Florida: Still a Long Way to Go

Disgruntled homeowners attempting to repair residences destroyed by hurricanes Charley, Frances, Ivan and Jeanne applauded Florida legislators after they unanimously approved a bill to reimburse them for multiple deductibles.

The Florida Legislature met in mid-December and agreed to send payments of as much as $10,000 to homeowners who had paid two deductibles, and as much as $20,000 to policyholders damaged by three or four hurricanes (see page 8). The Legislature also approved a bill that will eliminate multiple deductibles in any one hurricane season.

In addition to cash assistance, legislators want to approve a measure that gives consumers the option of paying a lower deductible if they face damage from a second or third storm. But the option comes at a price: higher premiums.

Subsequently, Dec. 21, during an emergency meeting called by Gov. Jeb Bush, the Cabinet extended the moratorium to March 31, prohibiting insurers from dropping hurricane victims who have not had their homes repaired.

Legislators, to their credit, realized they had a lot on their plate and suggested another special session this month. Issues they will discuss include: changes in reforms made after Hurricane Andrew in 1992; multiple deductibles; rate hikes (how to keep policy rates from skyrocketing); and how to “fix” the Citizens Property Insurance Corp.

Two new insurance companies arrived to pick up 140,000 new policies (see page 8), but more than 200,000 homeowners turned to Citizens. Citizens, which writes a majority of its business in South Florida, insures more than 850,000 policies and has been adding business at a rate of 26,000 new policies a month for several months.

The pace of development in Florida is outpacing the insurance industry’s ability to accumulate money to pay hurricane claims. Even after the hurricanes, Florida’s insurance market is dramatically growing, more than 140,000 new homeowners arrived in 2004, but many could not find an insurance company that would write homeowners policies and most had to resort to Citizens.

Legislators are addressing problems, but not their source–the rising costs of insuring property in Florida. They have overlooked the well-known fact that newcomers pouring into the state are willing to buy high-risk property in hard-to-insure areas: near the beach, on flood plains and where there are sinkholes. The legislature needs to place controls on where planners can build such projects.

Another overlooked area, pointed out by several Insurance Journal readers is that Florida legislators have totally ignored businesses destroyed by the hurricanes whose owners are now struggling to survive. Legislators, it seems, have assumed that most businesses had enough insurance to rebuild, which is not very realistic.

It remains to be seen what the legislators can accomplish before the next hurricane season, but no one can deny them an “A” for effort.

Topics Florida Catastrophe Hurricane Homeowners