It is my belief, and the belief of many of my fellow state representatives, that if homeowners spend money protecting their homes against hurricanes, and the improvements they made reduce their risk of loss, they should get a discount on their insurance premium. Who can argue with that? It makes sense, and it should be available to all homeowners.
Providing windstorm mitigation credits to Florida homeowners who protect their homes is good public policy. It is an incentive to put up storm shutters; install proper garage doors and windows; and to ensure roofs are tied down properly. Mitigation helps lower insurance premiums and will limit the state's financial exposure to future hurricane losses.
The problem is that this well-meaning program isn't working the way the Florida Legislature intended. In fact, Insurance Commissioner Kevin McCarty recently acknowledged that problems with the mitigation credits could be why several of the state's private property insurers are struggling.
It is time for the state Office of Insurance Regulation to take another, and hopefully this time closer, look at how windstorm mitigation discounts are awarded and make some urgently needed changes to the system. If the Office of Insurance Regulation cannot fix the problems, the Legislature needs to take some corrective action during its upcoming legislative session.
The problem is pretty straight-forward. A small cottage industry of private mitigation inspectors, many with questionable credentials, have recently proliferated in our state. These inspectors tell homeowners that for a fee, typically $150, they will guarantee a premium reduction of at least that amount, "without having to drive a single nail into your home." In other words, the state's well-intended home mitigation program is turning into a fraudulent insurance giveaway program allowing some residents to receive premium credits far too large for the actual reduction of risk to their homes at the expense of increasing premiums to other homeowners who are honest and fair. I am sure you will agree that dishonesty and fraud should not be rewarded.
Another reason this should disturb all of us is that, as a result of flawed inspections, many citizens are now living with a false sense of security that they are properly protected against hurricanes. The result is that a homeowner could be in personal danger if he, she or the family tries to ride out a major storm that tears apart their home.
Currently, the Florida Commission on Hurricane Loss Projection Methodology is holding public hearings on our current mitigation program. It is required to make recommendations to the Legislature by Feb. 1.
It appears that some media outlets have characterized this issue as "property insurers reneging on promises they made to policy holders." That is not necessarily true. Insurers have for many years supported mitigation efforts, and given discounts, as long as the mitigation was appropriate and honest.
On Sept. 15 of this year, McCarty actually told the governor and Cabinet that there are problems with many of the home inspections and mitigation credits. He suggested that legislators should review the program and toughen fraud provisions. Due to his report, Citizens Insurance will make spot checks to verify that the mitigation credits given were deserved, based on the work actually performed. If enough fraud is found, a full-fledged investigation may be needed.
The Legislature got it right seven years ago. Insurers should provide discounts to people who truly take appropriate measures to protect their homes from hurricane damage. Nearly everyone with a stake in the program wants it to be successful.
The bottom line for all of us is that the system needs repair. Commissioner McCarty needs to conduct a proper investigation and should fix any problems that are uncovered. If he does not, then the Legislature may need to take action. It's time to make sure mitigation credits truly match the reduction of risk.
It is time to weed out the bad apples that prey on our system with bogus inspections that might leave many homeowners feeling safer than they really are and that put our citizens in physical and financial danger.
This should be a nonpartisan issue, and I urge all of my fellow legislators, the Cabinet, the insurers and the governor to work together to come up with a win-win solution for our citizens. They deserve nothing less.
Rep. Peter Nehr represents District 48 in upper Pinellas County and parts of Holiday and Trinity in Pasco County.