Keys fight Citizens bill

Apr 28, 2008

State insurer would package all coverage

By Sam Nissen
The Keynoter--April 26, 2008

Insurance reforms in Tallahassee could add thousands to new homeowners’ yearly bills in the Keys.

Legislation that passed the Florida Senate would stop Citizens Property Insurance Corp. from issuing new windstorm-only policies. Instead, the state-backed insurer of last resort would package windstorm with homeowners coverage.

State Rep. Ron Saunders, D-Key West, said he “strongly objects” to that becoming law. In the current House climate, the bill might not make it to a vote with the provision, as too many people oppose it, he said.

“If [the House bill] has the wind-only bit, I can’t support it,” he said.

Locals from the insurance and real estate industries also oppose the bill and are worried it ignores the special needs of Monroe County.

“This is going to kill us,” said Linda deGinder, owner of The Johnsons Insurance Agency. “They would be forcing people to take lesser coverage for more cost.”

Insurance agents, among others, say the bill would force Keys homebuyers into Citizens, as the county lacks other windstorm insurance providers. It would not affect current policyholders, however.

The proposal has several problems, writes Joseph Roth of the Regan Insurance Agency: Customers would lose discounts provided when combining other policies, such as auto and boat, with their homeowners policies; homeowners could not insure jewelry, artwork, in-home businesses or pets or tailor insurance to fit any special needs; and homeowners would face added fees from Citizens in the event of a major storm.

On top of that, homeowners insurance could become very expensive relative to many current policies, said Derek Martin-Vegue, president of Keys Insurance Agency. As examples, he offered up three clients that would see rate increases if they were forced to get homeowners and windstorm coverage from Citizens:

u A large house worth $1.8 million with an annual premium of $6,817 would see it rise to $18,586.

u An older house worth $515,000 with an annual premium of $6,159 would see it rise to $11,760.

u A small house worth $250,000 with an annual premium of $2,005 would see it rise to $6,008.

The initiative is part of a bill that would cap Citizens’ annual increases at 10 percent and provide greater oversight of the Office of Insurance Regulation, said Heather Carruthers, a spokeswoman for Fair Insurance Rates in Monroe and a member of a Citizens state oversight board.

“There’s much in the rest of the bill that we like,” she said. “We think that’s the direction we’re headed in now – toward special consideration for Monroe County.

“We’re a special place, we deserve special consideration.”

Brian Schmitt, owner of Coldwell Banker Schmitt Real Estate Co., says the state has treated the county differently in the past, and that needs to continue.

“If it turns out that the legislators are wrong and the market doesn’t come in and cover properties for wind, then we’ll be wholly dependent on Citizens to provide homeowners insurance,” he said. “Monroe County has been treated different on the wind front since the ‘70s, so if this does pass, there needs to be some sort of exclusion or amendment for Monroe, and I would hope our legislators would recognize that.”

Carruthers says she believes the scenario is ultimately unlikely, but that locals should not stop fighting yet.

“We’ve had some positive feedback that the bill will pass as we hope,” she said. “People can’t get complacent, they still need to fight this.”