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Florida: How safe is your home insurer in 2017?

EXCLUSIVE: How safe is your home insurer in 2017?

Satellite image of Hurricane Mathew off the coast of Palm Beach County on Oct. 6, 2016.

A potentially darker 2017 hurricane outlook hangs on a “knife’s edge” of pending weather factors, one forecaster says, but South Florida home owners are already doused with rising insurance rates and a wave of mergers and capital infusions to prop up insurers threatened with lower financial ratings.

One refuge: The updated and exclusive Palm Beach Post Property Insurance Guide, available today online with free access to subscribers. It lists multiple financial ratings for more than 100 companies, along with information about how to contact each company, its number of customers and complaint data obtained and analyzed by the Post.

As the 2017 hurricane season approaches June 1, premiums are rising 10 percent or more in some cases.

“When is enough enough?” said West Palm Beach homeowner Jim Finnegan, who gets windstorm coverage from state-run Citizens Property Insurance Corp.

In the state with the nation’s highest home insurance costs, it’s an especially good year to take matters into your own hands and find out what the options really are.

Sitting back and waiting for mailed offers may not help much at this point.

A year after Florida’s 11-year hurricane dodge ended, offers from private insurers to take Citizens customers are slowing to a trickle. After about 1 million customers left Citizens in recent years, just over 12,000 have departed so far in 2017.

Only one company, Weston Insurance Co., plans to make offers — up to 12,000 — in June and July.

Let’s face it: It’s no piece of cake to shop for home insurance in Florida. It’s not like booking a hotel room or airline ticket or even buying car insurance, where an array of online marketplaces make it easier for consumers to harness the power of price competition.

Most of the companies writing new business are small, homegrown players. Plenty of insurers are not writing new policies at all.

Yet a competitive market still exists in many if not all parts of South Florida if you are willing to dig, said Clint Strauch, president of Boca Raton-based Florida Peninsula Insurance Co. and sister firm Edison Insurance Co.

His companies are trying to make it simpler for consumers to do their own research and get a realistic price quote online.

“Our main goal was to create a convenient, fast and easy way for Florida consumers to shop and compare coverage,” Strauch said. People can certainly reach out to an agent if they have questions, he said.

Ratings firm Demotech Inc. threatened lower financial grades on several Florida insurers heading into storm season, prompting a flurry of mergers, changes in ownership and capital infusions.

Avatar Partners LP, the parent company of Tampa, Fla.-based Avatar Property & Casualty Insurance Co., announced in March it agreed to acquire Tallahassee, Fla.-based Elements Property Insurance Holdings LLC and subsidiaries including Elements Property Insurance Co. Also announcing new ownership was Tampa-based Prepared Insurance Co.

Insurers under pressure added about $200 million in loss reserves and $155 million in capital contributions, Demotech said. A host of companies retained A grades but Demotech warned it remains “likely that insurers may face downgrades in the future.”

Meanwhile, the return of hurricanes to Florida isn’t even the only reason insurers say they need to raise rates. There’s a lot of fuss about what state legislators didn’t do in a session that ended May 8.

Lawmakers could not reach agreement to pass new laws restricting costs in non-hurricane claims that insurers say are inflated by contractors and attorneys.

These costs are often associated with “assignment of benefits,” or AOB. That’s when a contractor offers to clean up water from a plumbing leak, for example, and handle the claim with the insurance company if the customer signs a form.

Attorneys and contractors pushed back, saying insurers can fix the problem by paying claims quickly or winning bogus cases in court.

Insurance executives have sometimes cast the problem a little differently when talking to stock analysts. Homeowners Choice Property & Casualty Insurance Co. CEO Paresh Patel said in February AOB trends have featured “extremely elevated” levels of costs but also that they have “steadied out.”

“It’s too early to tell yet, but the actions we have taken make us very optimistic that at a minimum, the AOB problem for us has stabilized and at a maximum, it may actually go into decline because of some of the underwriting actions that we have taken,” Patel said.

Citizens officials have defined the AOB problem zone as Miami-Dade, Broward and Palm Beach counties, though Patel limited it to Broward and Miami-Dade in his company’s experience.

In February, the Post reported the state’s largest insurer and the biggest in Palm Beach and Broward counties said its average cost for AOB claims has been falling for two years.

“We saw a little bit uptick in frequency, nothing major,” Universal Property & Casualty Insurance Co. CEO Sean Downes told analysts on a fourth-quarter earnings call. “But the severity is down.”

Universal tried to impose a blanket 8.1 percent rate increase for 2017 in Palm Beach, Broward and Miami-Dade counties but regulators questioned its vague justification and the company withdrew it. Universal had about 577,000 customers statewide at the start of the year, the most in Florida, state records show.

Citizens, the state’s second-largest insurer with about 450,000 customers, expects to add policies in 2017 even as it raises premiums near its state-imposed rate cap of 10 percent a year.

One of the state’s top six insurers, Heritage Property & Casualty Insurance Co., emphasized with analysts it has moved away from writing new business in the tri-county region including Palm Beach.

So for consumers, it’s no time to sit and watch the mailbox. Take control and check things out with resources including the Post guide.

Take charge

Floridians pay the nation’s highest home insurance costs, so it pays to be your own advocate. Check out multiple financial ratings and complaint information on more than 100 companies analyzed by the newspaper in The Palm Beach Post’s Property Insurance Guide:

Talk to agents. Go online. The state’s Office of Insurance Regulation offers basic information about price examples and availability by county:

Top insurers in Palm Beach County

Company/customers in county at start of 2017

1. Universal Property & Casualty Insurance Co. 71,777

2. Citizens Property Insurance Corp. 42,759

3. Federated National Insurance Co. 34,934

4. Homeowners Choice P&C Ins. Co. 20,642

5. Heritage P&C Insurance Co. 19,869

Source: Florida Office of Insurance Regulation


Michael Wagner

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Michael Wagner

Flood insurance reform modeled after Citizens takeout program

Michael Wagner

Executive | Chief Marketing Officer | Expert Brand Builder | Global Business Driver | 13,000 + Connections

By Ron HurtibiseContact ReporterSun Sentinel

The depopulation program that keeps state-run Citizens Property Insurance Corp. from growing too large should be a model for reforming flood insurance nationwide.

That’s the idea a Florida lawmaker is promoting as Congress faces a Sept. 30 deadline to reauthorize a National Flood Insurance Program burdened by $24.6 billion of debt and ever-rising premiums

State Sen. Jeff Brandes, R-St. Petersburg, is calling for reducing the size of the government-run insurance program by allowing private insurers to take over bundles of NFIP policies. The concept would be modeled after Florida’s depopulation program that reduced the size of state-run Citizens from about 1.5 million policies in 2012 to fewer than 500,000 today.

Under the so-called takeout program, private insurers obtain state approval to take batches of policies away from Citizens, then notify policyholders they’ve been transferred. Customers can opt-out if they choose, but only after receiving a takeout notice.

In an interview Friday, Brandes said a similar approach could be taken with the NFIP program. Private insurers would be encouraged to select bundles of NFIP policies within individual states, he said. Customers would benefit because private insurers could offer lower prices and more options compared to the NFIP’s one-size-fits-all approach that limits coverage to $250,000 for buildings and $100,000 for contents.

Government-run insurers, he said, “shouldn’t be in the market if the private market can get involved.”

Brandes said he has spoken with Florida congressional members about the idea, and plans to go to Washington later this summer as Congress debates NFIP reforms.

Brandes has led flood insurance reform efforts in Florida since his 2010 election. Last week, Gov. Rick Scott signed a bill co-sponsored by Brandes extending rate-setting flexibility and lifting some regulations for private flood insurers.

Brandes’ interest is driven largely by the Tampa Bay region’s vulnerability to catastrophic flooding.

Although all of low-lying Florida is at risk of flooding, the danger is most severe in the Tampa Bay region because of the continental shelf’s wide and shallow slope away from the coastline.

A 2015 study by Karen Clark & Co., a catastrophe modeling firm, concluded that Tampa, because of its shallow sea bed and numerous inlets, is the third-most vulnerable metro area in the nation to costly flooding from a once-a-century hurricane. Such a storm would cause up to $175 billion in losses, the study found.

The Miami area, including Fort Lauderdale and southern Broward County, was the nation’s fourth-most vulnerable, with $80 billion in potential flood damages.

Brandes said he has outlined his idea to members of Florida’s Congressional delegation, including Rep. Dennis Ross, R-Lakeland, as well as to Florida-based insurance executives.

Ross is co-sponsor of one of six flood insurance reform bills pending in the U.S. House. His bill would allow qualifying private flood policies to satisfy coverage requirements of homeowners with federally backed mortgages. Under current law, those borrowers must buy NFIP policies if they are in mandatory flood insurance zones.

The bill would also give states more flexibility to license and regulate private flood insurance.

In an email sent through a spokeswoman on Friday, Ross said he looked forward to talking further with Brandes about flood insurance reforms. He praised Brandes for his “leadership and ingenuity on this pivotal issue,” and added proposals like his “could help lead the way to a thriving private flood insurance marketplace with a limited federal footprint.”

Of the NFIP’s 5 million policies, 1.8 million are in Florida, including 708,000 in the tricounty region. The high concentration of flood policies has made Florida a test market for private flood insurance.

The state’s Office of Insurance Regulation lists 20 private companies selling primary flood insurance — meaning coverage replacing NFIP policies — as standalone products or as endorsements to existing property insurance.

The companies’ flood insurance offerings vary.

Tampa-based American Integrity Insurance Group on Monday announced a new primary flood product designed for non-coastal properties and available only as an endorsement to its existing property insurance customers.

However, TypTap, a spinoff company of Homeowners Choice Insurance, primarily sells standalone policies to customers in mandatory-coverage zones who aren’t already Homeowners Choice customers.

Since its introduction in March 2016 as Florida’s first regulated insurer licensed solely for flood insurance, the company has sold about 5,000 flood policies, said Paresh Patel, chairman and CEO of HCI Group Inc.

Like Brandes, Patel foresees private flood insurers gradually increasing market share while, like Citizens, the National Flood Insurance Program becomes “the insurer of last resort,” he said.

“Ten years from now, the private market and NFIP will co-exist in a competitive landscape,” he said.