RGN). When you win at one slot machine the attendant doesn’t recover the loss at that particular slot machine by adjusting the RGN to recover the casinos payout. But that is the premise of The Florida Only Pup Insurance Company, which artificially ‘raises the odds’ and charges higher premiums by basing its risk against policies only in Florida, which I call ‘stealing’. With the slots you can win and lose, but with the ‘PUPs’, you only lose! If Florida should ever sustain a hurricane, the ‘Big Dog’ insurance companies can absorb the claims and still make a profit by resuming ‘The Law of Large Numbers’, while decreasing Floridians’ homeowners’ premiums. The State of Florida must work diligently with insurance companies to spread their risk to reinsurance companies, and insure stability for the marketplace. Experts have calculated that Insurance Companies need a minimum of ‘the square root’ amount of Reinsurance Companies to stabilize risk, which is tantamount to improving our economy. The present high cost of homeowner’s insurance is toxic, crushing our first-time buyers and fixed income senior citizen homeowners. Many seniors forgo insurance if there isn’t a mortgage against the property, which is playing Russian Roulette with their lives. Insurance companies have now become predatory by cancelling insurance on homes having a 20 plus year-old roof, even if there aren’t any signs of defects. High insurance premiums are one of the many reasons why Florida leads the nation in bankruptcies, and foreclosures by 4 to 1 in the entire U.S.A. It’s time to represent the individual citizen and not the insurance companies.