Don Brown

InsuranceNewsNet.com
By Jeff Jeffrey
October 19, 2011

The chief operating officer of the Florida Hurricane Catastrophe Fund has picked up some major support in his effort to shrink the state-run reinsurer and reduce its reliance on borrowing.

COO Jack Nicholson has been pushing to “right-size” the fund, arguing that unless the state legislature acts to lower $17 billion exposure in mandatory coverage to around $12 billion over the next three years, it may be unable to meet its obligations in the event of a major catastrophe. Earlier this week, financial experts hired by the fund told a state Senate panel the fund faces a $3.2 billion shortfall if a major catastrophe strikes Florida.

“We need to create confidence in the fund again,” Nicholson told Best’s News Service. “There will be serious consequences if a major catastrophe hits and we can’t cover our obligations, including some insurers who may become insolvent.”

The cat fund was created in November 1993 during a special legislative session after Hurricane Andrew and is designed to help insurers pay homeowners’ claims if a major storm results in widespread damage. It currently has $7.25 billion of cash on hand and some $18.55 billion of exposure. In the event of major hurricane, the fund may need to borrow $11.3 billion to meet its obligations.

Nicholson is working on a presentation to the state Senate, where he will outline proposals he hopes will be used as the basis of a bill for the next legislative session. In addition to lowering capacity by at least $5 billion through higher co-pays phased in over three years, Nicholson wants to immediately eliminate the optional layer, known as the Temporary Increase in Coverage Layer, which is expected to dry up in 2014 (Best’s News Service, Aug. 15, 2011).

Nicholson said his goal is to seek no more than $5 billion to $7 billion from the capital markets, rather than $10 billion or more (Best’s News Service Sept. 26, 2011).

Recently, several organizations have come out in support of Nicholson’s proposals, including The Heartland Institute, the Florida Wildlife Federation and Americans for Prosperity-Florida.

“The release of the fall bonding and claims-paying capacity estimates goes to show even after years of Florida not being hit by a hurricane the current system leaves taxpayers very vulnerable,” said Christian Camara, director of Florida Insurance Project at The Heartland Institute, in a statement. “The legislature would do well in making necessary reforms to the cat fund in order to protect the state and residents from an economic disaster, and the current reform proposal by COO Jack Nicholson is a step in the right direction.”

Nicholson said picking up the support of those organizations will help to “convey the message that the fund is dangerously overexposed.”

“Communication has been a problem,” Nicholson said. “There is always the misunderstanding that the changes that are needed will increase costs for consumers. But the fund will be in a highly volatile situation until we get it to the right size. It is yet to be seen how the support will actually help in motivating the legislature, but any support for what we’re doing is seen as a positive.”

http://www.insurancenewsnet.com//article.aspx?id=288698&type=propertycasualty

Out of the Storm News
By R. J. Lehmann
October 19, 2011

The Florida Hurricane Catastrophe Fund, the state-run reinsurance facility from which all property insurers in the state are required to purchase coverage, would not be able to borrow enough money in the capital markets following a major hurricane to cover its $18.389 billion in potential claims-paying obligations, according to new analysis from the fund’s financial advisor.

The Oct. 18 report from John Forney of Raymond James Financial estimates the fund has $15.170 billion of claims-paying capacity for 2011, which Forney derived from Paragon Strategic Solutions Inc.’s projection that the fund will have a $7.170 billion year-end cash balance, and estimates that the fund has the capacity to raise up to $8 billion in post-event bonds in the 12 months following a major hurricane. The bonding capacity projection was $3 billion less than the $11 billion estimate offered prior to the start of this year’s hurricane season.

Those estimates, which do not include $6 billion in potential additional bonding capacity the fund could raise in the second year following a storm, would leave the fund with a 12-month funding shortfall of $3.219 billion. The fund’s statutory obligation for mandatory coverage for June 1, 2011 through May 31, 2012 is $17 billion, while an additional $1.389 billion in reimbursement obligations stem from two optional coverages that insurers may select.

Forney notes in the report that “estimating the FHCF’s post‐event bonding capacity is an inexact science,” adding that “the largest single issue in the municipal market (taxable or tax‐exempt) since 2009 was $6.543 billion by the State of California.”

Indeed, the $8 billion estimate might be optimistic, as it represents merely the midpoint of a range of estimates provided by investment banks who would be charged with bringing the bonds to market. The report notes that J.P. Morgan estimated the FHCF’s 12-month bonding capacity at $6-$8 billion, and Goldman Sachs’ estimate was just $5 billion. Using the latter estimate, the cat fund’s shortfall could be as large as $6 billion.

To pay off its debts, the fund would lay assessments on nearly every insurance policy sold in the state. Indeed, Florida’s drivers are still paying off assessments on their auto insurance policies for claims the cat fund paid stemming from Hurricane Wilma in 2005. How the fund would pay claims should its obligations exceed what it can borrow is less clear. Florida has no state income tax.

None of this should be surprising. It was the inevitable result of former Gov. Charlie Crist’s misguided plan to curry short-term political favor by rolling back property insurance rates and subsidizing the Florida market with unsustainable state-backed programs, including both the FHCF and the massive Citizens Property Insurance Corp.

The Associated Press quoted the fund’s chief operating officer, Jack Nicholson, as noting that the reinsurance is priced so that primary insurance rates would be roughly 25% cheaper than would be the case relying solely on the private market. However, Nicholson also told legislators last month that the fund was on “shaky ground.”

“I think we are dangerously overexposed considering the current reality of the marketplace,” he said. “It scares me to death where we are.”

Nicholson wants state lawmakers to scale back the size of the fund. That would likely cause insurance premiums to rise. It has the backing of many key Republicans, including Gov. Rick Scott.

Separately, Nicholson acknowledged how the state of the national economy, and particularly the state of the municipal bond market, has forced the fund’s management to face some uncomfortable realities:

“We used to think we could bond for $55 billion in multiple hurricane seasons,” Nicholson said. “That’s fairy land now.”

http://outofthestormnews.com/2011/10/19/crists-legacy-fla-cat-fund-faces-3-2b-shortfall/

The Current
By Gary Rohrer
October 19, 2011

The push to reform Citizens Property Insurance will continue this year, but the recent flap over its sinkhole rate request has some lawmakers skittish about supporting changes that could increase homeowners’ premiums in a harsh economic environment.

Sen. Garrett Richter, R-Naples, filed SB 578 Tuesday, which would allow surplus lines insurance companies to compete with private insurers to attract customers from Citizens .

“It would provide another alternative for depopulation,” Richter said Wednesday.

But the use of surplus lines carriers – out-of-state insurers with less oversight than in-state insurers whose rates must be approved by regulators – is viewed skeptically by those opposed to changes to Citizens that might increase rates.

Sen. Mike Fasano, R-New Port Richey, a perennial thorn in the side of property insurers, doesn’t think using surplus lines will help homeowners in a state with large amounts of foreclosures.

“You can’t take a homeowner in the state of Florida and force them to take insurance from a company that’s not regulated by the state of Florida,” Fasano said.

Richter counters that there will be standards for surplus lines carriers in his bill that would prevent them from dramatically increasing rates and that Citizens customers would not be forced out.

With 1.3 million policies, Citizens is the largest property insurer in Florida, and some legislators think a three-year freeze on its rates that ended in 2009 — while other private insurers were increasing rates — and a subsequent 10 percent cap on annual increases has made the state-backed insurer too attractive to homeowners, taking on too much risk to be able to pay out claims in the event of a catastrophic hurricane.

But after the fight over SB 408 during the previous legislative session – which Richter sponsored and Fasano fought against – and the large rate request from Citizens it enabled, some lawmakers are leery of voting for more insurance changes with the potential to raise rates.

Citizens initially filed a statewide average 447 percent increase in sinkhole rates, but after an uproar from Tampa Bay area residents, its board voted to phase-in the increase, and a much lower rate hike was approved by the Office of Insurance Regulation.

The outcry from residents facing the rate hikes – in the Tampa Bay area some homeowners would have had rate increases of more than $3,000 – caused some lawmakers to change their minds about the law. Rep. Richard Corcoran, R-New Port Richey, who voted for SB 408, helped organize rallies against the original rate request.

Richter defended SB 408, saying the flap over rates showed the need for its provisions aimed at driving down the amount and cost of sinkhole claims.

“In my eyes it shined a light on the fact that (SB) 408 is absolutely necessary. It just actually confirms the fact that we had a problem that was running rampant,” Richter said.

Now, the effort to further reform Citizens could mirror the fight over SB 408.

“The [Citizens] premiums that are artificially and actuarially unsound need to be addressed,” Richter said.

http://www.thefloridacurrent.com/article.cfm?id=25049484

Florida-Based Property Insurers CEO Group
Editorial
October 13, 2011

Citizens Property Insurance Corporation’s new board got mixed signals this week – reports of an incredible 42 percent increase in policies in 21 months but information from OIR that interest in Citizens takeouts by private carriers is surfacing once again.

“There will be takeouts in November and December,” reported Belinda Miller, Office of Insurance Regulation general counsel. “It is possible next year we will have additional takeouts.”

These are small proposals from insurers whom Ms. Miller did not identify, but it is encouraging news. OIR has not encouraged Citizens takeouts in recent months because several proposals fell apart when the majority of affected policyholders utilized the Citizens Choice statute and chose to remain in Citizens.

Depopulation programs, higher rates when possible under the Citizens’ glide path statute and other steps to stem the dramatic growth in Citizens and begin to shrink the program dominated the first meeting – Wednesday in Orlando – of the newly constituted Citizens board.

The board now includes two insurance community leaders with close ties to the Florida Insurance Council – Nancy Baily, Tampa, former chair of the FIC Executive Committee and Board and CEO of Travelers of Florida, and John Rollins, High Springs, president of Rollins Analytics, an actuarial consultant to several FIC members and former actuary for FIC member Florida Farm Bureau Insurance Company.

Former state Representative Carlos Lacasa of Miami, appointed Citizens chair by Chief Financial Officer Jeff Atwater, stated that Citizens must explore all possible options to stem its growth, eventually shed much of its business to the private market and work to promote the improved health of private carriers. Ms. Miller, who updated the board on the recent new depopulation interest among some private carriers, said Citizens will have to help make this work.

The discussions Wednesday were consistent with concerns about the critical need to reduce the size of Citizens expressed recently by Senate Banking & Insurance Chairman Garrett Richter, R-Naples, Senate President-Designate Don Gaetz, R-Destin, and Sen. Alan Hays, R-Umatilla, sponsor of unsuccessful legislation during the 2011 session dramatically increasing Citizens premiums and tightening its eligibility requirements.

“There are some folks who are coming to the Office…and they are suggesting they would be willing to do some takeouts if,’ General Counsel Miller said. “There are some if’s.” “Citizens will play a pivotal role in that. You have to be flexible and creative. There is absolutely no doubt this board can do that. You are creative…The board now has enough experience in insurance … from a variety of perspectives. I think you have the potential to really be successful.”

There are steps the Citizens board could consider which do not require legislation to make it less competitive and attractive in relation to private insurers, she said. “A lot of the commercial coverage is A-rated and not subject to prior approval. You might be able to make some adjustments there … You can certainly introduce things over time. That would be fine and we would work with you. Other things may take legislation.”

The big hurdle to successful takeouts by private insurers the last couple of years has been Consumer Choice, which allows consumers to opt out of a takeout proposal. The initial rejection rate in a proposed takeout was 5 percent. “After a few years, that really ballooned,” Ms. Miller said. Takeout companies would wind up with a fraction of what they selected and all of it in southeast Florida or in the sinkhole crisis areas of Tama Bay. “That doesn’t work out for a company. That is disastrous for a company.”

She rejected a comment by one Citizens board member that companies who did implement major Citizens takeouts in the 1990’s have gone out of business. Some takeout companies have, she said, but others have become major, significant insurers in the Florida property market.

Some companies can make a Citizens takeout work, she said. They have very conservative approaches, perhaps 10,000 policies a year. They know how to deal with agents.

OIR is no longer encouraging takeouts of 50,000 to 60,000 policies, especially as part of a start-up plan, she said. However, Commissioner Kevin McCarty will work to expand successful depopulation initiatives and partner with the Citizens board.

PropertyCasualty360.com
By Joan E. Collier
October 13, 2011

At its October 12 meeting, the board of governors of Citizens Property Insurance Corp. ratified rate increases recently approved by the Florida Office of Insurance Regulation. The rates will increase a statewide average of 6.2 percent and have a sinkhole cap of 32.8 percent. The new rates on homeowners’ and dwelling fire policies take effect on Jan. 1, 2012, for new and renewal multi-peril business, and Feb. 1, 2012, for new and renewal wind-only business.

In addition to ratifying the rates, the board also voted unanimously not to pursue a phase-in schedule for sinkhole rates that it approved at a September 12 meeting. The board reversed its position on the phase-in because the rates ultimately approved by the OIR were substantially lower than what the board sought.

This summer, amid its 13 other filings, Citizens’ sinkhole rate increase requests ranged from zero to 2,688 percent, for an overall average rate increase of 447 percent. On September 12, the board voted to cap rate hikes for sinkhole coverage at 50 percent in 2012 and then phase in future increases over the next several years. It also approved a proviso that allowed it to review that implementation schedule if the OIR approved significantly different rates.

Good thinking.

On September 19, Florida Insurance Commissioner Kevin McCarty axed Citizens’ request to an overall statewide and territorial premium increase for sinkhole coverage of 32.8 percent for homeowners, and a 96.5 percent increase for dwelling fire policies.

Growth Continues, Especially in Older Homes

In his report to the board at the October meeting, Citizens’ President Scott Wallace said that Citizens is consistently insuring older, less expensive homes; 97 percent of all insured personal lines accounts and 82 percent of coastal account policies are written for values of $400,000 or less. He further noted that 78 percent of those homes are 20 years or older in both the coastal and personal lines accounts. Mobile homes track the same way, with 75 percent of the policies issued for homes that are 20 years or older.

Despite attempts over the past several years to scale back Citizens’s growth overall, it continues to reign as the largest property insurer in Florida. On Jan. 1, 2010, the in-force policy count for all lines of business was slightly over 1 million . As of Jan. 1, 2011, it was just under 1.3 million policies. By Sept. 30, 2011, the in-force policy count had reached 1.46 million—a 42 percent increase in 21 months.

Not all the news was disheartening. Citizens’ CFO Sharon Binnun, reporting data from the June 30, 2011, financial statements, noted that:

•In the last three years, surplus has grown from 3.1 billion to 5.1 billion as of June 30, 2011.

•Citizens has nearly $4 billion in additional claims-paying ability available through its pre-event liquidity program.

•Citizens purchased $575 million of private reinsurance for this hurricane season.

•It has more than 43 reinsurers participating in the reinsurance program

In other action, the board selected Rob Wallace to serve as vice chairman.

——————————————————————————–

http://www.propertycasualty360.com/2011/10/13/floridas-citizens-property-insurance-corp-board-ra

SunSentinel.com
By Julie Patel
October 6, 2011

Citizens Property Insurance, the state’s largest home insurer, is getting even bigger.

You can blame South Florida and the Tampa area for most of the growth, Sharon Binnun, Citizens’ chief financial officer, told a panel of Senators this week. “Of the new business coming in…42 percent is Dade, Broward and Palm Beach and 29 percent” is Hillsborough, Hernando, Pasco and Pinellas counties, she said. “We have a lot of geographic concentration” in those areas.

“I thought initially that I would have to thank Sen. [Alan] Hays for all of his constituents subsidizing my constituents on the coast, then I saw your charts and I know that Sen. [Mike] Fasano needs to thank Sen. Hays for all those subsidies,” Sen. Don Gaetz, R-Niceville, said at the Senate’s insurance committee meeting Tuesday. Hays is a Republican from Umatilla and Fasano a Republican from New Port Richey.

The question often surfaces as lawmakers prepare to draft legislation to improve the state’s insurance market: Are South Floridians disproportionately burdening Citizens?

Citizens’ own data shows more policies come from South Florida – 45 percent from Broward, Miami Dade, Palm Beach and Monroe counties – and 52 percent of Citizens’ exposure to losses is concentrated in the counties. But South Floridians also pay 58 percent of the premiums Citizens collects.

Still, nearly all Floridians would be affected if a major storm wiped out Citizens’ reserves because they would pay fees to support the insurer. Hays said if there’s enough interest among lawmakers, he would propose a bill similar to legislation he floated the past few years to shrink Citizens dramatically by raising its rates.

http://articles.sun-sentinel.com/2011-10-06/news/sfl-citizens-insurance-south-florida-burden-20111005_1_citizens-property-insurance-sharon-binnun-premiums

SunSentinel.com
By Antonio Fins
October 12, 2011

So, I was feeling pretty good about Florida escaping — so far — a crushing hurricane for the sixth straight season.

Then the insurance industry analysts showed up for an editorial board meeting on Tuesday. And the good feelings kind of evaporated.

The gist of the hour and 45 minute discussion: Even with our good luck, we’re still out of luck on getting successful reforms to straighten out the private insurance market left in tatters by Charley through Wilma in the middle of the last decade.

For example:

Citizens keeps growing because large firms — ahem, State Farm — keep dumping policies. And the start-up competitors, which we’ve hung our hats on as saviors, can do no more than simply soak up a fraction of the policies the not-so-like-a-Good Neighbor is unloading.

Oh, it gets worse. As Citizens grows, its vulnerability — and the exposure of all Florida policyholders — grows too. So, a storm season with, say, $20 billion in losses, could trigger more than $1 billion worth of extra assessments on Citizens’ customers.

Don’t laugh if you are not a Citizens customer. Because non-Citizens policies would get socked with more than $5.5 billion in assessments.

Nice.

So, here’s an idea I floated some time ago — during the 2006 elections for Florida Chief Financial Officer, to be precise. Change Florida law so that the only requirement in hurricane coverage is to cover your home’s roof and walls, not its contents. Contents insurance would require a separate policy.

Do that and premiums will drop.

Now, the insurance people we met with today say this already in practice, though it’s not so widespread. Maybe so, but changing the law to force a separation would make this difference more prevalent.

And it would force Citizens — which isn’t separating coverages — to do so too.

http://mobile.baltimoresun.com/p.p?a=rp&m=b&postId=986773&curAbsIndex=0&resultsUrl=DID%3D6%26DFCL%3D1000%26DSB%3Drank%2523desc%26DBFQ%3DuserId%253A42%26DL.w%3D%26DL.d%3D10%26DQ%3DsectionId%253A6688%26DPS%3D0%26DPL%3D3

Florida-Based Property Insurers CEO Group
Editorial
October 12, 2011

Citizens Property Insurance Corporation’s new board held its first meeting today, with Chairman Carlos Lacasa establishing as a goal reducing Citizens’ size and fostering the growth of private insurers. “Citizens cannot continue to grow while private capital struggles to come into the private market,” said Lacasa, a former state House member from Miami.

Lacasa was designated chair by Chief Financial Officer Jeff Atwater. He succeeds Jim Malone of Sarasota, who was not re-appointed to the board. The board selects the vice chair. Acting on Lacasa’s recommendation, the board elected as vice chair another former House member, Rob Wallace, Tampa.

The new Citizens board includes three members from the old board, which faced expiration of terms this summer – Carlos Lacasa, Tom Lynch and Carol Everhart.

The new board “has the most promising mix of skill sets I have seen since 2006,” the chairman continued. “I am going to task this board to really really engage in the oversight of the company (Citizens) and make us a really big player.”

Belinda Miller, Office of Insurance Regulation general counsel and one of its key liaisons with Citizens, also said she sees a bright future for the new board. “The board now has enough experience in insurance..from a variety of perspectives. I think you have the potential to really be successful,” she said.

During his term as chair, Lasaca said, the board should:

* Strive to improve Citizens ability to underwrite new and existing business to eliminate fraud and inefficiency;

* Reduce claims to reduce losses;

* Help private insurers to participate more aggressively in the Florida market and reduce the size of Citizens;

* Explore cooperative arrangements with other states, using the expertise of board member John Wortman, Ponte Vedra, former director of citizens counterpart in the State of Louisiana; and

* Improve the board’s oversight of Citizens.

Here is the Citizens board:

Carlos Lacasa, chairman, a former state legislator who is vice president and general counsel of Managed Care of North America. Lacasa was re-appointed by House speaker Dean Cannon.

Rob Wallace, vice chair, a former state legislator from Tampa. Wallace is president of Environmental Engineering Consultants. He was appointed by Chief Financial Officer Jeff Atwater.

Nancy Baily, former president of Travelers of Florida and now director of a non-profit in Tampa that helps Lou Gehrig’s Disease patients. She is former chair of the Florida Insurance Council. She was appointed by CFO Atwater.

Chris Gardner, a shareholder with Kuykendall Gardner, an insurance broker and consultant in Winter Park. He was appointed by House Speaker Cannon.

Tom Lynch, president of Plastridge Insurance agency in Delray Beach. He was re-appointed by Senate President Mike Haridopolos.

Carol Everhart, vice president of insurance services at BB&T in Tampa. She was re-appointed by Haridopolos.

John Rollins, Rolins Analytics, High Springs. John is a former vice president of AIR Worldwide, a former actuary at Citizens Property and a former chief actuary and manager at FIC member Florida Farm Bureau Insurance. Appointed by Governor Scott.

John Wortman, Ponte Vedra, hief executive officer of Wortman Capital Associates. Previously, he served as chief executive officer of Louisiana Citizens Property Insurance Corporation from 2007 to 2010.

SunSentinel.com
By Julie Patel
October 12, 2011

Florida insurance industry representatives know state lawmakers may not end up spending as much time on insurance issues during the legislative session that starts in January as they have in years past.

But some have a wish-list of changes they said could improve the state’s insurance market. Don Brown, a consultant who is former state legislator and insurance agent, John Rollins, an insurance industry actuary and consultant and new member of Citizens Property Insurance’s board, and Lynne McChristian, a spokeswoman for the Insurance Information Institute, which represents insurers but does not lobby for laws, shared their ideas at a Sun Sentinel editorial board meeting Tuesday.

Fighting automobile insurance fraud

Problem: Automobile insurance rates are increasing, in part due to inflated and fraudulent personal injury protection insurance claims. State law requires drivers to have $10,000 in PIP coverage, which pays medical bills for policyholders injured in auto accidents regardless of who is at fault.

Insurance industry officials, state leaders and Gov. Rick Scott have all expressed interest recently in tackling the problem with legislation.

Proposals: Scott and Chief Financial Officer Jeff Atwater had planned to release legislative proposals last week and Robin Westcott, the state’s Insurance Consumer Advocate, plans to have a proposal out by the end of the month, McChristian said.

There are several bills filed already. SB 254 and HB 119 would, among other things, expand the reasons insurers can deny a claim and allow companies to give policyholders discounts for agreeing to use the insurer’s preferred doctors.

SB 286 would beef up penalties for someone who leaves an accident scene that involves a personal injury. The crime would be increased to a second-degree felony, instead of a third-degree felony.

Impact on consumers: Lowering costs for PIP claims could help lower premiums, especially if insurers are required to pass savings to consumers. Some proposals could make it harder for policyholders to get their claims paid.

Shrinking state insurance programs

Problem: Nearly all Floridians would have to pay fees on their auto and property insurance policies if a major hurricane or series of hurricanes wiped out the more than $12 billion in cash that two state insurance programs have.

The Florida Hurricane Catastrophe Fund, which sells cheap back up coverage to insurers so they can pass the savings to consumers, may not be able to pay all the claims it’s responsible for if there’s is a major hurricane. The Senate’s insurance committee has asked the fund’s manager to come up with a proposal to either raise more cash or shrink the fund. Such a proposal would expand a 2009 law to slowly shrink the fund by $12 billion and charge more for coverage.

Citizens has grown to over 1.4 million policies largely due to State Farm dropping policies and several insurers either folding or experiencing dropping policies after having financial problems, Rollins said. Data he complied from the Office of Insurance Regulation shows Florida-based companies and Citizens have filled the gap left by large national insurers that have been shedding policies since December 2005.

Brown said Citizens will continue to grow if its rates don’t increase faster: “Citizens continues to lag further and further behind [private insurers on the] rates they charge.”

(That’s true for most of the state, except Southeast Florida. State data analyzed by Rollins shows average premiums for Citizens policyholders are higher than those charged by private insurers while average insured values for Citizens’ policies are lower, but he said could be because Citizens’ policies probably have more windstorm risk.)

Proposals: One solution is to increase the 10 percent cap on annual increases for Citizens policyholders. Rep. Alan Hays, R-Umatilla, said recently he would sponsor a bill to do that if there is an appetite among other lawmakers and Gov.

HB 245 would allow surplus lines insurers, which aren’t fully regulated by the state, to take over Citizens Property Insurance policies in the same way regulated, private insurers can.

Impact on consumers: Lowering the risk of Citizens and the catastrophe fund would likely mean hundreds of dollars in savings for nearly all policyholders in Florida if a major hurricane wiped out the state insurance programs’ funds. But shrinking Citizens or the catastrophe fund, or raising their rates, would also result in insurance rate hikes for many South Floridians.

http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2011/10/insurers_legislative_wishlist_1.html

SunSentinel.com
By Antonio Fins
October 11, 2011

So, I was feeling pretty good about Florida – so far – escaping unscathed from a hurricane for the sixth straight season.

Then the insurance industry analysts showed up for an editorial board meeting at the Sun Sentinel. The gist of the hour and 45 minute discussion: Even with our good luck, we’re still out of luck on getting legislative reforms to straighten out the morass of a private insurance market left by Hurricanes Charley through Wilma in the middle of the last decade.

For example:

Citizens Property Insurance Corp. keeps growing because large firms – ahem, State Farm – keep dumping policies. And the start-up competitors, which we’ve hung our hats on as saviors, can do no more than simply soak up a fraction of the policies the not-so-Good Neighbor is unloading.

Oh, it gets worse. As Citizens grows, its exposure – and the exposure of all Florida policyholders – grows too. So, a storm season with, say, $20 billion in losses, would trigger more than $1 billion worth of extra assessments on Citizens’ customers.

Don’t laugh if you are not a Citizens customer. Persons insured by other companies can be socked with more than $5.5 billion in assessments.

Nice.

So, here’s an idea I floated some time ago – during the 2006 elections for Florida Chief Financial Officer, to be precise. Change Florida law so that the only requirement in hurricane coverage is for the structure of your home, not its contents. Contents would require a separate policy.

Do that and premiums would drop.

Now, the insurance people we met with today say that’s already getting into practice. Maybe so, but changing the law to force a separation would make this difference more prevalent.

And it would force Citizens – which isn’t separating coverages – to do so too.

Antonio Fins is the Sun Sentinel’s editorial page editor. He can be reached at either afins@sun-sentinel.com, (954) 356-4669 or you can follow him on Twitter @opinefins

http://weblogs.sun-sentinel.com/news/opinion/theslant/blog/2011/10/floridas_out_of_luck_and_money.html