Homeowner insurance tide turning in Florida

Jul 7, 2008

Charlotte Sun and Weekly Herald--July 5, 2008

Staff Writer

The state of Florida still has far more potential liability than available insurance coverage. Some compare the state’s insurance coverage today to those old Coppertone ads where the puppy is pulling the swimsuit bottom off a sun-splashed toddler: The exposure is not just embarrassing, it could be painful.

It’s gotten to the point where the state sometimes has to buy reinsurance on its reinsurance, which is like a homeowner taking out a third mortgage. It tends to be fiscally disastrous.

"It’s a death spiral," said Lee Arnold of Colliers Arnold Commercial Real Estate Services in Tampa. "We need to encourage private industry to provide more capacity at affordable rates."

This is happening, said Tom Zutell, spokesman of the Florida Office of Insurance Regulation. He said nearly 500,000 residential homeowner policies have been moved to private sector coverage providers from the Citizens Property Insurance Corp. umbrella in the past two years.

"For the first time since the hurricanes of 2004-05, it seems the market has stabilized enough for private companies to assume those policies," Zutel said. "For the past eight months, participation in Citizens has declined for the first time since the 2004-05 hurricanes."

State efforts to convince the private sector to provide more commercial insurance and cover risk through enhanced mitigation programs have not had the same effect, Arnold said. This saddles the Citizens Property Insurance Corp. with an evermore lopsided share of liability in the state.

"We’re basically socializing insurance in Florida," Arnold said.
Patti Allen, general manager of Fishermen’s Village in Punta Gorda, which sustained $8 million in damages from Hurricane Charley in 2004, said recovery was swift but so were insurance premium increases.

"It was astronomical," Allen said. "Premiums doubled. It was almost to the point of how do people do this?"

Caroline Thonon, a Belgium native who lost her Styles of Punta Gorda salon business in Punta Gorda to Hurricane Charley, plans to move into an existing business named Papillon, into a building about four blocks from the site of her ruined business, which has since been rebuilt. She’s peeved State Farm Insurance canceled her business coverage prior to this hurricane season, despite the fact the new building was unscathed by Charley. It is the second cancellation since Nationwide canceled her right after Charley struck.

"It’s not fair," Thonon said. "It’s illegal in Europe. There they can’t refuse you without sufficient reason."