Advertisement
  1. Business

The constant storm over insurance rates in Florida

Hurricane Wilma, 2005: Wilma created an insurance headache for homeowners as well as owners of other property. Here, brothers help salvage personal belongings from their houseboat in a Miami marina after the storm.
Hurricane Wilma, 2005: Wilma created an insurance headache for homeowners as well as owners of other property. Here, brothers help salvage personal belongings from their houseboat in a Miami marina after the storm.
Published May 17, 2013

Florida homeowners are grappling with a familiar nightmare this time of year, and it's not fear of a major hurricane.

Once more, property owners enter hurricane season threatened with paying higher insurance rates — particularly if they're with state-run Citizens Property Insurance — even though Florida has been spared major storm damage for eight years.

The argument over higher rates is sharply divided.

Advocates say, several hurricane-free seasons aside, many Florida homeowners are still paying less than they should for hurricane exposure, especially on the coast. Moreover, other factors are pushing up rates: a surge in other types of property claims such as water damage; fraud; and higher property replacement costs.

Balderdash, say opponents of higher rates. The cost of reinsurance, an added layer of coverage that insurance companies buy, is going down so insurers should pass on those savings. Both the state's hurricane catastrophe fund and Citizens' reserves have built up billions of dollars in reserve to handle the next mega-storm. And property insurers have already stopped standard coverage of such high-claim risks as mold and sinkholes.

Fueled by the support of Gov. Rick Scott and the Republican-controlled Legislature, the higher-rate camp has been winning the day up to now.

But some are betting those days are numbered.

It's hardly an anti-insurance climate in Tallahassee, but the influence of insurance lobbyists has slipped. Legislators have not supported a push to let Citizens Property Insurance, the insurer of last resort, increase its rates more aggressively than the current cap of 10 percent on average per year.

Florida insurance consumer advocate Robin Smith Westcott predicts any rate increases ahead will be marginal. "Rates are about where they should be," she said.

Not long ago, nearly every Florida-based property insurer was operating in the red. "A lot of these companies are now making money," Westcott said.

The one notable exception on rates, she said, is Citizens Property Insurance, which has far greater exposure to hurricane damage than any private insurer.

Citizens, which covers those who cannot find insurance on the open market, has authority to assess every property owner statewide if it does not have enough money to cover claims after a major storm.

Citizens has been allowed to continue raising its rates up to 10 percent on average annually, with or without a hurricane.

Bill Newton, executive director of the Florida Consumer Action Network, said the lower cost of reinsurance this year and next should be enough to push down rates. But that won't happen, he said, without any pressure on insurance companies.

"In the private market there's no significant competition to undercut the prices," he said. "You need little companies to come in and undercut the big guy and sell for lower prices. That pressure isn't there."

Citizens has provided some check on rates, Newton said, but he believes regulators could have done more to support property owners. Instead, regulators have been sympathetic to the industry line that insurers need to buy even more reinsurance — and then pass on those costs through higher rates.

Citizens has bolstered its reserves to the point it can handle the magnitude of a storm occurring once in every 60 years, and many still aren't satisfied, Newton said.

Industry backers don't believe rates should be slashed.

Lynne McChristian of the Insurance Information Institute says the current insurance problem is widely misunderstood.

It's not the hurricane portion of premiums that's driving rates upward, she said. The problem is a jump in other types of claims, particularly those tied to water damage like broken pipes or burst water heaters. At the same time, prices are up sharply for materials like hardwood and gypsum, which is used for drywall.

And what of the argument that Citizens has enough in reserves to handle a Hurricane Andrew-type storm?

What worries McChristian is what comes next: "The day after an Andrew-type storm, Citizens won't have the money to handle whatever Mother Nature might throw at the state the next day, the next month or even the next year."

ALSO IN THIS SECTION

  1. More than 44 percent of people who searched on ApartmentList.com for the Tampa Bay area from June to December were outside the region, according to a report from Apartment List. Percentages in the “Top Three Sources” box represent the share of searches coming from outside the metro area. (Apartment List map) [Apartment List]
    The region trails only Denver, Baltimore and San Diego for the percentage of people from outside the area searching for apartments on Apartment List.
  2. To accommodate the swelling numbers of aging baby boomers, experts say we will need to make transportation more readily available, build more affordable housing, modify homes and apartments to help seniors age in place, and create programs to bring young and old people together. [Times (2011)]
    “There’s never been a time like this,” one expert says. Solutions include more health aides, taming long-term care costs and just healthier living.
  3. In this Sept. 20, 2017, file photo Oscar the cat sits in his carry on travel bag after arriving at Phoenix Sky Harbor International Airport in Phoenix. Airlines might soon be able to turn away cats, rabbits and all animals other than dogs that passengers try to bring with them in the cabin. The U.S. Transportation Department on Wednesday, Jan. 22, 2020, announced plans to tighten rules around service animals. The biggest change would be that only dogs could qualify. (Ross D. Franklin | Associated Press] [ROSS D. FRANKLIN  |  AP]
    Soon mainly dogs would be allowed on planes, under plans announced on Wednesday.
  4. The sale of Tampa-based WellCare Health Plans to Centene Corp. is expected to close Thursday, the companies said on Wednesday. [File photo]
    The companies said Wednesday they have satisfied all regulatory approvals, including with the U.S. Department of Justice, for the merger to close.
  5. Power Design has a 22-acre campus in the Gateway area of St. Petersburg. [Rendering courtesy of Power Design]
    In settling the case with the District of Columbia Attorney General’s Office, the electricial contractor company denies that it violated worker classification laws.
  6. Rooker Properties of Atlanta plans to build at least 400,000 square feet of industrial and office space at what is now county-owned  land on Old Pasco Road, Wesley Chapel. Pictured is Rooker's Spartan Ridge Logistics Center, a 273,000-square-foot, Class-A industrial building in Spartanburg, S.C. It was constructed in 2018 and the company said the buildings planned for the Pasco County site will closely resemble this. [Rooker Properties]
    Rick Narkiewicz is seeking tenants for the planned Rooker Properties spec buildings known as North Tampa 75 Business Center.
  7. This home in Colonial Hills neighborhood in west Pasco has been vacant for 10 years, neighbors said. A new Pasco County ordinance would require the owners of vacant and rental residences to register their properties with the Pasco County Sheriff's Office. [C.T. BOWEN  |  Tampa Bay Times]
    A new ordinance is supposed to aid sheriff’s deputies and code-enforcement officers dealing with rental or vacant properties.
  8. Four Tampa Bay businesses made Fortune’s list of “Most Admired Companies” in the world for 2020. Pictured is a Publix location in the Channelside district last year. [OCTAVIO JONES   |   Times (2019)] ["OCTAVIO JONES   |   TIMES"  |  Tampa Bay Times]
    Four Tampa Bay businesses made Fortune’s list of “Most Admired Companies” in the world for 2020.
  9. After a spike last week, gas prices in the Sunshine State are down slightly. Pictured is the Courtney Campbell Causeway in 20098. [Times file] [CLIFFORD, DOUGLAS R.  |  St. Petersburg Times]
    Low demand and higher gas supply are bringing cheaper gas this week, experts said.
  10. Next month the Pirate Water Taxi will debut a 100-passenger vessel and two smaller taxis as part of an expansion of the company's routes and coverage of Tampa's waterfront. (Yacht StarShip) [Yacht StarShip]
    The service, owned by the operator of Yacht StarShip Dining Cruises, is investing $1.6 million in three new vessels and adding a long-desired stop near the Florida Aquarium.
Advertisement
Advertisement
Advertisement