State Of Florida Insurance Crisis Homeowners

Dig Florida out of a hole

For a change, the next big increases in the cost of homeowners insurance won't fall hardest on South Floridians. The issue itself, though, shows how far the state remains from solving the homeowners insurance crisis.

Today in Tampa, the Office of Insurance Regulation will hold the annual rate hearing for Citizens Property Insurance Corp., the state-run entity that has more policies - 1.4 million - than any carrier in Florida. The proposed increases for hurricane coverage in this part of the state are in line with the 10 percent annual limit imposed by the Legislature. In the Tampa Bay area, however, policyholders face increases for non-catastrophic sinkhole coverage that could add $1,000 and more to their premiums.

That's because the Legislature this year did yet another favor for private insurance companies by allowing them to limit sinkhole coverage. That will drive more Floridians to Citizens, which offers the coverage, but the Legislature also supposedly wants to reduce the number of policies in Citizens. The new sinkhole coverage comes with such a sticker shock that the Citizens board may limit annual increases to 50 percent.

As always, the answer from the industry to a problem is: Let us drop the coverage, or let us charge more. Among many favors regarding hurricane insurance, the Legislature in 2005 passed a bill that reversed a ruling from the 4th District Court of Appeal. The legislation limited what insurers must pay if wind-driven water - as opposed to just wind - damages property. Earlier, carriers were allowed to stop covering mold.

In a recent Post story, examining whether Hurricane Irene would cause rates to rise here, Insurance Information Institute President Robert Hartwig said homeowner rates "are based on events that occur in Florida and expectations about future events that are expected to occur in Florida." We hope no serious "events" occur this year, but Mr. Hartwig's explanation is incomplete.

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The Florida home insurance crisis is still alive and well as Florida homeowners insurance companies continue to leave the state and/or seek major rate hikes. Both the companies and state regulators can’t agree on the appropriate amount that homeowners should be paying to insure for losses against major Florida hurricanes.

Consequently, in early 1990, Florida began to impose special assessments on each insurance policy owners in Florida has published and created an insurance company state of execution of last resort is called the Society Citizens Property Insurance to ensure that everyone in Florida can get home insurance coverage for their home.

Florida also created the Fund of Florida Hurricane Catastrophe which requires all companies licensed in Florida home insurance to buy reinsurance from losses from a major hurricane to reach a certain level. This fund is insurance for Florida insurance companies and helps to make sure that they don’t have to absorb all of the costs of a major hurricane event.

Last but not least, Florida has an entity called the Florida Insurance Guaranty Association (FIGA) that steps in to pay your claim up to a certain level if your Florida home insurance company runs out of money and is declared insolvent.

Those special assessment line items on your Florida home insurance bill can cause you to pay line item charges for many years into the future.You may be prompted to make a difference when citizens property insurance corporation and the Hurricane Catastrophe Fund Florida can not afford to meet their obligations. Or you could be assessed for the difference if FIGA does not have the cash to pay claims against an insurance company in Florida that has become insolvent.

So far, the highest level, each of these entities and the protections they offer a sense. And when they work properly they do help further diversify Florida’s hurricane risk and help make it attractive for Florida home insurance companies to continue to do business in the state.

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