THE NEWS SERVICE OF FLORIDA: Monroe County Wind Rates Too High, Group Says
Nov 10, 2009
THE NEWS SERVICE OF FLORIDA published this article on November 10, 2009
By MICHAEL PELTIER
THE NEWS SERVICE OF FLORIDA
THE CAPITAL, TALLAHASSEE, Nov. 10, 2009…Tired of paying rates they say are artificially high and based on fundamentally flawed data, Monroe County advocates called on Florida insurance regulators Tuesday to tweak the state’s formula that sets rates for state-backed windstorm coverage.
Speaking to a panel from the Office of Insurance Regulation, a cadre of Monroe County homeowners said the Florida Keys represent a unique landscape and operate under a stricter building code. The combination renders inappropriate the model used by the state to set insurance rates for policyholders of Citizens Property Insurance Corp.
Citizens, the only insurer that provides wind insurance for the 100-mile strip from Key Largo to Key West, is charging too much for coverage residents don’t need, they say.
From the geographical perspective, water is the greatest threat to the low-lying keys. Insurance models show that storm surge will likely cause the most damage to homes and business. Flood damage is covered by federal flood insurance.
Monroe County homes are built to the strictest building codes in the state and are therefore better able to withstand hurricane force winds, members of the Fair Insurance Rates in Monroe contended during public testimony. The absence of high rise development also reduces the risk of wind damage.
The state model used to set rates does not take any of this into account, FIRM’s lawyer told the panel.
“If the inputs are inaccurate, the conclusions will be wrong,” said FIRM executive director Colleen Repetto. “…Garbage in, garbage out.”
The unanswered question is what insurance regulators can do about it. A 2007 law requires the Office of Insurance Regulation to use an accepted public model, an actuarial formula that calculates risk. On Tuesday, panelists questioned publicly if they have the authority to override the state-approved model in situations where proof shows the model inaccurate.
“I’m not sure how we’re going to be able to sort that out,” said OIR deputy commissioner Belinda Miller. “We’ll go back and see if we can figure out a way to do that.”
Ironically, Monroe County residents’ arguments that rates there should be lower came as OIR panelists took testimony from Citizens officials and others that statewide, rates remain too low, as officials consider a proposed rate hike for 300,000 windstorm customers in the state’s high risk areas.
Posted several weeks ago, the proposed rate hikes would increase homeowner rates by 7.5 percent. Other increases would include 9.6 percent for commercial residential; 9.9 percent for commercial non-residential property, and 11.8 percent for mobile home owners in the state-run pool, Florida’s largest property insurer with more than 1 million policyholders.
At issue Tuesday was whether Citizens should factor in a 15 percent hurricane surcharge in its base rate, a move that would reduce the requested premium increase for all policyholders. Under that scenario, homeowners would see rate hikes of 4.4 percent while commercial non-residential owners would see a 9.3 percent increase.