Study may lower insurance rates

By Steve Estes

Eight firms have responded to Fair Insurance Rates for Monroe’s request for qualifications to conduct a study that the grassroots advocacy group hopes will prove once and for all that windstorm rates charged by Citizens Insurance in the Florida Keys are exorbitant.

FIRM has been fighting what it calls unfair windstorm insurance rates in Monroe County since 2006 when the company tried to more than double local premiums.

Since then FIRM has been instrumental in keeping premiums low here to the point where Monroe County no longer pays the highest average windstorm premiums in the state. But, says County Commissioner and FIRM President Heather Carruthers, Monroe County still pays the highest premium per potential exposure anywhere.

The new study is expected to change that. At the very least it opens up options for local policy holders, says Carruthers.

The study will consist of four phases, with the first being engineering guidelines on what it takes to build a hurricane-resistant structure, selecting a sample of Keys homes and inspecting them to ensure they meet those guidelines.

The second phase will consist of inspections of random homes built in various decades to ensure that those homes feature the hurricane-resistant building techniques applicable to each decade.

“We all know we have the strongest building codes in the state, we just have to convince Citizens of that,” said Carruthers.

Phase three will be to use the building-strength data to extrapolate the actual risk faced by windstorm insurance carriers, and also to compare that to the damage that will be suffered as a result of storm surge rather than wind in a hurricane event.

“We all know that flood, rather than wind, causes the most damage in the Keys. We just have to convince Citizens of that,” said Carruthers.

The final phase will be to remodel the actual damage risk in the Keys attributable to wind based on building strength and flood versus wind damage reports.

“With that information, we can look at different options for windstorm insurance in the Keys,” said Carruthers.

One of the options would be to remain with Citizens under a rate structure different from today, if the data bears that out, she said.

“We are convinced that the study will prove that Monroe County has been overcharged for windstorm insurance for more than a decade,” Carruthers said.

Another option would be to shop Keys’ windstorm insurance to a private insurer with the new risk modeling in hand proving that the risk here isn’t as great as Citizens has envisioned it to be.

The final option on the table is to develop a self-insurance pool for windstorm coverage of Keys homes where the rates could be set using the local data.

Carruthers says she’s convinced that any of those options would result in lower premiums for the local homeowner. The new data could also allow Citizens to divest itself of Monroe County policies and decrease its potential exposure by about $10 billion, which is the amount of property the state-run insurer covers here.

The study should be completed by November.

But completing the study will take the cooperation of local homeowners, she adds.

“If your home is selected for inspection, cooperate with us,” said Carruthers.

These inspections will not mirror the current round of re-inspections being performed by Citizens’ contractors, many of whom are not even from South Florida let alone the Keys.

As one of its risk depopulation moves, Citizens authorized re-inspections of homes with existing hurricane mitigation credits such as shutters and roof straps. If inspectors couldn’t see the Miami-Dade approval etch in the shutters, the credit was taken away. If they couldn’t access the attic to see the hurricane straps, the credit was taken away. In many cases, the homeowners were able to get the credits back by proving they were eligible for the credits, but in the meantime, premiums rose by as much as 100 percent.

“These inspections (by FIRM) will not have an effect on your windstorm premiums,” said Carruthers.

Citizens has been under a mandate from Gov. Rick Scott to divest itself of policies. Those decisions have hit the Keys particularly hard. Vacation rentals can’t get insurance. Builder’s risk insurance, needed for construction projects, has been discontinues, although Carruthers says that will be reinstated. Homes with a replacement value of more than $1 million can’t get insurance, and that cap drops to $750,000 this year and a bill currently working Tallahassee could drop that to $500,000, which will eliminate a lot of waterfront property in the Keys.

“We have to do something so our people can continue to afford to live here,” said Carruthers.

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