How Key Biscayne Insurance Consumers Can Help Mitigate Disaster Costs | Vizcaya key
Florida’s home insurance crisis has seen nine property insurance companies in the state – the latest Orlando-based St. Johns Insurance and Tampa-based Avatar Property and Casualty – liquidate their holdings, leaving consumers, in many cases without coverage.
There have also been several reports of homeowner policies doubling or being voided, in some cases only for a 10-year roof.
Living near the ocean in a Key Biscayne condominium, Fausto Gomez became increasingly concerned when his and his neighbors’ storm insurance premiums “easily increased by 20% every year.”
“Double-digit increases, frankly, are not sustainable,” he said.
So the Key Biscayne Condominium Board of Presidents decided to do something about it.
Earlier this year, they brought in former Florida insurance consumer advocate Sha’ Ron James to educate the public during an interactive presentation in the Crossbridge Church auditorium, where she offered advice and a warning of what was to come.
“The problem is serious,” Gomez said last week. “We were aware of the (developing) crisis. We understand that. Before people talked about the insurance problem we have now, we knew what was going on and that’s why we were proactive.
“It’s one of the biggest issues (consumers and lawmakers face) in Florida…accessibility to get coverage and affordability to pay for it.”
Gomez had known James from her work when she represented insurance consumers before the Office of Insurance Regulation.
“I suggested that he educate Key Biscayne residents about the insurance market and what we can do to improve rates and continue to afford it,” Gomez said. “This is not just[affecting]condo owners, but also single family home owners.”
James, a Tallahassee-based attorney for Gunster, the Florida Business Law Firm, said, “Real estate risk in Florida could be one of the toughest insurance markets in the world.”
Among some of the statistics she mentioned:
– There are over 4,400 insurance-related entities in Florida writing over $154 billion in premiums;
– There are 7.5 million property insurance policies in force;
– Florida has the third highest property insurance rate in the country; and
– About 12% of US coastal exposure is in Florida, but more than 50% of related losses come from Florida.
James said that in the first nine months of 2021, carriers in the Florida market had a net loss of $438 million, and that Citizens, the state-created insurer of last resort, expects that he will have over a million policyholders this year, putting him at financial risk in the event of a catastrophic storm.
Prior to Hurricane Irma in 2017, she said, Florida had gone 10 years without a major storm and “reinsurance rates were very low. Since then, prices have risen considerably.
James said reinsurance companies insure risks both domestically and globally, so storms, fires or other disasters in other states — or even countries — can have a knock-on effect. drive on Florida fares. Now reinsurance rates have jumped into the double digits, 10% per year over the past few years, she said.
“So when insurance companies have to take an increase of 10% or more to insure their exposure to hurricane risk, they always try to pass it on to policyholders, through rate increases,” a- she explained.
Gomez said reinsurance is the “real argument” in the price spike, snubbing the idea that Florida rates have mostly been tied to complete roof replacements and countless lawsuits over such claims, as explained by David Altmaier, Commissioner of the Office of Insurance Regulation. at the Florida Cabinet last week.
“Insurance companies have to buy their insurance from reinsurers (to protect their risk),” Gomez said. “A fire in Paris, say, affects rates in New Castle, PA.”
James said that several factors are also involved when it comes to the risk-taking activities of insurance companies.
“The age and location of coastal condominiums plays a huge role,” she said, adding that many are from the “condominium boom” of the 1980s, and those in their 40s and older “c’ That’s when we start to see a lot of plumbing-related issues.”
And now, especially since the Surfside condo collapse last summer, more and more insurance companies are requiring up-to-date (county-mandated) inspections.
Another factor, James said, that plays into what she calls underwriting or market uncertainty is the “crystal ball factor” driven by data, analysis and forecasts from, for example, meteorologists.
Consider the fact that there have been over 100 named storms in the past five years.
During the 2021 hurricane season, there were 21 named storms, seven of which were hurricanes, four Category 3 or stronger, and three that made landfall in Florida – Elsa, Fred and Mindy. Only two other Atlantic hurricane seasons have had more than 21 named storms (28 in 2005 and 30 in 2020).
James said the insurance market in Florida is “very fragile”, which means the balance between supply (insurance companies in the market) and demand (consumers in the market) is delicate.
Insolvencies, large risk exposure, fewer policies (on the demand side) and population growth have all contributed to the shrinking private market in Florida, she said.
A recent report, titled “Priced Out of Paradise” from WPTV in West Palm Beach, showed that in 2021, the average Florida homeowner’s policy soared to $3,643, while the national average was $2,305 ( based on insurance.com data).
Lee Burke, president and CEO of insurance agency Burke, Bogart & Brownell, Inc., in Boca Raton, said there would be a much more competitive market offering options, “if we didn’t had no fraud and abuse”.
He went on to say lawmakers need to take drastic action now or “we may not have an insurance market for a large portion of homeowners insurance buyers in the near future.”
James recommended working with your agent or broker; consider increasing your deductible; and consider paying off small claims with your reserves or savings, so that a relatively inexpensive claim won’t count against you.
Along those lines, independent insurance agent James Cleveland of Lake Mary’s Insurance Services of Central Florida offered other suggestions in a report released last week by NBC affiliate WESH-TV in Orlando.
When it comes to roofs, insist on a policy with a replacement value, rather than getting a depreciated cash offer, Cleveland said.
He also said that paying for a four-point inspection and a wind-mitigation inspection might cost a few hundred dollars up front, but it might make you more attractive to a new business, as, of course, would a new roof.
“Sometimes it doesn’t yield the premium savings we want, but in most cases it does,” Cleveland said.
Finally, he said, read the deductibles and premiums page to find out what is actually covered and what isn’t.
“You are buying a promise. It’s a piece of paper, a promise. But you want to make sure it’s the right promise,” Cleveland said in his interview.