Since Hurricane Charley sliced through the state five years ago this week, hundreds of thousands of Floridians have spent lots of money to fortify their homes. As an incentive for those investments, the state required insurers to offer significant insurance premium discounts for hurricane shutters, stronger garage doors and other improvements. And the Legislature launched the My Safe Florida Home program to help homeowners get free inspections and finance their mitigation efforts. Now it turns out homeowners responded so well insurers are complaining the discounts are costing them too much money, and they want the discounts reduced. The state should not unfairly penalize homeowners for doing what it encouraged them to do in the first place.
Today in Tallahassee, the Florida Commission on Hurricane Loss Projection Methodology will hold a public hearing where insurers will make their case for lowering the windstorm mitigation discounts. The commission, composed of regulators, industry representatives and academics, has a role to play in considering what it's really worth to install shutters and more secure roofs in terms of lessening storm damage. But let's not forget the bottom line: Insurers want the discounts reduced because the push for fortifying homes has been so successful it is hurting their bottom line.
Leading the charge, of course, is State Farm Florida. First they asked for a 47 percent rate increase last year and blamed the premium discounts as one of the reasons. Then they announced they would leave the state after the rate increase was rejected. Last week, insurance regulators allowed State Farm to effectively increase rates significantly on its way out the door by eliminating premium discounts for multiple policies, alarm systems and other items — but they rejected a proposed cut in the windstorm mitigation discounts. Today's broad review of the value of those credits was ordered by the Legislature following State Farm's original complaints.
Through the successful My Florida Safe Home program, more than 400,000 homes received free windstorm inspections and millions in tax dollars were spent on grants and loans to harden homes. In its typical short-sightedness, the Legislature suspended that program at the end of June by failing to earmark more money for it. Now after so many homeowners have made substantial investments to reduce the potential for major hurricane damage, insurers want to significantly reduce their reward. That would be a frustrating bait-and-switch.
Windstorm mitigation discounts should reflect the value of the improvements in reducing the risk of storm damage, but it is sound public policy to reward homeowners for making the investment. Cutting windstorm mitigation discounts significantly would send the wrong message.