No major storms, but Florida's property insurance rates keep rising

TALLAHASSEE — Marco Tarafa was stunned to find that his homeowners insurance policy is increasing by nearly $1,000 a year — all because inspectors couldn't get into his attic, where there was no crawl space and about 24 inches of insulation.

Tarafa was a customer of state-backed Citizens Property Insurance Corp. for eight years, and his rates had been stable over much of that time. Tarafa pays $2,200 for his policy on his 1,800-square-foot, ranch-style home in Miami Gardens. Unless something changes between now and when the policy renews in May, he's looking at a $980 increase, a hike of nearly 45 percent.

He is among thousands of Florida homeowners forced to take coverage offered by Citizens and a target for being moved to another company in Citizens' attempts to downsize.

For Tarafa and millions of other Florida businesses and homeowners, property insurance rates keep soaring even though a hurricane hasn't made a direct hit in the state in seven years.

The average Florida homeowner is paying twice as much for insurance as just six years ago, according to industry statistics. In some areas, the increases are much higher.

Data from the New York-based Insurance Information Institute shows homeowners' claims are up by an average of more than 17 percent over the past decade. They are virtually all due to noncatastrophe claims involving water. In many instances, they are claims for issues ranging from leaky toilets to burst water heaters. Florida's rates have also been hurt by soaring claims on losses from sinkholes.

A more industry-friendly Office of Insurance Regulation pressured by Gov. Rick Scott and a Republican-led Legislature means consumers pay more.

"It's a dangerous day in Florida when the Office of Insurance Regulation turns into the office of blind trust because they lack the resources to independently verify form filings from insurance companies," said Sean Shaw, a Tampa lawyer and self-styled consumer advocate associated with a firm that frequently litigates on behalf of policyholders.

There is little competition in the Florida property insurance market because many consumers can buy from only one company — usually Citizens. Founded by the Legislature in 2002 for homeowners who could not get private policies, it has become the state's largest property insurance company with more than 1.3 million customers after shedding about 160,000 policies in recent weeks to private companies.

Scott and the Legislature are anxious for Citizens to reduce its overall liability, which would exceed its ability to pay off in the aftermath of a catastrophe.

"Gov. Scott, of course, wants premiums to go up and he wants Citizens to be depopulated at any cost to the policyholder," said state Rep. Mike Fasano, R-New Port Richey, whose district encompasses the highest concentration of Citizens' policy holders in the state. "Citizens is only there because, unfortunately, so many couldn't find insurance anywhere else."

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And while its premiums have risen by an average of 8.1 percent statewide over the past four years, some, including new president Barry Gilway, say the company still doesn't charge market rates and needs to raise them to a point comparable to what a private company would charge. That puts Gilway, who has 40 years of experience in private insurance, right into the crosshairs of politicians who generally abhor any rate increases being passed along to their constituents.

Citizens says it would need a 16.4 percent premium increase on all products in 2013 to be actuarially sound.

Many Citizens customers aren't enamored with the idea of moving to a private insurer. Jason Carpenter, a 30-year-old field manager for a Brooksville company, is one. He refused to give up his Citizens' coverage to become a customer of Florida Peninsula because he felt it would be only a matter of time before his rates would increase and coverage decrease with the new carrier.

"I know exactly what's going to happen," Carpenter said. "They'd basically create their own terms."