Hurricane Andrew was a tropical nightmare.

What began as a middling storm measuring the shore from afar arrived as a 175-mph freight train, leaving a wake of desolation 8 miles wide.

In Florida alone, there was $26 billion in insured losses, 22 deaths, 63,000 destroyed homes, 175,000 left homeless, 1.3 million families without electricity, widespread looting and untold numbers in search of food and water. Forty thousand people simply picked up and left, never to return. 

In some ways, the real disaster for independent agents occurred in the form of complete market chaos and a slew of insolvencies: 11 Florida domestics immediately went broke, leaving 16,000 homeowners with damaged homes and no insurer to satisfy their mortgage requirements.

And worse, virtually every other carrier began non-renewing entire property books, leaving agents in south Florida, and many in the rest of the state, without a single willing property writer. 

Bad as it was for independents, it was much worse for competitors. After nearly a half-century beating us up with bargain-basement pricing, foolhardy underwriting and give-away coverage, Andrew finally dealt captive agents and companies their comeuppance. 

Along with one-third of its countrywide earnings, Allstate lost all surplus accumulated since opening its Florida doors. That's nearly $1.4 billion in profit, including investment income from all property-casualty lines—gone overnight.

State Farm was just as dire, and since 1993, it hasn't written new or additional homeowners policies in eight of Florida's largest coastal counties. Today, its precarious Florida presence is made possible with a stripped-down product and sticker-shock pricing; it continues to send thousands of customers to the state pool, to independent agents or to both—every month!

Fifteen years after Andrew, lawmakers learned their prior reforms weren't enough. During one 16-month interval, Florida was swarmed by eight Atlantic cyclones—averaging one every 60 days—spawning a mixed bag of political cures. While some were actually detrimental to the return of a competitive market, many had the effect of further elevating independent agents in their traditional competition with direct writers.

For better or worse, Florida has migrated away from large national and super-regional carriers for residential property coverage. It now embraces an MGA system that, while replete with drawbacks, spawns monoline homeowners carriers willing to insure homes on the world’s hurricane highway and to do so exclusively with independent agents.

Before Andrew, independent agents and their large national partners had completely given up on personal lines. With barely 30% of the homeowners market and not even an inclination for turning it around, they focused on commercial multiperil instead.

Since Andrew, however, the agents have gained marketshare for the last 20 years and today dominate Florida's residential property market.

While all this bodes well for independent agents, the horizon may hold even more serendipity.

Florida's homeowners residual market, Citizens Property Insurance Corporation, now insures 1.5 million policyholders and has a half-trillion dollars (that's trillion with a "t") in total exposure. Arguably, it's the most adversely selected risk pool in the world and is now poised to begin massive depopulation.

Where could 1.5 million property policyholders go? Via well-capitalized domestics and their consortiums, both created by the aforementioned MGA system, it's likely they will arrive in the offices of thousands of independent agents; hundreds who exist only because of legislative repair work necessitated by Hurricane Andrew.

This, I predict will complete the circle of competition and be the beginning of the end for Florida's captive competitor—at least for residential property insurance.

As someone who has represented independent agents for most of his adult life, I must say that, while many have suffered in its aftermath and some barely survived its wrath, Hurricane Andrew dramatically changed the competitive paradigm in favor of independent agents.

And, in my opinion, it's going to stay that way.

Scott Johnson is president of Johnson Strategies, which specializes in planning, communications and advocacy in the property-casualty insurance industry, and former executive vice president of the Florida Association of Insurance Agents. He writes about Florida insurance issues at scottjohnsonflorida.com.

How are independent agents playing a greater role in educating consumers in today's post-Andrew environment? Find out in IN&V's additional coverage on the storm's 20th anniversary.