Study could lead to insurance alternatives

Florida Keys News

Monday, October 29, 2012

Study could lead to insurance alternatives

FIRM tells Citizens that flooding, not wind, is the issue in the Keys

BY TIMOTHY O'HARA Citizen Staff
tohara@keysnews.com

The nonprofit group Fair Insurance Rates for Monroe (FIRM) and Monroe County leaders have embarked on in-depth analysis of homes and businesses in the county and want to conduct a full-blown study in an attempt to lower windstorm insurance rates or possibly encourage another insurance carrier to provide coverage in the Florida Keys.

Officials with FIRM hope the study will sh...

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If only Cruise Ships needed

Submitted on Tue, 10/30/2012 - 10:43pm by 666

If only Cruise Ships needed this insurance the 450k would be allocated by the city tomorrow. Get rid of one of the two assistant city managers and the parking Tzar (what does he actually do anyway?), and you will have the money in 2 years!

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To understand the insurance

Submitted on Mon, 10/29/2012 - 8:01pm by ezinthekeys

To understand the insurance rate problem you have to understand what brought it on. After hurricane Andrew hit in 1992 the Florida legislature allowed all insurance companies, All State, State Farm, Nationwide, etc. to separate themselves from their parent companies. This allowed them to "cook the books" so to speak and show huge losses for several years as they recovered from paying out on their claims. That was 20 years ago and those losses long ago have been overcome by nearly 2 decades of multi- billion dollar annual profits. Rather than spreading their losses/ gains across the country and over time, like they'd been doing for decades, this allowed them to "cry wolf" to the legislature and insurance commission and convince them into allowing these companies to raise rates by astronomical levels year after year after year to where we are now. Before there can be any true reform to our insurance rates the people of this state must force the Florida legislature and insurance commission to tell the insurance companies they can no longer be separate corporations in the state of Florida. The insurance companies used one hurricane twenty years ago to radically change the way they do business in Florida and the way they determine our rates... it has cost us dearly. Compared to how much damage hurricanes have caused to other states since then, Florida doesn't even come close in claims, yet we pay three to five times as much in insurance. Much can be said to our other types of insurance as well... auto healthcare, etc. Insurance is somewhat of a scam in that it is in no way a capitalistic business. It is the only industry in the United States that the government guarantees will make a profit. That, by definition, is by no means "Capitalism". It's a fraud we're to stupid enough not to reacognize.

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Makes no sense!

Submitted on Tue, 10/30/2012 - 1:41am by RSD

If insurance companies were making billions, as you claim, the last thing they would do is leave Florida's business on the table! I think they left the business for the same reason Citizen's wants to raise its rates. The risk of a major loss is significant. A commercial insurer is risking the company, and the financial well-being of all its customers, for what is to it a small profit. Citizen's needs to have large reserves, since it does not have a whole country over which it can spread the risk. A storm hitting Florida has a much larger impact on Citizen's than it would to a national insurer.

And low reserves can come back to bite you. If Citizen's runs out of money they can slap homeowners with an extra charge, up to 45% of your premium! Even renters are not safe. If the 45% assessment isn't enough, Citizen's can hit just about every insurance policy written in the state by any company (car, life, etc.) with up to a 30% surcharge!

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Actually it makes pefect

Submitted on Wed, 10/31/2012 - 7:47am by ezinthekeys

Actually it makes pefect sense and it's obvious you weren't in Florida when Andrew hit or several years after to remember what happened. Citizens was created by the State of Florida (not an insurance company like any of the others) because the insurance comapanies refused to write new policies, as they still do today in most areas of Florida. The state had no alternative or the housing industry would simply collapse. Furthermore, the state began to allow insurance companies to pick and choose who they would continue coverage for and who they would cancel forcing long- time policy holders into the Citizens insurance pool that had never made any hurricane claims. The companies cherry picked the low risk policies and cancelled the higher risk ones. It's exactly how insurance companies (and I'm excluding Citizens becasue they're not one) are showing multi- billion dollar profits year after year after year. This was all done after the state let the insurance comapnies separate from their parent companies into All State of Florida, State Farm of Florida, Nationwide of Florida, etc. By letting them do that the insurance companies were able to show huge losses on their books for a few years after Andrew hit in 1992 from paying out claims on the damage it caused. Those books look very different today and have for nearly 20 years. If they hadn't been allowed to separate from their parent companies they would have still shown huge profits, but isolating the Florida policies from the rest of the nation allowed them to show losses. Here we are a day after Hurricane Sandy hit the eastern seaboard and we all can see the damage it has caused, so you tell me why is it someone with a $250,000 house in New Jersey, New Orleans, Texas, or North Carolina pays a third in homeowner's insurance than someone would pay in Florida... those are all places that had devastating hurricanes with muti- billions in claims from their damage? It's because those states don't allow insurance companies to manipulate them like Florida does. Do yourself a favor and before you make comments like you did, get your history and facts straight...

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I was here.

Submitted on Thu, 11/01/2012 - 9:41am by RSD

I was here for Andrew, and Georges, Katrina, Wilma, and the rest. And I remember what happened. The key fact is the reason companies won't write insurance is the risk of a major loss is too high to justify the profit. There is science behind assigning a dollar value to the risk. It is that science that causes for-profit insurance companies to avoid the Keys. It is that science that Citizen's uses to set rates. It is that science that FIRM hopes to pay for a second opinion that will lower rates. When you say "Look what happened in New Jersey" you are not using that science. Sandy is a once in a lifetime storm for that area. I've had such flooding twice in the 25 years I've lived here. I'll have it again before I die, probably more than once. If we have a three-times higher premium it is because the models say we have three times the risk.

Also, New Jersey has a huge base of inland homes to spread the cost around. In South Florida, and especially the Keys, everyone is exposed to loss from storms. Imagine Andrew had tracked 60-70 miles further south. EVERY home in the Keys would be a claim, most a total loss. That possibility is what keeps private insurance away from the Keys and what keeps Citizen's rates high.

And as for insurance company manipulation, if they really had the ability to manipulate things in their favor they'd be writing policies. They'd be fighting over our business the way they fight over our car insurance business. They left the Keys and the state because there was simply not enough money to justify the risk.

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sad how some people have no

Submitted on Sun, 11/04/2012 - 12:26pm by ezinthekeys

sad how some people have no clue... here's a site for you to check out of the hurricanes that have hit new jersey... http://en.wikipedia.org/wiki/List_of_New_Jersey_hurricanes many of which happened in the past 100 years and were devastating, deadly, and expensive. as for the inland properties there... we have them here in florida too, maybe not in the keys, but there's the entire rest of the state, and their rates are just as high as in the keys... without any justification. and you still haven't figured it out... citizens is not an insurance company. it's also only in the state of florida and unable to spread risk across the nation. let's also not forget... no other state in the country has a state sponsored insurer because no other state has allowed insurance companies to do what they did here. that's why their rates are a fraction of ours. citizens is not the solution nor is creating another entity just to insure people in monroe county or anywhere else in the state. it would change nothing and perpetuate the problem we already have. guess ur just one of those people that will never see the light... no matter how much "science" is shoved in front of them. and to be honest with you... it's not "science "at all... it's statistices. that's math!

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Where do I pay?

Submitted on Mon, 10/29/2012 - 11:19am by RSD

Someone pays for a new study which shows my home is more likely to be damaged by floods and less by wind. My wind insurance goes down $1000. The NFIP hears about this new study and raises my flood insurance by $1500. Yes, this is a great idea, I'll fund the whole thing myself!

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Have the cities pay

Submitted on Mon, 10/29/2012 - 5:37am by none

What possible issue....could be more important to every one of us....than this rape and pillage by Citizens? Ask Key West, Marathon, Key Largo etc. to help fund the study. Citizen's is driving people out of here and is destroying real estate values. While your at it.....look into the Keys doing "self insurance". If you add it all up.....you may be surprised! We could probably make money and lower rates.

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Ever notice how insurance

Submitted on Tue, 10/30/2012 - 7:36pm by david2009

Ever notice how insurance companies own some the biggest buildings in our major cities?

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It's called "investing"

Submitted on Wed, 10/31/2012 - 7:51am by RSD

Insurance companies have a lot of cash to manage between getting a premium and paying a claim (especially for life insurance). Their investments make their premiums lower. Look at their bottom lines - they are generally profitable, but no more so than other large corporations.