Florida insurance officials seek ways to Lessen the risk pos

 

Thursday, Mar 05,2009, 2:09:42 PM   Click:

Florida insurance officials to seek ways to mitigate the risks posed by citizens: Florida, the industry leaders try to reduce the insurance risk posed to the State Julie Patel Sun Sentinel of Fort Lauderdale , Fla. McClatchy-Tribune Regional News
January 4 - Over the past three hurricane seasons have come and gone without a major storm, many residents may need a reminder that the state of Florida is the largest insurer of property. And this means that virtually all Floridians would again be on the hook should future storm seasons is not so sweet.

A special team of insurance executives, government officials and business leaders have held several meetings last year to study ways to reduce Citizens Property Insurance Corp. and restore its original role as a home insurer last resort. The group will make recommendations to the state legislature later this month.

Questions persist about whether the State would be able to borrow enough money to pay claims if a major storm strikes.

A catastrophic hurricane "could bankrupt, really bankrupt, the state", which is already $ 2.3 billion in red, "said Chip Merlin, a lawyer appointed by the Gov. Charlie Crist.

Many members of the working group believes that the Heads of State and the citizens - more than 1 million owner policies - should increase its rate of at least 10 per cent per year to strengthen its reserves and to encourage insured to consider moving to a private insurer. An idea with less force in support of the citizens will certainly have a private insurer if they are offered a policy, even if the annual premium is much more money.

But it is certain policies of private insurers are willing to take people and efforts to make the state insurance small May increase, not reduce the risk of the insurer poses to the State residents. All Florida and automobile insurance policies to property may be required to pay fees to offset the deficits of citizens. Already homeownerswill continue to pay an annual fee of 1.4 percent of premiums until 2017for citizens deficits incurred in 2005.

The legislature has canceled the planned increase in the rate of 21 percent and 56 percent for citizens in 2007 to help homeowners whose insurers dropped or whose rates have doubled and even tripled in some cases, after 2004 and 2005 hurricanes. The legislature extended the rate freeze last year until the end of 2009.Citizens estimates, it would have to pay up to $ 23 billion in claims of a great storm, the kind that hits every 100 years. Citizens will be able to pay $ 17.5 billion by using its $ 3.4 billion in net assets as well as backup and coverage of loans, Citizens Chief Financial Officer Sharon Binnun said.

Some are torn state legislators to raise prices dramatically citizens, since many residents of Florida are faced seizures and loss of jobs. That is why the President of the Senate, Jeff Atwater said state insurance regulators supports the idea of increasing the rate of people over 5 per cent to 10 per cent annually. Atwater, R-North Palm Beach, said after the first year, all future increases could be reviewed each year to see if they are necessary to reflect the decreased risk of newly fortified houses against hurricanes.

The working group, created earlier this year by the state legislature, meets Tuesday to begin to make recommendations that are due to Crist, Atwater and House Speaker Ray Sansom by Jan 31.

Private insurers have taken more than 670,000 citizens of policies in recent years, in part because of incentive programs.

The problem is that they cherry picked the policies with the least risk of storm and left most people with the policies for senior citizens, coastal zones or mobile homes that do not correspond to an insurer's underwriting guidelines, "Deputy Insurance Commissioner Belinda Miller said.

The growth of the citizens of the probable maximum loss of a major storm over its policy of growth more than tripled since 2005. More and more residents of Florida have been pushed into the political property of the citizens such as State Farm, Allstate and other insurers have canceled policies. Age and the sustainability of households covered by the citizens are just some of the many factors that contribute to the projected losses.

If people really be the ultimate insurer returns its predecessor was created after Hurricane Andrew in 1992, it would be forbidden to practice an essential part of property insurance: to spread the risk, Jim Malone, chairman of the board of Administration stated citizens.

Senator Dan Gelber, D-Miami Beach, a leading Democrat of the Senate considers the issue of citizens to a goal of health insurance as weeds to the health of customers and is found only with patients cancer, lead to both risk and interest rate policy needed to provide sufficient flow coverage.Solutions so far by the working group to reduce the citizens of the risks include the possibility of eliminating the people who buy policies the insurer which only cover hurricanes. Many private insurers no longer offer wind coverage and is considered one of the riskiest and least profitable insurance peril. About 400,000 citizens policyholders with so-called "wind only" policies to buy cover fire, theft and other dangers of private insurers.

Atwater, who co-authored a sweeping property insurance law in 2008, said he supports requiring insurance coverage to provide the State, not only in the areas considered most profitable risks.

"If [the insurer] enjoys the opportunity to serve Florida, they should do in all areas," he said.

Julie Patel can be reached at 954-356-4667 and jpatel@sunsentinel.com.

Citizens Growth

Citizens Property Insurance Corp. policies in Florida

Policy Year

2003 820.276

2004 873.996

2005 810.017

2006 1.298.922 *

2007 1.304.949

2008 1.076.626 **

* The citizens requires more than 300,000 policies from the insolvency of Poe Financial Group in July 2006.

** With the 30 September.

Source: Citizens Property Insurance Corp.