Palm Beach and Broward condos to fight for self-insured fund
Dec 19, 2008
Palm Beach Post--December 18, 2008
By RANDY DIAMOND
Palm Beach Post Staff Writer
FORT LAUDERDALE – Officials of a self-insurance fund that has cut windstorm insurance costs for 18 condominiums in Palm Beach and Broward Counties vowed Thursday to fight a state order shutting it down.
State insurance regulators say the Palm Beach Wind-Storm Self-Insurance Trust is insolvent and that they plan to revoke its license on Monday.
Condo owners formed the trust in January 2008 as an alternative to high insurance rates charged by Citizens Property Insurance Corp. About 80 condo residents met Thursday and voiced their support for the continued operation of the trust.
“We are right on the cusp of seeing whether we will succeed or not,” said John Vivenzio, the trust’s chairman.
A petition objecting to the state Office of Insurance Regulation’s plan will be filed today Vivenzio said.
Tom Zuell, a spokesman for the Department of Insurance Regulation, said officials are concerned that the trust will not have the money to pay claims. A state audit of the trust’s financial statements in June found the organization had a surplus of only $100. And the trust’s original business plan depended on 55 condominiums joining the organization. The trust has enrolled 18.
“We are just trying to protect policyholders,” Zuell said.
Vivenzio counters that the audit is misleading because all 18 condominiums posted letters of credit enabling the trust to raise $3 million in capital if necessary. Reinsurance – insurance for insurance companies – would pay larger claims. “This is really a dispute over accounting,” he said. Vivenzio said the trust has had 20 applicants in the last few weeks.
But Rob Friedman, a West Palm Beach insurance lawyer, said it is hard to believe that new condominiums would sign up in the middle of the dispute with the state.
Condo owners at Thursday’s meeting, though, said they would rather stay with the organization than go back to Citizens.
The condominium boards will have the final say on whether they use the trust or another insurer, but Al Reiss, a representative of the Ambassador South condominium in Palm Beach, pointed out that the trust had cut his condominium’s $67,000 windstorm bill almost in half.
“We are 99.9 percent certain that we will remain with the trust,” he said.