Fla. Cabinet Extends Moratorium to Dec. 31, But Only for Unrepaired Homes

Florida Gov. Jeb Bush and members of the Florida Cabinet approved an emergency rule extending the moratorium to Dec. 31 and banning insurance companies from canceling or non-renewing insurance policies for victims whose homes have yet to be repaired.
Tom Gallagher, Florida Chief Financial Officer recommended the rule to protect thousands of Floridians still waiting for storm repairs who would be uninsurable if they lost their insurance coverage.

The Cabinet measure only protects policyholders who suffered damages during recent hurricanes and does not prevent insurance companies from canceling or non-renewing residential policies on homes that were not damaged — the moratorium protecting them expired Dec. 1, so a flurry of cancellation and non-renewal notices are anticipated to be mailed.

“We recognize that many homeowners are being told there is a substantial waiting list for repairs, due to a shortage of contractors,” Gallagher said. “Without this protection, homeowners who lost their insurance coverage would be uninsurable. I applaud the governor and my fellow Cabinet members for making sure that storm victims have property protection.”

The emergency rule, developed by the Office of Insurance Regulation, applies to all residential and commercial residential properties and prohibits insurance companies from canceling insurance policies until 60 days after repairs are complete.

“This is a very necessary measure to protect Floridians from becoming uninsurable and the attendant problems that could follow such a situation,” said Florida Insurance Commissioner Kevin McCarty, who heads the Office of Insurance Regulation.

Gallagher said he will ask the legislature to address this issue at this month’s special session by giving insurance regulators the authority to protect homeowners from losing coverage until storm repairs are complete.

Gallagher will also ask lawmakers to take steps to prevent consumers from being charged large multiple hurricane deductibles when more than one storm strikes Florida in a single season. The Office of Insurance Regulation reported that as of the end of November, more than 29,000 Floridians have paid more than $50 million in second, third and fourth deductibles.

Citizens solvency could be threatened
In 1992, when Hurricane Andrew hit Dade County insurance companies threatened to drop more than 1 million policyholders. Such mass cancellations are not expected now, but state officials worry that if companies drop only a quarter of that number, it could threaten the Citizens Property Insurance Corp. (CPIC), the state-backed insurer of last resort.

CPIC was created in Florida two years ago to provide insurance coverage for homeowners and businesses that could not obtain insurance elsewhere.

The CPIC currently has reserves totaling $1.5 billion. If CPIC uses all available funds for payments, it can assess a special charge on all Florida property insurers, which those companies can in turn pass on to policyholders.

The CPIC is continuing to process insurance claims, and will not have final insurance payment totals until late February 2005.

McCarty said that during ordinary circumstances around 200,000 homeowners receive non-renewal notices each year. Usually these are mailed out on an ongoing basis throughout the year.

McCarthy expects the private insurance market to grow in Florida throughout 2005. He said homeowners dropped by insurers will soon find other companies competing for their business.

Andrew’s expenses edged out
Newly released information has ranked all four of this season’s hurricanes among the top 10 costliest U.S. hurricanes in the past 25 years. — taken together, the cost of this season’s storms edges out Andrew by about $100 million.

On Aug. 18, five days after Hurricane Charley struck Florida’s west coast, and for the first time since Hurricane Andrew, the Office of Insurance Regulation ordered a temporary moratorium on insurance cancellations and non-renewals. That order originally affected only counties hit hard by Charley, but was expanded to the entire state after Hurricane Frances struck on Sept. 4.

Gallagher said his department will monitor non-renewals and cancellations. He said he’d like to give the industry the benefit of the doubt that people won’t lose their coverage because of the hurricanes, but noted that companies aren’t required to keep policyholders.

“If they don’t want to insure you for whatever reason, they don’t have to insure you,” Gallagher said. He suggested that even homeowners who are dropped by their insurers may find more options than in the past. Gallagher said three companies want to take policies out of Citizens, something he considers “a very good sign.”

Wait-and-see attitude
Some insurers are taking a wait-and-see attitude before writing new business in Florida. Some companies, such as Allstate Floridian, are not writing new policies in the state until they see what actions state legislators take.

“The challenge going forward is what we can do in Florida to make investing in Florida … more attractive,” commented William Standler, Tallahassee-based regional manager for the Property Casualty Insurers Association of America (PCI).

Topics Florida Catastrophe Carriers Legislation Hurricane Homeowners A.J. Gallagher