Legislature to take up insurance overhaul bills

When lawmakers return to Tallahassee next week, they’ll resume work on a six-pack of bills that would overhaul property insurance for Florida consumers, particularly the 24,000 Keys residents and business owners who are among 1.3 million statewide covered by Citizens Property Insurance Corp.

Fair Insurance Rates in Monroe hopes that by the time lawmakers return, they’ll have inboxes full of messages from Keys residents explaining the effects large rate hikes and dropped policies would have on one of the state’s crown jewels of tourism.

Proponents say the overhaul is necessary to protect an undercapitalized and overextended insurer-of-last resort and lure back private insurers. Meanwhile, Keys residents who’ve long had little to no choice in windstorm insurers fear rapidly rising rates. And they’re unconvinced other insurers will be knocking on their doors anytime soon.

The two legislative bodies are taking different tacks on the issue with the widest impact — rate increases for Citizens’ policyholders. The Senate bill would have policyholders paying 25 percent more next year; the House bill calls for a more modest 15 percent. Both are above the 10 percent cap the Legislature put in place two years ago.

“It’s hard to tell what’s going to get hammered out,” said Monroe County Mayor Heather Carruthers, because there are several bills working their way through the two chambers toward floor votes and than some kind of reconciliation.

What they say

The Sun-Sentinel broke down the six main pieces of legislation under consideration and their highlights:

• HB 803 and SB 408 would allow private insurers to drop full sinkhole coverage; bar regulators from rejecting rate hikes for insurer’s costs for advertising and agent commissions; and limit the time homeowners have to file sinkhole and hurricane claims to two and three years respectively. The Senate version has cleared four committees and is now pending a full chamber vote. The House version has cleared two committees.

• HB 1243 and SB 1714 would allow annual rate hikes for state-backed Citizens Property Insurance customers that are higher than the 10 percent allowed by state law; bar policyholders who can find a private insurer that charges up to 25 percent more; and allow the insurer to drop policies for homes that cost $500,000 or more to replace. The Senate version, which allows fewer policyholders to be dropped and allows premiums to rise by up to 25 percent a year, has yet to be taken up by its final legislative panel. The House version, which limits increases for individual policyholders by 15 percent a year, has cleared two panels and is now pending approval by the full House.

• SB 1330 would allow insurers to increase policyholders’ premiums by up to 30 percent a year without the normal oversight from regulators. It has cleared one committee and is slated for consideration by another. The House version, HB 885, was stripped of that provision. It has cleared two committees and is available to be taken up by the full chamber.

The specifics of each bill are tweaked constantly. You can find the text of each one on the House and Senate websites, myfloridahouse.gov and flsenate.gov.

Local impact

“Disruptive and destructive for the economy as a whole” is how Carruthers describes some of the current proposals, which include measures to bar new business policies and exclude homes with a replacement cost of $1 million or more.

Carruthers is president of the nonprofit FIRM, which has long lobbied for rate parity for the Keys and an overhaul of the risk models that insurers use to set those rates.

Carruthers and other Keys residents have made a few rounds of the Capitol in the last month and a half, knocking on office doors and testifying before committees working on the measure, hoping to raise awareness of the Keys’ unique piece of the insurance puzzle.

In the short term, FIRM hopes it can carve out some protection from the insurance overhaul for Keys policyholders, who already pay among the highest rates in the state.

“We’re feeling pretty positive about some things, but we’re going to have this annual fight until we get the models changed,” said Annalise Mannix, FIRM’s executive director.

In the long term, the organization has to provide hard data that the state can use to change how the island chain fits into windstorm risk models.

The modeling issue is a complicated one; in simplest terms, FIRM contends the county doesn’t get enough credit for the strength of its housing stock or the fact that it’s more at risk from water than wind. As a result, residents pay among the highest rates in the state to insure homes with the highest replacement costs.

“It’s really expensive to build here, in part because we build sturdier than everyone else,” Carruthers said.

To keep up the pressure, FIRM and its supporters, like the Key West Chamber of Commerce, are asking residents to send letters to lawmakers. Mannix is appealing for at least some of the letters to be sent the old-fashioned way, via U.S. mail.

Mannix said residents interested in writing letters can find suggested text at the group’s website, FIRMKeys.org, but they might want to add personal details. “Push forward the idea that there is no alternative insurer,” she said, and that a 25 percent increase is no small matter for residents paying thousands of dollars a year to ensure a relatively modest house.

FIRM is also sending off a series of videos of locals — such as two that feature Key West Police Chief Donie Lee and Monroe County schools’ chief Joe Burke — explaining the impact of higher insurance costs on Keys residents’ ability to afford homes, retain employees and keep businesses open. Carruthers said more participants are welcome; she’s shooting the videos using her iPhone, editing them on her Mac and sending them off to all Florida lawmakers.

The modeling fight is going to take expert witnesses, who cost money. That’s where the fundraisers come in. The three Realtors’ associations, for instance, have been pulling together events to bolster FIRM’s coffers.

“We’re starting to see more money roll in,” Carruthers said, “and we really appreciate the support.”

The prospect of exponentially increasing insurance rates is of particular concern to those involved in the real estate market, which is just starting to gain some steam.

“As a buyer is shopping, they always want to know the carrying costs — taxes and insurance,” said Realtor Sandy Tuttle, who works out of the Schwartz Property Sales office on Big Pine Key. “It is tricky for buyers to obtain real insurance rates until they are into the buying process and are already spending money.

“Most buyers will use the existing owner’s policy as a guide,” Tuttle said, “but none of the policies are actually assumable.”

Tuttle was working with a local who wanted to buy a $199,000 A-frame, ground-level home on a dry lot on the island.

While the home itself was affordable, the insurance costs — $3,700 for windstorm, $1,700 for flood and $800 for homeowners — nearly doubled the monthly payment and pushed the home out of the prospective buyer’s budget.

In the case of her buyer, Tuttle said, Citizens wouldn’t issue a mitigation credit for the A-frame’s new roof, which was anchored to the ground, and the home’s expansive glass windows posed an issue.

Citizens’ mitigation credit program, which offers discounts for improvements or structural elements that harden a home against storm damage, requires that homeowners hire a qualified inspector and fill out a detailed application before applying, even if there are already credits in place on the home.

While homeowners who qualify for the credits can get substantial breaks on their premiums, Mannix points out there’s “no guarantee that the mitigation credits will be there tomorrow.”

This story includes material written by Sun-Sentinel reporter Julie Patel.

Find this story here:  http://www.keysnet.com/2011/04/21/331578/legislature-to-take-up-insurance.html