Like a hurricane rolling in from the Atlantic, a panel on hurricane insurance claims, moderated by Rudy Valdez-Diaz, a past-president of the Latin American Association of Insurance Agents, went into high-gear during the opening general session of LAAIA’s 35th annual conference and exhibition in Hollywood, Fla.
LAAIA President Dulce M. Suarez-Resnick and Valdez-Diaz kicked off a general session about hurricane precautions during the first evening of the conference. Panelists included Susan Straker, Coral Insurance; Rick Mahler, Department of Financial Services chief of staff; Jeff Grady, Florida Association of Insurance Agents president and CEO; and Daniel Baptista, a member of the Citizens Property Insurance Corp. Task Force and winner of an LAIA award in 2004 as Man-of-the-Year.
According to Brady, wind damage requirements distort everything and there is little consensus. He said carriers prefer other perils, like dog bites or theft, but won’t touch construction policies.
Brady suggested the state should establish a wind pool.
“We are trapped by institutional thinking,” Brady said. “Four million property owners are paying for Citizens, there are lots of ways to reduce the assessment base.
“Carriers have the capability to write wind and can write and offset their risk by adding an assessment as the policyholder is located closer to the coast.”
Mahler suggested that the age and construction of damaged homes he saw while flying over coastal areas after Hurricane Charley made a big difference in losses. He saw three or four homes that were totaled, next to one that had little damage, all due to when the home was built and what construction codes it met.
He pointed out that parts of the Florida Pan-handle are exempt from building codes.
Baptista said that building homes in Florida with second-story frame construction does not make sense. He described a pilot program underway to provide loans to homeowners who retrofit their homes with roof straps and other measures to make them more hurricane resistant and bring them up to code.
Mahler pointed out wind is no longer the highest risk for claims. He said a large number of new policyholders are coming to Citizen’s for sinkhole coverage.
“I wouldn’t like the federal government to become involved, decide how to spread the risk and write the construction code,” Straker commented. “Coral writes in a narrow niche market and looks closely at every property before we write a policy.”
Straker suggested small voluntary companies like hers, that write only Florida policies, and have offices in the state provide the necessary coverage and will never become national companies.”
“I’d rather see a small company becoming bigger and better,” Brewer agreed. “Our system leaves a big chunk of the homeowners market open.”
Brewer predicted Citizens will perform better this year because it has taken recommendations from last year to heart. But he said that was not the best solution.
“I want to see more small companies like Coral that will stay and grow and not churn,” Brewer commented.
Baptista agreed, saying grassroots underwriting is the answer to a lot of Florida’s problems.
Suarez-Resnick commented: “You have to be in pursuit of something. Take time to work on your business instead of in it,” she said. “Have a backup plan, for instance, be able to read from the manual if the Internet goes out.
“Being a successful insurance agent isn’t just about selling product, you have to be able to sell solutions for your customer’s needs,” Suarez-Resnick advised. “As with all sales, the customer is buying a relationship with the agent.”
“Plan your work and work your plan,” she said. “Be proactive instead of reactive.”
“A small company has a different and better philosophy than the larger providers,” Baptista said. “Smaller companies offer a hands-on-relationship with their clients and underwriters, and provide their customers with the proper coverage.”
Baptista suggested the only way to solve problems is to be an integral part of the solution.
“Don’t just criticize, you need to be part of cohesive group and bring ideas to the table,” he said. “The key is being involved.”
A wide variety of topics were discussed in educational sessions that followed.
Keri Rayborn of Rayborn Consultants discussed major changes in Florida Statute 718 and how insurance agents should write condominium policies, based on what part of a condominium property should be covered by the condominium association.
She outlined what part of condominium damages must be covered by the condominium owner during a session on “Everything Condominium.”
Rayborn pointed out the Florida Legislature made major changes in Statute
718 after Jan. 1, 2004. She pointed out that condominium coverage is often confusing due to the fact policies have to be written for both the condominium association and the condominium owner.
Basically, she said, the condominium association’s policy covers all external grounds, the building and common areas; while the condominium owner’s policy covers everything else, the interior of the condominium and everything added by the owner.
“The legislation contains some tricky terms and there are four or five suits now in process in which what should be covered by which policy is in contention,” Rayborn said.
She advised that the best way to ascertain what is covered is by which policy requires you to examine the original plans to determine what part of a condominium development is a common area. Rayborn said that in some areas of North Florida where condominiums were damaged near the water, it is hard to determine if a balcony has blown off a condominium unit, the only way to determine who should pay for the damage depends on the original plans.
“You have to take a look at exclusions,” Rayborn explained. “Everything not written down on the list of exclusions would be the responsibility of the master association. However, if the owner changed anything or upgraded it from the original, then the owner would be responsible.”
In some situations, Rayborn illustrated, if the original fixtures or appliances in a condominium were valued at $5,000, and if they were upgraded to $10,000, then it would be a tricky situation, because the condominium association’s coverage would take care of the actual $5,000 value, but the condominium owner would have to have his own coverage to take care of the additional $5,000.
With property and casualty insurance, the key seemed to be public access. If an area was publicly accessible, then it would be covered by the condominium association’s policy; but if, for instance, a condominium owner had screened in a porch or in some way limits public access, then he would have to insure that area.
Rayborn also said that Florida Statute 718 makes it mandatory for condominium owners to maintain personal insurance on their
Everyone at the seminar, including Rayborn, agreed that very few owners realize this and many go without coverage.
LAAIA-members attending the session pointed out that it is often a problem trying to determine how much personal insurance their policyholders need on a condo-
Rayborn advised them to tell anyone who wants a policy to hire an appraiser to come in and determine the value of a property and its contents and then submit an itemized list to their agent. She said that having such a list enables the agent to more correctly estimate the value of the property. She advised agents that if a policyholder does not have a list of contents, that it is a good idea to write them a letter telling them they should obtain an appraisal.
The LAAIA conference moved into full-swing with two presentations on “How to Turn Your Technical Knowledge Into $$$,” and another on “Personal and Commercial Lines, Why Flood Insurance is Important to Both.”
A gala reception and installation gala ended the conference on a high note,
with presentations outlining LAAIA’s history and installation of the new president Enrique Ruiz.
Panelists, left to right: Susan Straker, Coral Insurance; Rick Mahler, Department of Financial Services chief of staff; Jeff Grady, Florida Association of Insurance Agents president and CEO; and Daniel Baptista, a member of the Citizens Property Insurance Corp. Task Force.
Rudy Valdez-Diaz, a past-president.
LAAIA President Dulce M. Suarez-Resnick
Enrique Ruiz, incoming LAAIA president