Well, TREMBLOR, let ME correct a few of your misconceptions:
1. There are indeed financially sound private insurers writing homeowners in Florida, but they don’t write homes where no steps have been taken to strengthen them against hurricanes or homes on the coast. Insurance is not about writing guaranteed losses.
I never said that ALL take-out companies are not financially secure but many of the “new” one that are taking out policies are not and some of the other smaller ones have clauses such as if you home is over 20 years old they will not cover a fire caused by electrical, THAT is something that the average homeowner is not made aware of until it happens. No insurance is written and premiums are taken for years and years then they cancel you (non-renew) even though you have NEVER had a claim.
2. Citizen’s covers other perils than wind now, and sustains losses in those just as all other insurers do. Their rates are inadequate thanks to our politicians.
Citizens rates were frozen because #1 they were required at the time to be higher then the top selling companies in Florida and #2 People were seeing rate increases in the 300% to 500% when they were required to be the highest.
3. I do indeed own a house, in Ft. Lauderdale, 8 miles from the ocean. And I have done everything I can to strengthen it against hurricane damage. I am with a standard company and my rates have dropped 50% since ’06.
You are fortunate to have the money to strengthen your home, just putting storm windows in can cost around $10,000 and most cannot afford to do that in these older Florida homes. Especially the elderly on fixed incomes. I guess you being in the insurance industry has done well for you financially!
4. If Citizen’s is financially strong then why is every insurance policy in Florida still paying assessments – why doesn’t Citizen’s pay all the standard insurers back for wthe assessments they had to cough up (and then collect from their policyholders over 1 to 10 years, depending on the politicians whims?)
This is an old argument from you insurance people. Let me explain what you already know. Citizens was NEVER set up to hold the amount of policies it was DUMPED on by the private market in such a fast time and did not have the YEARS of built up premiums as did the private market when the storms of ’04 and ’05 occurred therefore, when those storms happened they were deficient in having enough money to pay out claims, not to mention POE ….which I am sure you as a homeowner in Florida are aware of.
Have you looked at Citizen’s financial statement lately? I think not.
Really, you think not? You don’t know who I am or where I work do you!
5. Citizens was so badly hammered in ’04 and ’05 (and other storms since) that it will take years for them to build adequate reserves negating the potential need for new assessments. They ended up ’05 with a substantial negative net worth. The assessments paid their losses but they still have a long, long way to go to build their reserves. We are still in the position where one strong storm or several ’04’s or ’05’s would put them right back in the hole, dead broke and depending on assessments from real insurance cos. to pay their claims.
Yes we still need more in reserves but since the “freak” storm season in ’04 and ’05 things have been relatively calm. And after all if you look at the last 100 years in Florida there have only been a handful of sever hurricanes in Florida…that’s a lot of years of premiums with little to no storm activity. Before Andrew in 1992 there was Elena in 1985 and prior to that it was 1960 Hurricane Donna, NOT every year like the insurance industry would like people to believe.
Indeed, in a different field, WC, the state has recently ordered numerous companies to return “excess profits” to their insureds.
Yea…we have really seen a return! HA!
9. Have you forgotten the storms that buzzed around last year? Some very powerful storms? Only the magic of vagaries in the steering wind currents prevented ’08 from being just like ’04 and ’05.
See #5 and stop the fear mongering!
10. Citizen’s coverage is not as good as either the private market cos. or the takeout cos. but their price is often less.
You are right about that it is not as good insurance but for many people it is the ONLY insurance thanks to being dropped by the company they paid for 20 or 30 years with no claims!
11. Finest of print for exclusions? Haven’t read your policy lately, have you? The minimum size type allowable is set by law, and it is not “fine” print.
I HAVE read my entire policy as many people do not, especially the elderly who count on their insurance agents who are being paid a commission to explain the “fine print” to them but do generally not do so.
12. Insurers made money in ’04 and ’05? yes, they actually did – that’s not a crime you know. But, it is not proof that rates are to high. You see, insurers purchase catastrophe reinsurance from reinsurance cos.
You are right it is not a crime to make a profit but it is a crime to make the excessive profits that the insurance industry is making. I firmly believe that if they do not want to take the risky homeowners policies that they should not be allowed to sell other lines of insurance in Florida. Insurance IS a risk-based business and if they don’t want to assume some risk then they should not be in the risk business!
Yes, property/casualty insurers did a little better than break even in those years (you can’t count profits from life and health insurers, as some misguided “consumer advocates” do to distort their arguments, but then you are comparing apples and oranges). The PROPERTY REINSURERS however, had loss ratios of 140 to 150% (65% to 70% is generally break even).
Why can’t I count all their lines of insurance, does Wal-Mart only do their profit margins on one item they sell?
See, you do have to include reinsurers if you want to try to make an argument about industry profits – but one well known “consumer advocate” cleverly leaves that part of the industry out. Why? If included, he would have no argument and would have to just sit quietly doing nothing.
Re-insurance is just another way that the insurance companies can insure record profits. There are many companies that actually buy their re-insurance from themselves, profit & more profit for them!
Reinsurers don’t have a catastrophe fund or assessments to back them up. They absorb their losses and raise their reinsurance rates for future policies to recoup their losses. They did so after ’05, but their rates have come down substantially since then, but not to pre-04 levels.
The Panel wants to start enforcing stricter laws, then limit or discontinue companies like State Farm who are using Citizens Insurance as their standard home-owners insurance vehicle. Citizens was supposed to be the insurance of last resort. However when companies like State Farm discontinue writing HO3 in the state, why are they using Citizens as a replacement?
State Farm agents aren’t allowed to be licensed with any other co., but they can steer customers to Citizen’s and then write their auto, umbrella, life, etc.
The real problem is Crist and friends have deliberately required Citizen’s rates to be lower than the real insurance co. rates. They are not actuarially sound (as was initially required) thus Citizen’s doesn’t do very well, can’t build reserves and thus, if Fl gets hit by one bad storm, or a series of storms as happened in ’04 and ’05, Crist is quite happy to have the deficit made up by assessments.
And assessments are apportioned among all the other insurers based on their pro rata share of the entire Fl. market. They have to cough up their assessments immediately (so citizen’s can pay their claims)then recover via surcharges over the next year, or even years if the assessments are large and the politicians don’t want to slam homeowners too hard.
Crist stated it was a risk worth taking (when he still thought he had a chance at VP and wanted to be popular with the voters so he could deliver Fl.s votes).
Many agents try to discourage their clients from using Citizen’s, many use it as their main market. Sometimes their prices are so much less it’s really hard to discourage clients who are cost concious first, worried about coverage next.
First of all most people are on Citizens Insurance because the “private” market no longer sells insurance. They (the private market insurance) has dropped hundreds of thousands of policies in the past several years making Citizens the #1 insurance company in Florida. The people of Florida are not happy about being covered by Citizens but that is what they are stuck with. Citizens IS getting reserves as we have NOT had any storms since ’04 and ’05 so they are getting stronger each year!
You obviously don’t live in Florida or pay Florida Insurance premiums, which are higher in some cases then, the persons mortgage payment…it is ridiculous! To say we are not paying “real” insurance rates is a joke! What we were paying for in the “private” market was to pad the multi-billion dollar profits that you all need to keep making! If you recall that even through all those storms AND Katrina the insurance industry STILL made R-E-C-O-R-D profits.
Yes, we are cost conscious because we don’t want to pay more for insurance then for our house….Insurance in Florida is a political racket and is a joke! RAPE would be a good word for it!
As for the article, to FORCE someone to a takeout company should be illegal, these takeout companies often are poor companies that have poor coverage and also offer a low price when you sign up then raise you rates the following year to a skyrocketing level. There are also exclusions that are only told in the finest of print so the unsuspecting buyer does not know until it is too late and the agents that write these policies do not make the customer aware either.
Well, Kathy, first of all let me correct a few of your misconceptions:
1. There are indeed financially sound private insurers writing homeowners in Florida, but they don’t write homes where no steps have been taken to strengthen them against hurricanes or homes on the coast. Insurance is not about writing guaranteed losses.
2. Citizen’s covers other perils than wind now, and sustains losses in those just as all other insurers do. Their rates are inadequate thanks to our politicians.
3. I do indeed own a house, in Ft. Lauderdale, 8 miles from the ocean. And I have done everything I can to strengthen it against hurricane damage. I am with a standard company and my rates have dropped 50% since ’06.
4. If Citizen’s is financially strong then why is every insurance policy in Florida still paying assessments – why doesn’t Citizen’s pay all the standard insurers back for wthe assessments they had to cough up (and then collect from their policyholders over 1 to 10 years, depending on the politicians whims?)
Have you looked at Citizen’s financial statement lately? I think not.
5. Citizens was so badly hammered in ’04 and ’05 (and other storms since) that it will take years for them to build adequate reserves negating the potential need for new assessments. They ended up ’05 with a substantial negative net worth. The assessments paid their losses but they still have a long, long way to go to build their reserves. We are still in the position where one strong storm or several ’04’s or ’05’s would put them right back in the hole, dead broke and depending on assessments from real insurance cos. to pay their claims.
6. The assessments are subsidies by all the citizens and businessess in Fl. to make up for inadequate rates.
7. Ask any actuary, Citizen’s rates are not actuarially sound. Even Charlie Crist admits they aren’t. You may think your rates are high, but they aren’t high enough.
8. Like any other private business, insurance companies have a right to earn profits. The various states watch them closely to make sure they don’t earn excessive profits. The rates are approved by the states. Only excess and surplus lines cos. can set their own rates.
Indeed, in a different field, WC, the state has recently ordered numerous companies to return “excess profits” to their insureds.
9. Have you forgotten the storms that buzzed around last year? Some very powerful storms? Only the magic of vagaries in the steering wind currents prevented ’08 from being just like ’04 and ’05.
10. Citizen’s coverage is not as good as either the private market cos. or the takeout cos. but their price is often less.
11. Finest of print for exclusions? Haven’t read your policy lately, have you? The minimum size type allowable is set by law, and it is not “fine” print.
12. Insurers made money in ’04 and ’05? yes, they actually did – that’s not a crime you know. But, it is not proof that rates are to high. You see, insurers purchase catastrophe reinsurance from reinsurance cos.
Yes, property/casualty insurers did a little better than break even in those years (you can’t count profits from life and health insurers, as some misguided “consumer advocates” do to distort their arguments, but then you are comparing apples and oranges). The PROPERTY REINSURERS however, had loss ratios of 140 to 150% (65% to 70% is generally break even).
See, you do have to include reinsurers if you want to try to make an argument about industry profits – but one well known “consumer advocate” cleverly leaves that part of the industry out. Why? If included, he would have no argument and would have to just sit quietly doing nothing.
Reinsurers don’t have a catastrophe fund or assessments to back them up. They absorb their losses and raise their reinsurance rates for future policies to recoup their losses. They did so after ’05, but their rates have come down substantially since then, but not to pre-04 levels.
One note, Hartford writes no new business for AARP members in Fl. Even if you are with them and move within or into the state the state they will not pick up the new place.
The excess profits claim comes from that moron “consumer advocate”, I can’t remember his name, who set up his own “consumer protection” foundation. He goes around testifying that even after ’04 and ’05 the property casualty cos. made a profit. Yes they did make a small profit nationwide, AFTER recovering their catastrophe reinsurance (except, I believe it was State Farm who had no cat re).
What he most conveniently leaves out is that the cat. reinsurers had combined ratios of 140% to 150% each year. Lump them in with the P&C industry (I wonder why he doesn’t)and the industry lost it’s shirts.
And it is sad about those who can’t afford mitigation on their homes, but, is that really an insurance company problem? Why doesn’t the state do more to help those people, such as extend the mitigation assistance program for those without the means? Notice that Crist doesn’t seem to care about any of this since he got passed over for VP?
In fact, it seems the only one worried about the problems now is Alex Sink, because she understands the ramifications of what has been done to date, and is scared to death of a bad season and what it will do to the state – whose finances aren’t in that great of shape anyway.
1. What Private Markets? Being in the business I can tell you that unless it’s brand new and masonry construction and has complete opening protection-Your luck at finding a company to write coastal is the same for me and the agent writing in South Florida. How do you think Citizens became so big?
2. Why are we letting Citizens depopulate to companies that have no financial strength?
3. Why is the state giving “bonuses” to these take out companies to depopulate? I have seen these take out companies take a policy for a year (or less) with no questions asked only to non renew them after an inspection and they just have to be rewritten back into Citizens? How does that make sense?
4. For a state that has had a proud conservative history-why are we so regulated? What happened to the free market speeches we keep hearing about? If anything our private markets have regulated themselves from writing any coverage in Florida?
5. If you are a consumer who has had to place coverage with Citizens and are now being assumed by a take out carrier-you should start thinking about self insuring now. Even the state website is apparently misinformed about what is available and what the rates look like. FMAP.org should be called FCRAP.
1. Citizen’s was initially intended to write coastal because the private market had withdrawn. It’s rates were specified by law to be actuarially sound, which of course, meant high, considering the age and construction of most existing coastal single family dwellings and complete lack of wind protection and inferior roofs on the existing condos. Inferior construction, lack of wind protection, coastal location = high rates.
The problem was exacerbated because before Andrew the Fl market was too competitive, with standard companies deliberately writing at a loss to maintain or gain market share. Consider the type losses you normally see under a homeowners policy – fire and theft probably contributing the bulk of the losses. If the companies are writing at a loss then it means they aren’t even loading for windstorm, because it had been so long since Fl had been hit.
Rates spiked after Andrew as companies adjusted, then sagged when there were no more storms.
Then ’04 and ’05 came. 7 or 8 companies went under, including Poe’s companies which were writing anything and everything, with no thought of underwriting, and who admitted they only had reinsurance for 50% of their windstorm peril. But they were cheaper than anyone else and most agents used them without ever explaining the situation to their insureds. And face it, most insureds would opt for the cheaper premium regardless.
So after ’04 and ’05 the standard and E & S markets saw their reinsurance costs go through the roof, which meant their rates had to go up but after almost $100,000,000,000 in losses (current dollars) from ’04 and ’05 alone they were still loath to write, fearing future years would be just as bad.
The state mandated they could only non-renew a small % of their policies each year to try to stabilize the market which meant they couldn’t even cull their books of their riskiest accounts.
And we should never forget (although many rabidly desire to do so) that each state’s total book of business is meant to be self supporting. In all 50 states the state laws do not allowusing good experience from another state to offset losses in Fl. Why? The regulators in the other states don’t want their own citizen’s having to pay higher premiums to support Fl.
So, by law, each state must stand on it’s own. It’s not a conspiracy by the insurance companies, it’s each state wanting to keep total control of what goes on in it’s borders. And it’s the local politicians in each state wanting a high profile issue they can use to make it look like they have their citizen’s best interests at heart.
Crist wanted to be VP so he manipulated the situation, decreeing that Citizen’s should be competitive with the open market (against specific enabling law which said Citizen’s rates were to be actuarily sound and higher than the general market average. then they expanded Citizen’s capability to full homeowners policies, not just wind, again at rates more competitive than the general market. Their policy forms are more restrictive, but few agents even know, much less tell their clients before they make their decision.
So Citizen’s got not only the coastal business, but a lot of the inland business as well. And they got the business from the insurers who failed after ’04 and ’05, and they got probably 90% of the Poe business as well.
That’s how Citizen’s got to be so big.
2. We’re letting Citizen’s depopulate to thinly capitalized companies because the politicians (Alex Sink, primarily) now understand that any serious storm or series of storms will quickly bankrupt Citizen’s (for the third time!) and the states weakened financial condition means it will not be able to sell up to $30 billion in bonds to fund the Cat Fund and the assessments from the standard companies to pay Citizen’s claims will be monstrous and will result in huge, absolutely huge surcharges on virtually all business written in the state for years.
In essence, the subsidization of Citizen’s by all the non-Citizen’s policy holders will drive their insurance costs through the roof.
Charlie Crist said it was a risk worth taking. But he still didn’t get the VP position so now he’s much less interested, but Alex Sink fully understands the situation.
The only solution? Depopulate Citizen’s as quickly as possible.
hence the recent committee report recommending higher rates. Citizen’s should NOT be competitive.
Policyholders who want to lower their rates should do whatever they can to make their homes more wind resistive. The next time a storm is pending, drive around and see how many homes (and high rise condos) STILL don’t have shutters.
True, hardening a dwelling cost money, but so does windstorm insurance for unprotected dwellings.
It is not the fault of the insurers that the cost of living in Fl. increased. Insurers are allowed by law to make a profit, indeed, there would be no insurance (other than Citizen’s) if they didn’t have some reasonable chance of making a profit.
3. Those “bonuses” are the principle source of their initial capitalization. At $100 bonus per policy, if they take out 100,000 policies, that’s $10,000,000!
If they spread those policies around the state, and buy some reinsurance, then hopefully they will survive long enough to build some strength. In the meantime, those policies won’t contribute to assessments for Citizen’s, although they may well require funds from the Cat Fund. it too is badly undercaptialized.
Crist, in his infinite wisdom, set up a bonding facility whereby the state could sell bonds to fund the Fund if necessary. But that was back before the recession. Now the state does not have the financial strength to secure the amount of money they were hoping, so the Cat Fund could well come up short! What ahppens if that happens? Lots of thinly capitalized insurers going under because they were depending on the Cat Fund for part or most of their reinsurance (as the Poe Cos. admitted they were doing).
In other words, Fl. is in a tough situation. The politicians, Crist in particular, have put us in a situation where and serious windstorm event(s) could cause complete chaos and devastation to the state and it’s economy. And there is no easy way out other than prayer.
4. One of the reasons we are so regulated is that politicians love to beat up on insurance companies, because the voting public loves to see insurance companies beat up on. It wins them votes to look like they are defending the people against those nasty insurers.
Yet come the losses, and they still expect the insurers to step up to the plate and pay.
And how many people do you know who have ripped off the insurers when they have a claim? First of all, that’s stealing, secondly it increases everyone’s rates. But does any honest citizen ever turn in someone who is stealing from the insurer? Not in my 40 years in the business have I ever seen it, even once.
A friend of mine told me about a neighbor after Wilma. He lost a few shingles. Fl. law says the entire roof must be replaced if it’s more than 25% damaged (what do you think that did to rates?).
This “neighbor” got up on the roof and tore off enough shingles to be over 25%, got a check for replacing the entire roof then put the missing shingles back. No one in the neighborhood reported this insurance fraud. Many thought the guy was smart. My friend wouldn’t tell me who it was. Your and my rates just went up a tad more.
5. Be cautious about “self insuring”. True self insurance does not mean just going without insurance (which your mortgagee wouldn’t allow anyway). It means funding for a possible total loss using something other than an insurance policy, i.e., you have enough liquid investments to cover the loss without your being financially impaired.
Just going bare and hoping isn’t self insurance.
6. One last point, anyone who thinks that the weather has settled down because we haven’t been seriously hit since ’05 is living in a phantasy world. In ’04 and ’05 the upper atmosphere wind currents steered hurricanes directly towad us.
In ’06 there were a whole string of hurricanes that came off the African coast, but a large high pressure system over Bermuda steered them all north in the N. Atlantic where they died a peaceful death.
In ’08 another high pressure system kept an incredible string of storms to the south of us.
The storms are still there, we’ve just been luck enough that they haven’t come our way. Our turn will come again.
The first line of defense is not insurance, that’s the last line, after all else fails. The first line is protecting your home. Everyone who doesn’t causes all our rates to go up.
It’s true there are people who can’t afford to do that. The state had a program where it paid, I believe 50% of the cost, for lower valued homes. The program was oversubscribed, but how many didn’t do anything? Unfortunately, it’s a fact of life, the cost of living in Fl. went up again.
All the screaming, railing and villifying of insurance companies won’t change that fact.
Well there are lots of comments here, some accurate and some just opinion with no basis.
State Farm agents are NOT allowed to sell insurance for any company other than State Farm. But for some reason they are allowed to continue to place all Floridians in danger of increased assessments everytime they place another customer in Citizens. I see NO valid reason that State Farm agents should be allowed to sell Citizens. The rules are very clear but allowed to be muddy. This is directly from the Citizens appointment agreement. To obtain a CITIZENS appointment to write any of the lines of CITIZENS Business, an
agent must: Have, at the time of CITIZENS appointment, an appointment with at least one insurer which is authorized to write and is actually writing new personal residential, commercial residential or commercial nonresidential property coverage within the state of Florida. So because State Farm is open in 3 zip codes in North Central Florida all 3000 agents can continue to write Citizens statewide?? If the company that you are EMPLOYED by does not have any desire to write homeowners business in Florida, I suggest you either have a serious talk with your EMPLOYER or find another company that does want to play ball in Florida.
#2 I do not believe any bonuses are being paid to take out companies any longer. When the massive influx of tiny carriers cropped up 2 years ago there was no need to continue the bonuses, there was now a desire to get these policies, by the new companies. and Citizens would have a hard time paying out bonuses and passing on assessments at the same time.
#3 Citizens rates are too low. period…
Yeah you may pay alot becasue of the particular county or zip code you are in. The simple answer is MOVE to a more affordable area or pay the darn bill.
#4 don’t give me the crap about there being NO admitted companies to write business. You simple have not shopped around. My agency has 21 (twenty-one) companies that are open for new business in COASTAL areas. This does not mean I can write on every island in the state with wind. But I have never seen so many companies looking to write new business. Sure some of them are take out companies, but they are admitted, protected by FIGA (citizens is not)and they have reinsurance (Citizens does not, well OK they have enough to pay for all the dog houses that blow down)
#5 We need a new Governor and insurance commissioner before things will change.
Crist does not get it and McCarty is his bed fellow and puppet. NO regulation will make things better. We are now faced with the problem of reduced coverages because they can not get rate increases approved. Citizens does not have a better policy it does has different exclusions. And don’t think for a minute that Citizens wil not start excluding pool cages as soon as the rate freeze is over.
#6 DO yourself a favor and get out of Citizens if you have your full home owners coverage there. You may have little or no option on the wind if you are in the wind pool area, but you have dozens of options for the rest of the coverage. This applies in most of the state including “South Florida, Palm Beach, Miami, Ft Lauderdale.
If you agent does not have options, keep looking. Call an independent agent not State Farm. They do not want to be here anyway.
Most of this thread reminds me of the politicians trying to fix the problem, they all know a little but no of them seem to listen to the people that do this for a living and can tell them the unintended consequences of their proposals, Like the new condo laws. Fripping idiots..
Thanks, Jack-great comment. Let me add that if you have any admitted and non admitted carriers that are writing and “still appointing agents” please contact FMAP or Dept of Insurance Regulation and tell them who they are (I am serious when I say that). The list for consumers on their shop & compare site still list rates from companies who have fled Florida or who are not writing in coastal counties. They have also listed each companies rates using a 1990 masonry construction home to provide rates. They do not say anything about who is writing the many non coastal “older” homes that are being dropped (even if they have updates). I do not see any insurance carriers taking advantage of writing the older homes because they do not want every consumer running to them for coverage (their afraid to compete).
Long time insurers that have cancelled policies have not looked at claims records or longetivity of these accounts they just dropped them because of to “cat exposure” or my favorite “no longer agent appointed” because of the ultimatum given by our state. We hear so much about Poe Allstate & State Farm-but what about Hartford, Travelers, Tower Hill etc….
It used to be when a company was dumping policies they would at least contract to sell that business to another carrier-even Poe rolled policies to Citizens but not Hartford or Travelers. These companies just dropped their policies without even a thank you for your many loyal years with no claims. How do they get away with still writing auto insurance in the state when Allstate can’t? If we had competing markets how come none of the market reps I spoke to was willing to work on a rollover?
Let’s talk about the wind mitigation forms and when they first came out how you had a lot of qualified inspectors refusing to sign these forms because they did not want to get caught up in the claims process leaving the insured between a rock and a hard place. Now we have the list of qualified inspectors and the grant program that no longer has money available. Even the ones who can afford opening protection complain about the price of having to install shutters. Can you imagine that 75 year old grandmother on a fixed income trying to even figure out what wind mitigation is and why this is a concern when she lives inland? It may be transparent to someone in the business but explain it to the regular consumer who doesn’t understand the changes. And how do you tell someone who has lived here all their lives to move?
Look at Louisiana trying to coax insurance companies to their state. What is Texas doing? Florida has got to foster and develop good communication with companies so that we can get some competition here. Maybe we need to hire Tim Tebow.
Trust me FMAP (which is Citizens) and OIR/DFS who what companies are open for new business. The Shop and compare rates website is a joke and does not have accurate rates posted. I do not suggest wasting your time with that site. Many of those carriers are NOT writing anyway.
Becasue fo the MANY factors involved with getting an accurate rate, I do not suggest looking to the internet for rates. Most consumers would not know a wind borne debris region from a gutter, or a mitigation from a trash can, hell half the agents I talk do not have a firm grasp of what a Hip roof is. MANY carriers are writing older homes as long as they meet certain criteria, they may require the home owner to get an inspection before writting the policy and it will vary by county as to who is writing
Long time insurers as you refer to them, have no reason to look at claims history, they have cancelled based on the states inability to logically approve rates.
The thing that consumers are saying is that insurance company are making excessive profits, how can they if they are non renewing the business and not accepting new business? If you are not selling you are not making ANY money. If they can not make a profit in Florida, they SHOULD NOT be here. That is good business practice. Do you want to be insured by a company that has struggled just to stay open? I don’t.
Poe is history (except they are actually still open as an agency marketing other companies products (go figure) Allstate has no desire to write homeowners in Florida and they continue to reduce the number of policies they have on the books by attrition. State Farm does not want to be here under the current climate but they have no way for an orderly withdraw. There is rumors that they are proposing to drop a ton of policies which will likely end up in Citizens if their agents have anything to do with it. Hartford has made decision to pull away from independent agents in Florida, yet still continues to do business with the political action group known as AARP, Travelers has not really done Homeowners in Florida since 1992 and I am not sure why you mentioned Tower Hill, They are still here and VERY active in writing new business thru out the state.
It is very rare for a company to sell its book of business to another company under current situations. Who wants to take it. (meaning the political climate)
Poe did not roll anything to Citizens, the state made a decision to make Citizens responsible for the exposure until the current policy expired, then it had to be rewritten. Many of those policies went to the admitted markets as they should have.
Trust me, get off the no Home, No auto bandwagon. If you want to see auto insurance rates double suggest that Progressive and Geico be required to write homeowners. They never have and do not want to. The auto market is very soft and rates are down. BECAUSE THERE IS SO MUCH COMPETETION AND NO HARSH REGULATION.
Companies are not looking to do rollover from Citizens unless they go thru the take out process, Why, because most of the Citizens book has been cherry picked by the 25 other companies that did do take outs. Don’t forget, in theory, there should be no good sought after busienss in Citizens. State Farm however throws a wrench into it since everything they write goes in to Citizens.
As far as the wind mitigation forms, they are a joke and the program is wrought with fraud. Hows that for simple and straight forward. I have seen numerous cases of bogus forms being submitted that have been altered or where never right in the first place. I have even seen 2 inspections on the same house be different in every category on the form. The best part is that both forms where done by the same exact inspector 5 month apart. And no additional mit factors where added, the 2nd inspection actually was the worst.
I never had a problem getting inspectors to sign the forms, in fact all of the contractors that are out of work are lining up to do them. The MSFH program is going away so no more needs to be said on that.
And yes I have many 75 y/o grandmothers that need shutters, the state offered a program and many took part in it and were eligible for $5,000 in matching funds.
Wind mitigation is the factors that pertain to a homes ability to resist wind damage. It does not matter if it is on the beach or downtown Orlando. In case you were not aware Orlando was hit by 3 hurricanes in 2004 and it is no where near the coast. Charley, Frances and Jeanne.
I have lived here all of my life (unlike the majority of the Florida population) and if I could no longer afford to live here it would be wise to move to somewhere with lower costs. Insurance is only a SMALL factor in the cost of living in Florida, but we are also one of a few states that do not have a state income tax. MANY residents have moved to Tennessee, North Carolina, Arizona, Oklahoma, etc to get away from the property taxes, insurance and general elevated costs of living in Florida.
Louisiana, Texas and Mississippi have all learned a lesson by watching how screwed up Florida became after hair pin reactions to the storms in 2004-2005. They are not shoving ridiculous regulation down the throats of its carriers because they see that they will just leave as our national carriers did. State Farm, Allstate, Nationwide, Auto Owners, Safeco, Hartford, the list goes on.
You said “Florida has got to foster and develop good communication with companies so that we can get some competition here. Maybe we need to hire Tim Tebow.”
Now your on the right thought process. But we have a Republican Governor that is not conservative in any way and acts like any Democrat I have ever seen. Get rid of him and things may have a chance.(assumming he takes Commissioner Mccarty with him)
Just don’t blame insurance companies for what is going on, they have tried to get things fixed but politics seems to get in the way. and if they are not writing how can they be making all the excess profits they are accused of.
We have only Florida regional carriers writing in Florida now, NO national carriers are left. The Florida domiciled carriers are now branching out into other states to help spread the risk and look a little more enticing to the reinsurance carriers. They are trying but do not look for many of them to consider writing auto insurance. Should we force Publix to sell gasoline so it is convienient for us. Should my barber be required to groom my dog? Why don’t we have hospice get into the funeral business so it is just one transaction from home care to the hole. When you add or force more regulation on companies you will get the opposite effect that you wanted. If legislation does not ease up the way companies do business they have no desire to be here, they can go to South Carolina and sell for half the price and make twice the profit.
Most decent long time top rank companies no longer write property in Florida. Why, because it doesn’t stand a chance of making a profit. People like Kathy don’t think insurance companies should make “excessive” meaning any, profits in the state so she can pay rates that don’t reflect the exposure. When the state stops playing political games with the property market a few companies may come back. For now, be satisfied with Citizens and a few underfunded state sponsored start up companies. Wait till the next big one and watch the financial house of cards fall down. People like Kathy simply have no knowledge of what kind of mess the government is setting up for them.
And Charlie Crist said possibly bankrupting the state in order for Citizen’s to offer competitive premiums was a risk worth taking. And now he’s missed being nominated as McCain’s VP, we haven’t heard from him since. What is he doing these days?
He was quite willing to beat up on those nasty old insurance companies and sell our future out just to be VP.
First, Nobody… I have lived in Florida my entire life and am 4th generation Floridian. I have NEVER had an insurance claim, not for Hurricane or anything for that matter. My great grandparents never had hurricane insurance claim, my grandparent, or my parents. The fear-mongering that the insurance companies do is disgusting and the fact that the black-box modeling is not accurate and does not work! You want to talk about a mess then raise the rates another 200% to 400% and there will be nobody left in Florida to insure! I DO agree that the state should stop playing political games and they should kick out all the insurance lobbyist out of Florida.
Yes I do believe in a company making a profit but the insurance industry makes GROSS profits and anytime someone does file a claim they fight it tooth and nail.
Now for Tremblor…
You are wrong about Citizens. The law was that Citizens had to be higher then the top 20 insurance companies in Florida…It had nothing to do with them being actuarially sound. Read the law!
You say…And we should never forget (although many rabidly desire to do so) that each state’s total book of business is meant to be self supporting. In all 50 states the state laws do not allowusing good experience from another state to offset losses in Fl. Why? The regulators in the other states don’t want their own citizen’s having to pay higher premiums to support Fl.
Here are some facts for you! Time Magazine reported: June 4th 2007…153 million people live within 50 miles of the coastline, this is more than “half” of the US population. Not to mention that some of the northern states have had a tremendous amount of hurricane related damage. My husbands family have had more hurricane damage in Pennsylvania then anyone we know in the state of Florida yet they still enjoy premiums of $350 a year for their homeowners insurance. Also it is a fact that insurance is suppose to be a pool of money collect not just for the gain of profit but for the loss people incur. It’s called spreading the risk…ever heard of it?
Actually Kathy, Insurance Companies are designed to make a profit. Pooling is certainly one of the basics of insurance, but if companies don’t make a profit they don’t stay in business. A degree in insurance and over 30 years in the business leave me some knowledge in the area. You simply refuse to look at the house of cards the politicians have set up to promote themselves. It’s a wonder of politics. You can’t see that because of your hate for us, but we can’t change that. All of us who represent decent and honest insurance companies can do is not write insurance in your state. It’s the only responsible thing to do. In the end you will have two disasters, the hurricane and the financial mess left when the house of cards your politicians put together collapse. It will happen. In the meantime you need some anger counseling with all of your swearing. Kind of childish. You can discuss things without the hate. It is supposed to be something of a professional site even if we have a lot of very odd people on it lately. I’m sorry you hate us Kathy, that’s your problem however, not ours.
Well, TREMBLOR, let ME correct a few of your misconceptions:
1. There are indeed financially sound private insurers writing homeowners in Florida, but they don’t write homes where no steps have been taken to strengthen them against hurricanes or homes on the coast. Insurance is not about writing guaranteed losses.
I never said that ALL take-out companies are not financially secure but many of the “new” one that are taking out policies are not and some of the other smaller ones have clauses such as if you home is over 20 years old they will not cover a fire caused by electrical, THAT is something that the average homeowner is not made aware of until it happens. No insurance is written and premiums are taken for years and years then they cancel you (non-renew) even though you have NEVER had a claim.
2. Citizen’s covers other perils than wind now, and sustains losses in those just as all other insurers do. Their rates are inadequate thanks to our politicians.
Citizens rates were frozen because #1 they were required at the time to be higher then the top selling companies in Florida and #2 People were seeing rate increases in the 300% to 500% when they were required to be the highest.
3. I do indeed own a house, in Ft. Lauderdale, 8 miles from the ocean. And I have done everything I can to strengthen it against hurricane damage. I am with a standard company and my rates have dropped 50% since ’06.
You are fortunate to have the money to strengthen your home, just putting storm windows in can cost around $10,000 and most cannot afford to do that in these older Florida homes. Especially the elderly on fixed incomes. I guess you being in the insurance industry has done well for you financially!
4. If Citizen’s is financially strong then why is every insurance policy in Florida still paying assessments – why doesn’t Citizen’s pay all the standard insurers back for wthe assessments they had to cough up (and then collect from their policyholders over 1 to 10 years, depending on the politicians whims?)
This is an old argument from you insurance people. Let me explain what you already know. Citizens was NEVER set up to hold the amount of policies it was DUMPED on by the private market in such a fast time and did not have the YEARS of built up premiums as did the private market when the storms of ’04 and ’05 occurred therefore, when those storms happened they were deficient in having enough money to pay out claims, not to mention POE ….which I am sure you as a homeowner in Florida are aware of.
Have you looked at Citizen’s financial statement lately? I think not.
Really, you think not? You don’t know who I am or where I work do you!
5. Citizens was so badly hammered in ’04 and ’05 (and other storms since) that it will take years for them to build adequate reserves negating the potential need for new assessments. They ended up ’05 with a substantial negative net worth. The assessments paid their losses but they still have a long, long way to go to build their reserves. We are still in the position where one strong storm or several ’04’s or ’05’s would put them right back in the hole, dead broke and depending on assessments from real insurance cos. to pay their claims.
Yes we still need more in reserves but since the “freak” storm season in ’04 and ’05 things have been relatively calm. And after all if you look at the last 100 years in Florida there have only been a handful of sever hurricanes in Florida…that’s a lot of years of premiums with little to no storm activity. Before Andrew in 1992 there was Elena in 1985 and prior to that it was 1960 Hurricane Donna, NOT every year like the insurance industry would like people to believe.
Indeed, in a different field, WC, the state has recently ordered numerous companies to return “excess profits” to their insureds.
Yea…we have really seen a return! HA!
9. Have you forgotten the storms that buzzed around last year? Some very powerful storms? Only the magic of vagaries in the steering wind currents prevented ’08 from being just like ’04 and ’05.
See #5 and stop the fear mongering!
10. Citizen’s coverage is not as good as either the private market cos. or the takeout cos. but their price is often less.
You are right about that it is not as good insurance but for many people it is the ONLY insurance thanks to being dropped by the company they paid for 20 or 30 years with no claims!
11. Finest of print for exclusions? Haven’t read your policy lately, have you? The minimum size type allowable is set by law, and it is not “fine” print.
I HAVE read my entire policy as many people do not, especially the elderly who count on their insurance agents who are being paid a commission to explain the “fine print” to them but do generally not do so.
12. Insurers made money in ’04 and ’05? yes, they actually did – that’s not a crime you know. But, it is not proof that rates are to high. You see, insurers purchase catastrophe reinsurance from reinsurance cos.
You are right it is not a crime to make a profit but it is a crime to make the excessive profits that the insurance industry is making. I firmly believe that if they do not want to take the risky homeowners policies that they should not be allowed to sell other lines of insurance in Florida. Insurance IS a risk-based business and if they don’t want to assume some risk then they should not be in the risk business!
Yes, property/casualty insurers did a little better than break even in those years (you can’t count profits from life and health insurers, as some misguided “consumer advocates” do to distort their arguments, but then you are comparing apples and oranges). The PROPERTY REINSURERS however, had loss ratios of 140 to 150% (65% to 70% is generally break even).
Why can’t I count all their lines of insurance, does Wal-Mart only do their profit margins on one item they sell?
See, you do have to include reinsurers if you want to try to make an argument about industry profits – but one well known “consumer advocate” cleverly leaves that part of the industry out. Why? If included, he would have no argument and would have to just sit quietly doing nothing.
Re-insurance is just another way that the insurance companies can insure record profits. There are many companies that actually buy their re-insurance from themselves, profit & more profit for them!
Reinsurers don’t have a catastrophe fund or assessments to back them up. They absorb their losses and raise their reinsurance rates for future policies to recoup their losses. They did so after ’05, but their rates have come down substantially since then, but not to pre-04 levels.
Again…see above!
It seems the Insurance Companies are winning again
Let’s face it if we have a hurricane greater than a category 3 in Miami or South Florida all of these take-out will be out of business
I don’t understand why they want to depopulate CITIZENS and put the people with some crappy insurance company
CITIZENS should required take-out companies to be rated A+ VII or better by AM BEST
Some Umbrella companies have this requirement
What is this Demotech S***
The Panel wants to start enforcing stricter laws, then limit or discontinue companies like State Farm who are using Citizens Insurance as their standard home-owners insurance vehicle. Citizens was supposed to be the insurance of last resort. However when companies like State Farm discontinue writing HO3 in the state, why are they using Citizens as a replacement?
State Farm agents aren’t allowed to be licensed with any other co., but they can steer customers to Citizen’s and then write their auto, umbrella, life, etc.
The real problem is Crist and friends have deliberately required Citizen’s rates to be lower than the real insurance co. rates. They are not actuarially sound (as was initially required) thus Citizen’s doesn’t do very well, can’t build reserves and thus, if Fl gets hit by one bad storm, or a series of storms as happened in ’04 and ’05, Crist is quite happy to have the deficit made up by assessments.
And assessments are apportioned among all the other insurers based on their pro rata share of the entire Fl. market. They have to cough up their assessments immediately (so citizen’s can pay their claims)then recover via surcharges over the next year, or even years if the assessments are large and the politicians don’t want to slam homeowners too hard.
Crist stated it was a risk worth taking (when he still thought he had a chance at VP and wanted to be popular with the voters so he could deliver Fl.s votes).
Many agents try to discourage their clients from using Citizen’s, many use it as their main market. Sometimes their prices are so much less it’s really hard to discourage clients who are cost concious first, worried about coverage next.
First of all most people are on Citizens Insurance because the “private” market no longer sells insurance. They (the private market insurance) has dropped hundreds of thousands of policies in the past several years making Citizens the #1 insurance company in Florida. The people of Florida are not happy about being covered by Citizens but that is what they are stuck with. Citizens IS getting reserves as we have NOT had any storms since ’04 and ’05 so they are getting stronger each year!
You obviously don’t live in Florida or pay Florida Insurance premiums, which are higher in some cases then, the persons mortgage payment…it is ridiculous! To say we are not paying “real” insurance rates is a joke! What we were paying for in the “private” market was to pad the multi-billion dollar profits that you all need to keep making! If you recall that even through all those storms AND Katrina the insurance industry STILL made R-E-C-O-R-D profits.
Yes, we are cost conscious because we don’t want to pay more for insurance then for our house….Insurance in Florida is a political racket and is a joke! RAPE would be a good word for it!
As for the article, to FORCE someone to a takeout company should be illegal, these takeout companies often are poor companies that have poor coverage and also offer a low price when you sign up then raise you rates the following year to a skyrocketing level. There are also exclusions that are only told in the finest of print so the unsuspecting buyer does not know until it is too late and the agents that write these policies do not make the customer aware either.
Well, Kathy, first of all let me correct a few of your misconceptions:
1. There are indeed financially sound private insurers writing homeowners in Florida, but they don’t write homes where no steps have been taken to strengthen them against hurricanes or homes on the coast. Insurance is not about writing guaranteed losses.
2. Citizen’s covers other perils than wind now, and sustains losses in those just as all other insurers do. Their rates are inadequate thanks to our politicians.
3. I do indeed own a house, in Ft. Lauderdale, 8 miles from the ocean. And I have done everything I can to strengthen it against hurricane damage. I am with a standard company and my rates have dropped 50% since ’06.
4. If Citizen’s is financially strong then why is every insurance policy in Florida still paying assessments – why doesn’t Citizen’s pay all the standard insurers back for wthe assessments they had to cough up (and then collect from their policyholders over 1 to 10 years, depending on the politicians whims?)
Have you looked at Citizen’s financial statement lately? I think not.
5. Citizens was so badly hammered in ’04 and ’05 (and other storms since) that it will take years for them to build adequate reserves negating the potential need for new assessments. They ended up ’05 with a substantial negative net worth. The assessments paid their losses but they still have a long, long way to go to build their reserves. We are still in the position where one strong storm or several ’04’s or ’05’s would put them right back in the hole, dead broke and depending on assessments from real insurance cos. to pay their claims.
6. The assessments are subsidies by all the citizens and businessess in Fl. to make up for inadequate rates.
7. Ask any actuary, Citizen’s rates are not actuarially sound. Even Charlie Crist admits they aren’t. You may think your rates are high, but they aren’t high enough.
8. Like any other private business, insurance companies have a right to earn profits. The various states watch them closely to make sure they don’t earn excessive profits. The rates are approved by the states. Only excess and surplus lines cos. can set their own rates.
Indeed, in a different field, WC, the state has recently ordered numerous companies to return “excess profits” to their insureds.
9. Have you forgotten the storms that buzzed around last year? Some very powerful storms? Only the magic of vagaries in the steering wind currents prevented ’08 from being just like ’04 and ’05.
10. Citizen’s coverage is not as good as either the private market cos. or the takeout cos. but their price is often less.
11. Finest of print for exclusions? Haven’t read your policy lately, have you? The minimum size type allowable is set by law, and it is not “fine” print.
12. Insurers made money in ’04 and ’05? yes, they actually did – that’s not a crime you know. But, it is not proof that rates are to high. You see, insurers purchase catastrophe reinsurance from reinsurance cos.
Yes, property/casualty insurers did a little better than break even in those years (you can’t count profits from life and health insurers, as some misguided “consumer advocates” do to distort their arguments, but then you are comparing apples and oranges). The PROPERTY REINSURERS however, had loss ratios of 140 to 150% (65% to 70% is generally break even).
See, you do have to include reinsurers if you want to try to make an argument about industry profits – but one well known “consumer advocate” cleverly leaves that part of the industry out. Why? If included, he would have no argument and would have to just sit quietly doing nothing.
Reinsurers don’t have a catastrophe fund or assessments to back them up. They absorb their losses and raise their reinsurance rates for future policies to recoup their losses. They did so after ’05, but their rates have come down substantially since then, but not to pre-04 levels.
Again, well said.
One note, Hartford writes no new business for AARP members in Fl. Even if you are with them and move within or into the state the state they will not pick up the new place.
The excess profits claim comes from that moron “consumer advocate”, I can’t remember his name, who set up his own “consumer protection” foundation. He goes around testifying that even after ’04 and ’05 the property casualty cos. made a profit. Yes they did make a small profit nationwide, AFTER recovering their catastrophe reinsurance (except, I believe it was State Farm who had no cat re).
What he most conveniently leaves out is that the cat. reinsurers had combined ratios of 140% to 150% each year. Lump them in with the P&C industry (I wonder why he doesn’t)and the industry lost it’s shirts.
And it is sad about those who can’t afford mitigation on their homes, but, is that really an insurance company problem? Why doesn’t the state do more to help those people, such as extend the mitigation assistance program for those without the means? Notice that Crist doesn’t seem to care about any of this since he got passed over for VP?
In fact, it seems the only one worried about the problems now is Alex Sink, because she understands the ramifications of what has been done to date, and is scared to death of a bad season and what it will do to the state – whose finances aren’t in that great of shape anyway.
I have some questions about this:
1. What Private Markets? Being in the business I can tell you that unless it’s brand new and masonry construction and has complete opening protection-Your luck at finding a company to write coastal is the same for me and the agent writing in South Florida. How do you think Citizens became so big?
2. Why are we letting Citizens depopulate to companies that have no financial strength?
3. Why is the state giving “bonuses” to these take out companies to depopulate? I have seen these take out companies take a policy for a year (or less) with no questions asked only to non renew them after an inspection and they just have to be rewritten back into Citizens? How does that make sense?
4. For a state that has had a proud conservative history-why are we so regulated? What happened to the free market speeches we keep hearing about? If anything our private markets have regulated themselves from writing any coverage in Florida?
5. If you are a consumer who has had to place coverage with Citizens and are now being assumed by a take out carrier-you should start thinking about self insuring now. Even the state website is apparently misinformed about what is available and what the rates look like. FMAP.org should be called FCRAP.
Ah! Intelligent questions and comments!
1. Citizen’s was initially intended to write coastal because the private market had withdrawn. It’s rates were specified by law to be actuarially sound, which of course, meant high, considering the age and construction of most existing coastal single family dwellings and complete lack of wind protection and inferior roofs on the existing condos. Inferior construction, lack of wind protection, coastal location = high rates.
The problem was exacerbated because before Andrew the Fl market was too competitive, with standard companies deliberately writing at a loss to maintain or gain market share. Consider the type losses you normally see under a homeowners policy – fire and theft probably contributing the bulk of the losses. If the companies are writing at a loss then it means they aren’t even loading for windstorm, because it had been so long since Fl had been hit.
Rates spiked after Andrew as companies adjusted, then sagged when there were no more storms.
Then ’04 and ’05 came. 7 or 8 companies went under, including Poe’s companies which were writing anything and everything, with no thought of underwriting, and who admitted they only had reinsurance for 50% of their windstorm peril. But they were cheaper than anyone else and most agents used them without ever explaining the situation to their insureds. And face it, most insureds would opt for the cheaper premium regardless.
So after ’04 and ’05 the standard and E & S markets saw their reinsurance costs go through the roof, which meant their rates had to go up but after almost $100,000,000,000 in losses (current dollars) from ’04 and ’05 alone they were still loath to write, fearing future years would be just as bad.
The state mandated they could only non-renew a small % of their policies each year to try to stabilize the market which meant they couldn’t even cull their books of their riskiest accounts.
And we should never forget (although many rabidly desire to do so) that each state’s total book of business is meant to be self supporting. In all 50 states the state laws do not allowusing good experience from another state to offset losses in Fl. Why? The regulators in the other states don’t want their own citizen’s having to pay higher premiums to support Fl.
So, by law, each state must stand on it’s own. It’s not a conspiracy by the insurance companies, it’s each state wanting to keep total control of what goes on in it’s borders. And it’s the local politicians in each state wanting a high profile issue they can use to make it look like they have their citizen’s best interests at heart.
Crist wanted to be VP so he manipulated the situation, decreeing that Citizen’s should be competitive with the open market (against specific enabling law which said Citizen’s rates were to be actuarily sound and higher than the general market average. then they expanded Citizen’s capability to full homeowners policies, not just wind, again at rates more competitive than the general market. Their policy forms are more restrictive, but few agents even know, much less tell their clients before they make their decision.
So Citizen’s got not only the coastal business, but a lot of the inland business as well. And they got the business from the insurers who failed after ’04 and ’05, and they got probably 90% of the Poe business as well.
That’s how Citizen’s got to be so big.
2. We’re letting Citizen’s depopulate to thinly capitalized companies because the politicians (Alex Sink, primarily) now understand that any serious storm or series of storms will quickly bankrupt Citizen’s (for the third time!) and the states weakened financial condition means it will not be able to sell up to $30 billion in bonds to fund the Cat Fund and the assessments from the standard companies to pay Citizen’s claims will be monstrous and will result in huge, absolutely huge surcharges on virtually all business written in the state for years.
In essence, the subsidization of Citizen’s by all the non-Citizen’s policy holders will drive their insurance costs through the roof.
Charlie Crist said it was a risk worth taking. But he still didn’t get the VP position so now he’s much less interested, but Alex Sink fully understands the situation.
The only solution? Depopulate Citizen’s as quickly as possible.
hence the recent committee report recommending higher rates. Citizen’s should NOT be competitive.
Policyholders who want to lower their rates should do whatever they can to make their homes more wind resistive. The next time a storm is pending, drive around and see how many homes (and high rise condos) STILL don’t have shutters.
True, hardening a dwelling cost money, but so does windstorm insurance for unprotected dwellings.
It is not the fault of the insurers that the cost of living in Fl. increased. Insurers are allowed by law to make a profit, indeed, there would be no insurance (other than Citizen’s) if they didn’t have some reasonable chance of making a profit.
3. Those “bonuses” are the principle source of their initial capitalization. At $100 bonus per policy, if they take out 100,000 policies, that’s $10,000,000!
If they spread those policies around the state, and buy some reinsurance, then hopefully they will survive long enough to build some strength. In the meantime, those policies won’t contribute to assessments for Citizen’s, although they may well require funds from the Cat Fund. it too is badly undercaptialized.
Crist, in his infinite wisdom, set up a bonding facility whereby the state could sell bonds to fund the Fund if necessary. But that was back before the recession. Now the state does not have the financial strength to secure the amount of money they were hoping, so the Cat Fund could well come up short! What ahppens if that happens? Lots of thinly capitalized insurers going under because they were depending on the Cat Fund for part or most of their reinsurance (as the Poe Cos. admitted they were doing).
In other words, Fl. is in a tough situation. The politicians, Crist in particular, have put us in a situation where and serious windstorm event(s) could cause complete chaos and devastation to the state and it’s economy. And there is no easy way out other than prayer.
4. One of the reasons we are so regulated is that politicians love to beat up on insurance companies, because the voting public loves to see insurance companies beat up on. It wins them votes to look like they are defending the people against those nasty insurers.
Yet come the losses, and they still expect the insurers to step up to the plate and pay.
And how many people do you know who have ripped off the insurers when they have a claim? First of all, that’s stealing, secondly it increases everyone’s rates. But does any honest citizen ever turn in someone who is stealing from the insurer? Not in my 40 years in the business have I ever seen it, even once.
A friend of mine told me about a neighbor after Wilma. He lost a few shingles. Fl. law says the entire roof must be replaced if it’s more than 25% damaged (what do you think that did to rates?).
This “neighbor” got up on the roof and tore off enough shingles to be over 25%, got a check for replacing the entire roof then put the missing shingles back. No one in the neighborhood reported this insurance fraud. Many thought the guy was smart. My friend wouldn’t tell me who it was. Your and my rates just went up a tad more.
5. Be cautious about “self insuring”. True self insurance does not mean just going without insurance (which your mortgagee wouldn’t allow anyway). It means funding for a possible total loss using something other than an insurance policy, i.e., you have enough liquid investments to cover the loss without your being financially impaired.
Just going bare and hoping isn’t self insurance.
6. One last point, anyone who thinks that the weather has settled down because we haven’t been seriously hit since ’05 is living in a phantasy world. In ’04 and ’05 the upper atmosphere wind currents steered hurricanes directly towad us.
In ’06 there were a whole string of hurricanes that came off the African coast, but a large high pressure system over Bermuda steered them all north in the N. Atlantic where they died a peaceful death.
In ’08 another high pressure system kept an incredible string of storms to the south of us.
The storms are still there, we’ve just been luck enough that they haven’t come our way. Our turn will come again.
The first line of defense is not insurance, that’s the last line, after all else fails. The first line is protecting your home. Everyone who doesn’t causes all our rates to go up.
It’s true there are people who can’t afford to do that. The state had a program where it paid, I believe 50% of the cost, for lower valued homes. The program was oversubscribed, but how many didn’t do anything? Unfortunately, it’s a fact of life, the cost of living in Fl. went up again.
All the screaming, railing and villifying of insurance companies won’t change that fact.
Well there are lots of comments here, some accurate and some just opinion with no basis.
State Farm agents are NOT allowed to sell insurance for any company other than State Farm. But for some reason they are allowed to continue to place all Floridians in danger of increased assessments everytime they place another customer in Citizens. I see NO valid reason that State Farm agents should be allowed to sell Citizens. The rules are very clear but allowed to be muddy. This is directly from the Citizens appointment agreement. To obtain a CITIZENS appointment to write any of the lines of CITIZENS Business, an
agent must: Have, at the time of CITIZENS appointment, an appointment with at least one insurer which is authorized to write and is actually writing new personal residential, commercial residential or commercial nonresidential property coverage within the state of Florida. So because State Farm is open in 3 zip codes in North Central Florida all 3000 agents can continue to write Citizens statewide?? If the company that you are EMPLOYED by does not have any desire to write homeowners business in Florida, I suggest you either have a serious talk with your EMPLOYER or find another company that does want to play ball in Florida.
#2 I do not believe any bonuses are being paid to take out companies any longer. When the massive influx of tiny carriers cropped up 2 years ago there was no need to continue the bonuses, there was now a desire to get these policies, by the new companies. and Citizens would have a hard time paying out bonuses and passing on assessments at the same time.
#3 Citizens rates are too low. period…
Yeah you may pay alot becasue of the particular county or zip code you are in. The simple answer is MOVE to a more affordable area or pay the darn bill.
#4 don’t give me the crap about there being NO admitted companies to write business. You simple have not shopped around. My agency has 21 (twenty-one) companies that are open for new business in COASTAL areas. This does not mean I can write on every island in the state with wind. But I have never seen so many companies looking to write new business. Sure some of them are take out companies, but they are admitted, protected by FIGA (citizens is not)and they have reinsurance (Citizens does not, well OK they have enough to pay for all the dog houses that blow down)
#5 We need a new Governor and insurance commissioner before things will change.
Crist does not get it and McCarty is his bed fellow and puppet. NO regulation will make things better. We are now faced with the problem of reduced coverages because they can not get rate increases approved. Citizens does not have a better policy it does has different exclusions. And don’t think for a minute that Citizens wil not start excluding pool cages as soon as the rate freeze is over.
#6 DO yourself a favor and get out of Citizens if you have your full home owners coverage there. You may have little or no option on the wind if you are in the wind pool area, but you have dozens of options for the rest of the coverage. This applies in most of the state including “South Florida, Palm Beach, Miami, Ft Lauderdale.
If you agent does not have options, keep looking. Call an independent agent not State Farm. They do not want to be here anyway.
Most of this thread reminds me of the politicians trying to fix the problem, they all know a little but no of them seem to listen to the people that do this for a living and can tell them the unintended consequences of their proposals, Like the new condo laws. Fripping idiots..
I couldn’t have said it better myself.
Thanks, Jack-great comment. Let me add that if you have any admitted and non admitted carriers that are writing and “still appointing agents” please contact FMAP or Dept of Insurance Regulation and tell them who they are (I am serious when I say that). The list for consumers on their shop & compare site still list rates from companies who have fled Florida or who are not writing in coastal counties. They have also listed each companies rates using a 1990 masonry construction home to provide rates. They do not say anything about who is writing the many non coastal “older” homes that are being dropped (even if they have updates). I do not see any insurance carriers taking advantage of writing the older homes because they do not want every consumer running to them for coverage (their afraid to compete).
Long time insurers that have cancelled policies have not looked at claims records or longetivity of these accounts they just dropped them because of to “cat exposure” or my favorite “no longer agent appointed” because of the ultimatum given by our state. We hear so much about Poe Allstate & State Farm-but what about Hartford, Travelers, Tower Hill etc….
It used to be when a company was dumping policies they would at least contract to sell that business to another carrier-even Poe rolled policies to Citizens but not Hartford or Travelers. These companies just dropped their policies without even a thank you for your many loyal years with no claims. How do they get away with still writing auto insurance in the state when Allstate can’t? If we had competing markets how come none of the market reps I spoke to was willing to work on a rollover?
Let’s talk about the wind mitigation forms and when they first came out how you had a lot of qualified inspectors refusing to sign these forms because they did not want to get caught up in the claims process leaving the insured between a rock and a hard place. Now we have the list of qualified inspectors and the grant program that no longer has money available. Even the ones who can afford opening protection complain about the price of having to install shutters. Can you imagine that 75 year old grandmother on a fixed income trying to even figure out what wind mitigation is and why this is a concern when she lives inland? It may be transparent to someone in the business but explain it to the regular consumer who doesn’t understand the changes. And how do you tell someone who has lived here all their lives to move?
Look at Louisiana trying to coax insurance companies to their state. What is Texas doing? Florida has got to foster and develop good communication with companies so that we can get some competition here. Maybe we need to hire Tim Tebow.
Trust me FMAP (which is Citizens) and OIR/DFS who what companies are open for new business. The Shop and compare rates website is a joke and does not have accurate rates posted. I do not suggest wasting your time with that site. Many of those carriers are NOT writing anyway.
Becasue fo the MANY factors involved with getting an accurate rate, I do not suggest looking to the internet for rates. Most consumers would not know a wind borne debris region from a gutter, or a mitigation from a trash can, hell half the agents I talk do not have a firm grasp of what a Hip roof is. MANY carriers are writing older homes as long as they meet certain criteria, they may require the home owner to get an inspection before writting the policy and it will vary by county as to who is writing
Long time insurers as you refer to them, have no reason to look at claims history, they have cancelled based on the states inability to logically approve rates.
The thing that consumers are saying is that insurance company are making excessive profits, how can they if they are non renewing the business and not accepting new business? If you are not selling you are not making ANY money. If they can not make a profit in Florida, they SHOULD NOT be here. That is good business practice. Do you want to be insured by a company that has struggled just to stay open? I don’t.
Poe is history (except they are actually still open as an agency marketing other companies products (go figure) Allstate has no desire to write homeowners in Florida and they continue to reduce the number of policies they have on the books by attrition. State Farm does not want to be here under the current climate but they have no way for an orderly withdraw. There is rumors that they are proposing to drop a ton of policies which will likely end up in Citizens if their agents have anything to do with it. Hartford has made decision to pull away from independent agents in Florida, yet still continues to do business with the political action group known as AARP, Travelers has not really done Homeowners in Florida since 1992 and I am not sure why you mentioned Tower Hill, They are still here and VERY active in writing new business thru out the state.
It is very rare for a company to sell its book of business to another company under current situations. Who wants to take it. (meaning the political climate)
Poe did not roll anything to Citizens, the state made a decision to make Citizens responsible for the exposure until the current policy expired, then it had to be rewritten. Many of those policies went to the admitted markets as they should have.
Trust me, get off the no Home, No auto bandwagon. If you want to see auto insurance rates double suggest that Progressive and Geico be required to write homeowners. They never have and do not want to. The auto market is very soft and rates are down. BECAUSE THERE IS SO MUCH COMPETETION AND NO HARSH REGULATION.
Companies are not looking to do rollover from Citizens unless they go thru the take out process, Why, because most of the Citizens book has been cherry picked by the 25 other companies that did do take outs. Don’t forget, in theory, there should be no good sought after busienss in Citizens. State Farm however throws a wrench into it since everything they write goes in to Citizens.
As far as the wind mitigation forms, they are a joke and the program is wrought with fraud. Hows that for simple and straight forward. I have seen numerous cases of bogus forms being submitted that have been altered or where never right in the first place. I have even seen 2 inspections on the same house be different in every category on the form. The best part is that both forms where done by the same exact inspector 5 month apart. And no additional mit factors where added, the 2nd inspection actually was the worst.
I never had a problem getting inspectors to sign the forms, in fact all of the contractors that are out of work are lining up to do them. The MSFH program is going away so no more needs to be said on that.
And yes I have many 75 y/o grandmothers that need shutters, the state offered a program and many took part in it and were eligible for $5,000 in matching funds.
Wind mitigation is the factors that pertain to a homes ability to resist wind damage. It does not matter if it is on the beach or downtown Orlando. In case you were not aware Orlando was hit by 3 hurricanes in 2004 and it is no where near the coast. Charley, Frances and Jeanne.
I have lived here all of my life (unlike the majority of the Florida population) and if I could no longer afford to live here it would be wise to move to somewhere with lower costs. Insurance is only a SMALL factor in the cost of living in Florida, but we are also one of a few states that do not have a state income tax. MANY residents have moved to Tennessee, North Carolina, Arizona, Oklahoma, etc to get away from the property taxes, insurance and general elevated costs of living in Florida.
Louisiana, Texas and Mississippi have all learned a lesson by watching how screwed up Florida became after hair pin reactions to the storms in 2004-2005. They are not shoving ridiculous regulation down the throats of its carriers because they see that they will just leave as our national carriers did. State Farm, Allstate, Nationwide, Auto Owners, Safeco, Hartford, the list goes on.
You said “Florida has got to foster and develop good communication with companies so that we can get some competition here. Maybe we need to hire Tim Tebow.”
Now your on the right thought process. But we have a Republican Governor that is not conservative in any way and acts like any Democrat I have ever seen. Get rid of him and things may have a chance.(assumming he takes Commissioner Mccarty with him)
Just don’t blame insurance companies for what is going on, they have tried to get things fixed but politics seems to get in the way. and if they are not writing how can they be making all the excess profits they are accused of.
We have only Florida regional carriers writing in Florida now, NO national carriers are left. The Florida domiciled carriers are now branching out into other states to help spread the risk and look a little more enticing to the reinsurance carriers. They are trying but do not look for many of them to consider writing auto insurance. Should we force Publix to sell gasoline so it is convienient for us. Should my barber be required to groom my dog? Why don’t we have hospice get into the funeral business so it is just one transaction from home care to the hole. When you add or force more regulation on companies you will get the opposite effect that you wanted. If legislation does not ease up the way companies do business they have no desire to be here, they can go to South Carolina and sell for half the price and make twice the profit.
Most decent long time top rank companies no longer write property in Florida. Why, because it doesn’t stand a chance of making a profit. People like Kathy don’t think insurance companies should make “excessive” meaning any, profits in the state so she can pay rates that don’t reflect the exposure. When the state stops playing political games with the property market a few companies may come back. For now, be satisfied with Citizens and a few underfunded state sponsored start up companies. Wait till the next big one and watch the financial house of cards fall down. People like Kathy simply have no knowledge of what kind of mess the government is setting up for them.
And Charlie Crist said possibly bankrupting the state in order for Citizen’s to offer competitive premiums was a risk worth taking. And now he’s missed being nominated as McCain’s VP, we haven’t heard from him since. What is he doing these days?
He was quite willing to beat up on those nasty old insurance companies and sell our future out just to be VP.
First, Nobody… I have lived in Florida my entire life and am 4th generation Floridian. I have NEVER had an insurance claim, not for Hurricane or anything for that matter. My great grandparents never had hurricane insurance claim, my grandparent, or my parents. The fear-mongering that the insurance companies do is disgusting and the fact that the black-box modeling is not accurate and does not work! You want to talk about a mess then raise the rates another 200% to 400% and there will be nobody left in Florida to insure! I DO agree that the state should stop playing political games and they should kick out all the insurance lobbyist out of Florida.
Yes I do believe in a company making a profit but the insurance industry makes GROSS profits and anytime someone does file a claim they fight it tooth and nail.
Now for Tremblor…
You are wrong about Citizens. The law was that Citizens had to be higher then the top 20 insurance companies in Florida…It had nothing to do with them being actuarially sound. Read the law!
You say…And we should never forget (although many rabidly desire to do so) that each state’s total book of business is meant to be self supporting. In all 50 states the state laws do not allowusing good experience from another state to offset losses in Fl. Why? The regulators in the other states don’t want their own citizen’s having to pay higher premiums to support Fl.
Here are some facts for you! Time Magazine reported: June 4th 2007…153 million people live within 50 miles of the coastline, this is more than “half” of the US population. Not to mention that some of the northern states have had a tremendous amount of hurricane related damage. My husbands family have had more hurricane damage in Pennsylvania then anyone we know in the state of Florida yet they still enjoy premiums of $350 a year for their homeowners insurance. Also it is a fact that insurance is suppose to be a pool of money collect not just for the gain of profit but for the loss people incur. It’s called spreading the risk…ever heard of it?
Actually Kathy, Insurance Companies are designed to make a profit. Pooling is certainly one of the basics of insurance, but if companies don’t make a profit they don’t stay in business. A degree in insurance and over 30 years in the business leave me some knowledge in the area. You simply refuse to look at the house of cards the politicians have set up to promote themselves. It’s a wonder of politics. You can’t see that because of your hate for us, but we can’t change that. All of us who represent decent and honest insurance companies can do is not write insurance in your state. It’s the only responsible thing to do. In the end you will have two disasters, the hurricane and the financial mess left when the house of cards your politicians put together collapse. It will happen. In the meantime you need some anger counseling with all of your swearing. Kind of childish. You can discuss things without the hate. It is supposed to be something of a professional site even if we have a lot of very odd people on it lately. I’m sorry you hate us Kathy, that’s your problem however, not ours.
Again, well said “Nobody”