Monday, February 12, 2007

Florida Homeowner's Insurance - Bad Moon Rising?

Today, our esteemed governor Charlie Crist is expected to sign the 2007 Florida Insurance Reform package into law. This will take away the downside risk from the insurers and place it on the state, thus (in theory) bringing rate relief.

In other words, in exchange for lowering rates now, if another catastrophic year like 2004 or 2005 happens again, the state will pay the majority of the insurance claims.

Does the state currently have the money to pay these claims? No, they do not. From the Tampa Tribune, some "downside risk" associated with the reform package.

'Insurance reform legislation that passed last week shows what's possible when lawmakers seek "ideas that help Floridians," Gov. Charlie Crist said in a weekly newsletter sent to supporters.

"Help for the people of Florida is on the way! Help is on the way in the form of lower homeowners insurance rates for every Floridian," Crist wrote Friday.'

So far, so good! But....(and it's a big 'BUT'....)

'And it might work, too, unless the state gets hit by a strong hurricane in the next few years.

"We are screwed if that occurs," said Senate Democratic Leader Steve Geller of Cooper City, one of the plan's architects.

A few worst-case scenarios are tempering some of the enthusiasm over what Crist and others bill as a bipartisan triumph:

• What if Florida gets hit by a costly storm before it can build up a bigger, new public catastrophe fund, designed to lower premiums by relieving insurers of some risk?

• What if new rules against "cherry picking," the practice of offering the most profitable types of insurance but not property insurance, send automobile insurers packing from Florida?

• What if a bulked-up Citizens Property Insurance Corp., the public insurer of last resort that's now empowered to offer other types of insurance, steals customers from private businesses?'

Aye, so there's the rub. And Charlie is worried about another one-time event.

'Crist even added his own scenario, which he plans to address at a Cabinet meeting this morning:

What if private insurers try to rush through rate hikes now, while the reform plan is being implemented?

Crist has an answer for that one: offer an emergency ruling to prohibit policy cancellations and require rate changes to incorporate the new legislation.'

So, back to the first point: in this blind pursuit of lowering insurance rates, what kind of risk is Florida taking on?

'Insurance industry officials accept the reforms as a political reality but caution they put state finances on precarious ground.

The eight storms that hit Florida in 2004-05 created $36 billion in insurance claims. Insurers warn this could be a drop in the bucket if the right storm hits the wrong part of Florida.

They insist that Citizens' premiums are irresponsibly low and won't be able to cover all of its claims in a future storm. That could lead to another taxpayer-financed bailout such as the one approved in 2006 and more assessments on all insurance policies.'

So what happens if we get wacked by another storm (or series of storms) and the state is on the hook for a bill that it can't pay?

' Floridians would also be hit with huge assessments on their property, auto and other insurance policies to cover any damages charged to the newly expanded public catastrophe fund.

Private insurers are responsible for the first $6 billion of payouts in a storm under the new reforms. The state's catastrophe fund covers the next $16 billion. If additional claims remain, as in an especially powerful hurricane, a second tier of the public catastrophe fund covers the next $20 billion in losses.

The state would have to issue bonds to finance all of that.'

Oh, and by the way, how much money does the state currently have socked away for catastrophic coverage?

'The catastrophic fund now has less than $2 billion.'

So, the next time a hurricane hits, get ready to pay for all those beach houses, waterfront mansions, and 2nd, 3rd and 4th homes of wealthy people. It's all now being subsidized by you.

Full Article


CRAZY G said...

And YES, Jerry:
The legislature is 'barring' the gates, so to speak..

Private insurance companies, can't raise rates, can't cancel policies, and are trapped with the status quo!!! Until they decide, what ever they are going to decide..


CRAZY G said...

NEWS UPDATE, from previous webpage:

On the last page, I told you about the "OPEN HOUSE EXTRAVAGANZA" in our community, with 15-17 open houses yesterday......

WELL!! Taking the dog for a walk this morning, I bumped into the Chief of Security in here, an acquaintence of mine....So, I mentioned to him about 'all' the open houses yesterday, and 'if' it was a problem for them.....
He said, "I don't know, But, I'll check"....He picks up his cell phone, and calls somebody, and asks about how many atteneded the open houses....
His answer:::::


So, when somebody tells you about the 'supposed' rebound in real estate....


zippo said...

...but, but...this is the spring selling season!

...but, is a great time to buy!

...but, but...they're not making anymore land, you know!

...but, but...1,000 people a day are moving to Florida!

...but, but...[insert your favorite realtor lie/myth here]

Anonymous said...

Massachusetts and Florida Report Highest Foreclosures for Month of January
Kerri Panchuk | 02.12.07
Massachusetts and Florida rank first in their respective regions for logging the most foreclosure filings during the first month of 2007, according to a new report from, a Sacramento, California-based provider of online foreclosure data.

The latest report from the company shows the number of foreclosure filings in Massachusetts totaling 4,153 for the month of January, while the total region reported 12,220 filings during the same period. says “if the pace continues unabated for the rest of the year,” the Northeast region could see more than a 50 percent increase in foreclosure filings by year's end.

While Massachussetts is leading the pack in the Northeast, Florida is feeling the ill effects of a less-than-perfect housing market in the Southeastern region. says Florida logged 11,500 foreclosure filings in January, which accounted for nearly half of the region's total foreclosure filings.

Beyond the Northeast and Southeast, the nationwide prognosis is not much better with reporting 103,075 foreclosure filings in just the month of January.

Despite the grim picture, experts say there's much to be optimistic about. “Overall, nationally, the economic news is good,” said Alexis McGee, president of “Interest rates remain low. Housing inventories are dropping, and the surge of new home starts are slowing.” Alexis predicts the market will pick up again by the end of the year. includes the following states in its Northeastern region: Connecticut, the District of Columbia, Delaware, Maryland, Pennsylvania, Vermont, Rhode Island, Massachusetts, New York, New Jersey, and Maine.

The Southeastern region includes Alabama, Arkansas, Florida, Mississippi, Kentucky, Tennessee, Virginia, Georgia, North Carolina, South Carolina, and West Virginia.

CRAZY G said...

The insurance companies are heading for the door, and "THE CRIST", is keeping them burning in hell!!!

Insurers fight for ability to drop policies
By Michael C. Bender

Palm Beach Post Capital Bureau

Tuesday, February 13, 2007

TALLAHASSEE — Florida insurers have appealed an emergency rule issued by Gov. Charlie Crist and the Cabinet that prohibited companies from dropping policies until after hurricane season this year.

The rule "wreaked havoc and confusion not only among insurers, but also, policy holders throughout the state," according to a complaint the Florida Insurance Council filed Monday in the First District Court of Appeals in Tallahassee.

Non-renewed? Depends on what day
Timing can be everything. Tequesta resident Phil Aaron’s Tower Hill insurance company ...

This morning, the court told state Office of Insurance Regulation officials they have until Monday to show why the rule should not be halted, said insurance council attorney Elizabeth McArthur.

After an intense seven-day special session last month devoted to property insurance reform, Crist persuaded the Cabinet to approve an emergency rule that prohibited insurance companies from dropping policies through the end of this year's hurricane season.

The Office of Insurance Regulation and Crist also interpreted the rule to apply retroactively.

In their complaint, insurers argued there was no emergency for Crist and the Cabinet to address because lawmakers had spent a week dealing with the issue.

"The emergency rule is an illicit attempt to legislate in the ways the legislature chose not to," McArthur wrote

CRAZY G said...



Yes, 1.3 million Citizens Insurance policy holders are going to be getting a refund??????



Citizens setting up refunds
By Randy Diamond

Palm Beach Post Staff Writer

Wednesday, February 14, 2007

Citizens Property Insurance Corp. plans to send refund checks to all of its 1.3 million policyholders around April 15, one of several price reductions that customers will receive during the next several months.

The state-sponsored insurer disclosed the time frame last week in papers filed with regulators but declined to say Tuesday how much the cuts would be.

How much Citizens policyholders save

The elimination of the Jan. 1 rate hike will result in real savings for high-risk customers of Citizens Property Insurance Corp. east of Interstate 95 in Palm Beach County.

Rates withincrease: $2,582.29

Adjusted rates, minus 22 percent hike: $2014.24

Previously, officials have estimated a maximum 5 percent cut. The refunds are the result of the state legislature's insurance reform package.

Some Citizens policyholders will be eligible for additional discounts. About 20,000 customers statewide in the high-risk wind account will receive refund checks in the next two weeks, said spokesman Rocky Scott.

Citizens has more than 400,000 high-risk policies, but most customers were not charged the higher premiums previously scheduled for January but subsequently canceled by state lawmakers.

Those premium hikes were as high as 22 percent in South Florida. Beginning Thursday, customers getting renewal notices will see the change reflected.

A small group of policyholders in Citizens personal lines account, which covers about 800,000 policyholders, also will be receiving refund checks as of March 15.

Most won't get the refund because Citizens already readjusted rates in the account to reflect the elimination of a Jan. 1 rate hike.

Policyholders who are not in the high-risk pool and who are eligible for refunds will see small checks for the most part because their rates did not go up as much as Citizen's high-risk rates.

Those policies in Palm Beach County refunds could be as little as 1 percent or 2 percent of the total premium. Martin County residents will fare better, with rates going down around 14 percent.

Citizens also has reiterated its plans to offer, by April 1, multi-peril coverage in its high-risk wind pool area, which is east of Interstate 95 in Palm Beach and St. Lucie counties. By issuing the less-risky fire and theft coverage, Citizens will increase its premium base while lowering its overall risk.

Policyholders in those areas now have two policies, one from Citizens for wind damage and a second policy, usually from a private company, to cover other risks.

Citizens' plan to offer such coverage is subject to the approval of the governor and other top state officials.

Anonymous said...

Face it kids,
Insurance is dead.
The information age has killed it.
An overabundance of McMansions has killed it.

When everyone has the me first attitude then life becomes unsustainable.

king said...

There are quite a few people weary of an insurance career because they think they have to be an aggressive sales person. Of course, sales is a necessary ingredient, however insurance is a service everyone needs. Besides, most positions do not require straight sales.

Nathan said...

It's very surprising to me that so few people seem to be aware of Wind Mitigation Inspections. They are provided either by the State of Florida or by private companies (I completely recommend using a private company. The idea is to provide a report to your insurance company that persuades them to lower your premium. I literally saved thousands of dollars on my premium just weeks after having a WM Inspection done. I'd be more than happy to share the contact information for the inspection company I used. There's a 100% money-back guarantee, so there's no risk at all. If you'd like the contact info, feel free to email me at

Miguel said...

I feel that this is very good. This will help to reduce the burden on the home owners of paying for Florida Homeowners Insurance and make sure that the homeowners will get the proper amount when some accident or natural calamity happens.

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