Time to look at self-insurance here

By Steve Estes

In just a few weeks, Fair Insurance Rates for Monroe hopes to have the necessary consultants on board to conduct a study of windstorm rates in Monroe County that the group hopes will result in overall lower rates for everyone here.

FIRM has been a decisive, tenacious force in keeping windstorm insurance rates in the Keys from driving many locals out through ever-increasing premiums. And the study they hope to finish by November will, we hope, be another step in the journey to get some long-term stability in that area.

The study should give Citizens Insurance, the state-run insurer of last resort for most of the state, the insurer of only resort for the Keys, a good look at the unfair rates we all seem to know they have levied against properties here for a decade.

The study will analyze the impact of our very stringent building codes on potential loss and thus decrease rates. The study will also measure the true impact of wind damage versus the true impact of flood damage during major storm events. We all know that flood does more damage than wind, we just have to convince Citizens of that.

Lastly the data collected will be run through the risk models to come up with an actuarially sound premium that supports our loss potential.

And we are certain that the results will show we have been overcharged for our risk for most of that decade we spoke about.

With results in hand, we have a few choices.

We can request that Citizens honor the data and reduce our rates to what they should be. We can try to entice a private insurance company to come in and write policies here again knowing what the true risks are. We can form our own self-insurance pool for Monroe County.

We personally support the latter option if the data bears out the decreased risk as believe it will.

There will be issues with re-insurance, a cost that allows an insurance company to buy its own insurance against loss from another company, because we’re again asking a for-profit company to take a risk in this highly hurricane prone area.

And if the big one comes along, the one that wipes half the Keys off the map, there is little chance our own company can withstand the loss and remain viable.

But we all took that chance when we moved here. It’s a risk we live with every hurricane season that comes along. And a risk most of us are willing to take.

Formation of a self-insurance company means that local people who don’t view the Keys as a bunch of whiney rich folk (do you know a neighbor who fits that description? Probably not.) will be making the decisions without massive profit as a motive.

In an eight-year span, Citizens netted more than $500 million in profits from Monroe County after payouts, including the heavy storm seasons of 2004 and 2005.

That would seem to make us a good risk.

And we believe it is high time we used our money to safeguard ourselves instead of allowing someone who cares little about the Keys and its people to use our money to subsidize lower premiums and higher payouts to areas where there is more political impact.

For that is the crux of the matter as we see it.

There are so few votes here that politicians, and the folks they appoint to Citizens to represent them, have no fear that ticking us off can do them any damage. So we get the short end of the proverbial stick in many decisions.

As with any area hit by a natural disaster, when a big one comes along, the Federal Emergency Management Agency will have to step in and offer up some bucks to aid in the clean up and rehabilitation of the area.

And we will have our own profits from which to draw to alleviate the pain of those who do suffer damage from a storm.

There is no certainty in what FIRM is doing, just a lot of hope.

But we feel confident that the study will give us many more options than we would have if we just allow Citizens to continue on its current path. A path that includes removing coverage on homes over $750,000, removing builder’s risk insurance, and conducting halfway done inspections on mitigation credits with the purpose of denying those credits and forcing us to spend the money to force them to reveres a decision we knew was wrong from the outset.

If FIRM asks for your support, give it. They have done great things for us. And will continue to do so.

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