Wednesday, November 22, 2017
Editorials

Editorial: Preparing for when Florida's hurricane luck runs out

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Florida's good fortune in avoiding hurricanes for eight years finally has helped stabilize property insurance rates and enabled the state-run Citizens Property Insurance Corp. to face the new season in its best financial shape ever. That doesn't mean Floridians should let down their guard. As another hurricane season opens today, the smartest approach is to hope for the best and prepare for the worst.

The Legislature approved another sales tax holiday for hurricane supplies that runs through next Sunday. That should provide an incentive to stock up on everything from flashlights and lanterns to batteries, radios and coolers. The sales tax exemption also applies to more expensive items such as tarps and portable generators that come in handy after a storm passes through. These are investments that can be used for multiple seasons if they are stored properly.

As Floridians prepare, Citizens is better prepared than ever for hurricane season. A year ago, it had more than 1.2 million policies. Now it has fewer than 930,000 policies, the lowest total in eight years, and three private insurers were approved last month to take out another 75,000 policies. Citizens also has increased its record surplus to more than $7.3 billion. Last year, Citizens entered hurricane season with enough capital to pay off claims from a 1-in-58-year hurricane without assessments to policyholders after a storm. It enters this hurricane season in even better shape, able to pay off claims from a 1-in-70-year storm without assessments.

Some of this progress in recent years has come at a price. Citizens aggressively reviewed premium discounts for hurricane hardening efforts, and its coverage is not nearly as comprehensive as it once was. Many of the private insurers removing policies from Citizens are relative newcomers with no track record in assessing damage and paying claims after major storms. And last year, the Citizens board recklessly agreed to pay a Pinellas start-up, Heritage Insurance, up to $52 million to take up to 60,000 policies. That sparked criticism from some legislators, and last week Heritage's holding company went public. It seems like some of that stock should have gone to the Citizens policyholders.

Since the last hurricane season, insurance concerns shifted from Citizens to the federal flood insurance program as the unintended consequences of the 2012 Biggert-Waters Act became apparent. With property owners complaining about soaring rate increases, Congress approved a partial fix in March that failed to help everyone. Lawmakers eliminated the phase-out of subsidies for grandfathered policies, but a more gradual phase-out of subsidies for older owner-occupied homes still could lead to annual premium increases of up to 18 percent. And there was no help for owners of second homes or commercial properties that predate the flood maps. Lloyd's of London has quoted substantially lower rates for Tampa Bay homeowners, raising more questions about the calculations driving the astronomical rate increases for the National Flood Insurance Program. The Florida Legislature passed legislation that could enable more companies to write flood insurance policies, but it is uncertain how much relief that might provide.

Let's hope the hurricane luck holds, but Floridians cannot afford to be complacent about being prepared if that luck runs out.

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