Local insurers writing policies, but avoiding some areas

Miami Herald–May. 28, 2008

BY BEATRICE E. GARCIA

The last two hurricane seasons have been kind to Florida. But it’s fear of what lies ahead that gives many insurers pause over selling homeowners policies in this state.

Agents say they’re seeing a few more companies providing coverage. It’s coming from home-grown firms and regional companies. Meanwhile, major national insurers such as State Farm, Allstate and Nationwide are dropping policies.

Some carriers are dropping rates as they compete with Citizens Property Insurance, said Gaby Dominguez, who heads Avante Insurance in West Miami-Dade.

Dominguez says she was able to switch her own homeowners insurance to a new carrier and save about 50 percent on her annual premium.

Young, Florida-based companies such as Coral Insurance, Cypress Property & Casualty, Universal Property & Casualty and Magnolia are among the insurers writing policies, she said.

It’s not blanket coverage. These insurers are still avoiding some areas — the ones closer to the coast, generally east of U.S. 1 and Interstate 95 in South Florida. Some carriers are willing to inch closer to the I-95 dividing line and will write multi-peril policies that include wind coverage.

Dominguez said she’s switching clients from their current insurer to a new one with lower rates even before the policy expires.

WINDSTORM COVERAGE

Nestor Rivero with Tropical Insurance in Miami said homeowners closer to the water are still ending up with Citizens, the state-run insurer, for windstorm insurance. But he’s seeing some insurers willing to take on older homes that have been updated — the ones that many companies had been avoiding since the storms of 2004 and 2005.

Rates for Citizens will remain frozen through 2009, based on a new insurance bill passed by the Florida Legislature in early May.

The state-run insurer is required to file new rates in 2010 that are actuarially sound. That means Citizens’ rates would be set at a level that allows the insurer to bring in enough in premiums so that it can pay future claims without running out of cash. Setting rates at such a level would require a big price increase.

That means homeowners in South Florida, where more than 500,000 are covered by Citizens, could see sizable rate increases. But lawmakers believe they could be back in Tallahassee next year to look for ways to phase in those future increases.

The new law eliminates the distinction between homesteaded and non-homesteaded properties for setting rates and charging assessments. That’s a big relief for Floridians who own second homes covered by Citizens.

UP TO $2 MILLION

Also, homes valued up to $2 million can continue to be insured by Citizens; higher valued homes need to find a new insurer by Jan. 1.

A big plus in the new insurance law is a revised schedule for setting surcharges in case Citizens suffers a future deficit.

Citizens’ own policyholders will still bear the brunt of making up a deficit for the insurer. After a catastrophic storm, Citizens policyholders could be assessed up to 45 percent of their annual premium in one year.

If a deficit still exists, all other policyholders in the state, except medical malpractice and workers comp, would see a surcharge of 6 percent added to their policies for one year.

Until now, nearly every policyholder in the state was assessed equally at a maximum of 10 percent.

A group of companies have been taking policies off Citizens in the past year. These carriers are required to set rates at or below what Citizens charges.

But homeowners, not their agents, have the last say about whether they stay with the state-run insurer or leave.

The Office of Insurance Regulation has set up a website to help consumers research these takeout companies. Go to www.floir.com/TakeoutCompanies.aspx.

When it comes to saving money on insurance premiums, mitigation, as Bruce Douglas, chairman of Citizens’ board of governor, says, may be the only long-term solution for lower overall insurance costs because homes that can better withstand storms mean fewer claims for insurers.

Consumers can still apply for a free home inspection through the My Safe Florida Home program. But there is a considerable wait. Or, they can chose to pay for the inspection — costs run between $125 and $175 — and submit the certified form to their insurance agent to send to their insurer.

Officials with My Safe Florida Home say the savings average $200, but the credits applied by insurers differ from company to company.