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HurricaneTALLAHASSEE — A hurricane hasn't made landfall in Florida in nearly nine years, but that hasn't kept property-insurance rates from increasing or becoming a bigger concern for homeowners.

As he seeks re-election, Republican Gov. Rick Scott has maintained a free market approach to the industry. That approach includes efforts to attract more private insurers to Florida , push thousands of policyholders out of Citizens Property Insurance Corp. and reduce what the state-backed insurer must cover.

Ever the populist, Democratic gubernatorial challenger and former governor Charlie Crist has said he will act to reverse rate increases that have occurred under Scott's free-market watch.

The majority of the insurance industry backs Scott.

Since the start of 2013, Scott has received roughly $2 million in contributions from the property- and auto-insurance industry through his campaign and the"Let's Get To Work" political committee that backs his re-election.

In the same time, Crist and a closely aligned political committee, Charlie Crist for Florida , have received about $75,000 from those with ties to the insurance industry.

University of South Florida political-science professor Susan MacManus, noting the anticipated low turnout in the statewide election, said insurance could be a deciding factor for many of the property owners who cast ballots.

The average annual premium for homeowners' policies has grown from $1,544 to $1,933 under Scott.

Meanwhile, Citizens coverage has been reduced for many customers to just main buildings, leaving unprotected awnings, gazebos, tiki huts and most carports and screened-in pool enclosures, which are more vulnerable to damage in a hurricane.

"Homeowners are very attuned to that, and homeowners tend to vote," MacManus said.

According to findings in a recently released Sunshine State Survey, conducted by the University of South Florida and the A.C. Nielsen Company, property insurance is one of the top six "stressors" for homeowners in Florida , along with food and maintenance costs, health care, utility bills, and the potential of no longer being employed.

MacManus said the survey found that concerns about property insurance have risen since a prior survey in 2012.

"The choice could not be more clear," Crist told reporters while announcing his insurance plan last month. "A governor who took on the insurance industry and lowered rates so families had more in their checking accounts and at the end of the month? Or a governor who let insurance companies raise rates — - over 25 percent so the companies and his campaign have more in the bank?"

While governor, Crist, then a Republican, backed a temporary freeze on Citizens rates and later a 10 percent cap on annual rate increases. Both were intended to help homeowners after a spate of hurricanes in 2004 and 2005 and during the recession. But they also helped lead to a shift of the state-backed insurer from being a refuge for those who couldn't find coverage into being the state's largest property-insurance company.

Scott spokesman Matt Moon pointed out that Crist's effort to hold down rates on Citizens Insurance also increased the liability risk for all homeowners.

"Florida taxpayers were left on the hook for billions and homeowners were left with fewer options to protect their property," Moon said in a prepared statement. "Under Governor Scott, Florida has done the exact opposite, reforming and shrinking Citizens Insurance while giving consumers more choice and competition to protect their home."

Pay now or pay later


Lynne McChristian of the Insurance Information Institute labeled the Scott model as "pay now" while Crist is offering "pay later."

McChristian said shrinking Citizens has reduced the exposure and likelihood of assessments on policyholders throughout the state if Florida is hit by another hurricane. Such assessments are still collected on most policies to help cover Citizens' damages from the 2004 and 2005 hurricanes. Reducing the size of Citizens has also brought private carriers back into Florida , which expands choice, she said.

"The pay-later model is the riskiest. It puts taxpayers —- all taxpayers, not just policyholders of Citizens —- at risk for long-term assessments, forces the state to borrow money that may not be easy, cheap to find and can pile up debt for years after multiple storms,"McChristian said.

She said Crist's rate-reduction proposal appears "arbitrary," rather than based on actual claims costs, which include historical losses from natural disasters.

"We can't change Florida's hurricane history, and no one believes this nine-year reprieve means a permanent end to major storms," McChristian said."Florida insurance rates reflect our long history of getting pounded by major storms, and the reprieve is temporary. Forcing private insurers to roll rates back to where they may be actuarially unsound is definitely unfriendly to consumers. It gives consumers fewer choices because it can cause insurers to restrict how much risk they can take on. If they can't charge the right rate, they can't take on the risk."

Jay Neal, president and CEO of the Florida Association for Insurance Reform, said a non-political middle ground is needed between Crist simply rolling back rates and Scott wanting to further deregulate the industry.

"I think we'd be better off, overall, if the extremes were not the policy, if we found a way to lower rates but to do it in a way that is actually paid for, actually responsible," Neal said.

Neal contends rates could be lowered about 7 percent by reforming the reinsurance industry, which is heavily based offshore.

Meanwhile, Neal added that in a state where "there isn't a long-term approach," there is a need to keep regulations in place on the industry to ward off lobbyist attempts to give insurers unfair advantages over policyholders.

"There is a price that the industry pays for having anti-trust protection, and one is to have a state regulator to ensure they're treating policyholders fairly," Neal said. "If we can help build sort of a middle approach, we'll have some stability. If you're out of balance, sooner or later someone is going to tug it back in the other direction, and that's where we have the pendulum effect, it never really stops, it just goes up the other end of the spectrum."

At the urging of Scott, who during his 2010 campaign vowed to "ensure that Citizens consistently operates on actuarially sound rates," premiums have increased while more than a half-million policies have been moved into the private market.

The shift of policies has accelerated in the past two years through large "take-outs" in which thousands of Citizens policies are offered at a time to private carriers. Also, a new electronic clearinghouse will force first-time policies and renewals to go with a private firm if the rates are somewhat comparable.

Through Aug. 30, 124,995 policies have exchanged hands through the "takeout" process this year. In 2013, 386,787 of the 905,338 policies offered through "take-out" were shifted from Citizens to private insurers.

*****
Protect your home from Mother Nature's fury. Call Prestige Insurance Group, Inc. at (305) 969-8776 for more information on Miami windstorm insurance.

(Article courtesy: Jim Turner of The News Service of Florida via Panama City News Herald)
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