Insurance savings on low end for area

Published: Wednesday, January 24, 2007 at 6:01 a.m.
Last Modified: Wednesday, January 24, 2007 at 12:00 a.m.

Savings estimates vary from zero to 10 percent for inland counties after the Florida Legislature passed insurance reform Monday, though the insurance industry has yet to decipher what the bill will mean for them and their customers.

Local property owners will be on the low end of the estimated statewide savings of up to 22 percent. Inland properties have seen rate increases in the 40 percent to 50 percent range since the 2004-05 hurricane seasons, but coastal rates that have in some cases tripled prompted the special legislative session to tackle the issue.

The Legislature's bill aims to ease rates by expanding insurers' access to the state's Hurricane Catastrophe Fund, rolling back customer rates to the state-created Citizens Property Insurance and allowing consumers to choose higher deductibles or go without wind coverage.

Rick Scarborough, owner of Scarborough Company Insurance in Gainesville, said he expects 5 to 10 percent reductions for local owners based on cuts to wind coverage, which make up half the costs of a home policy.

However, state Sen. Steve Oelrich, R-Gainesville, said he doesn't expect the bill to affect inland policies.

"This is a bill for people who live 50, 25 miles from the coastline," he said.

If there are savings here, Scarborough said property owners can expect cuts the next time they renew annual policies immediately after the bill becomes law, guessing it would be official by March 1.

Gov. Charlie Crist is expected to sign the bill this week.

State Farm agent Perry McGriff of Gainesville said the industry, which has been seeking rate increases to recoup losses, is going to do the minimum to satisfy the law.

Oelrich said the final bill reduces inland policyholders' portion of the shared risk, which was a major campaign issue for inland candidates statewide.

"There will be some risk sharing, but I don't think it'll be anything dramatic, so I'm not as concerned about that as I was," he said.

Scarborough said the biggest savings are going to people along the coast.

"What makes no sense is that the people who are getting the greatest savings are those who have the greatest exposure to the claims, which are those people on the coast," Scarborough said.

He said surcharges on all policies to subsidize Citizens would increase for everyone if a storm hits.

"Those of us in the middle of the state are going to pay more than our fair share," he said.

The wild card for the reforms will be the 2007 hurricane season.

Private insurers tried to make up for hurricane losses with rate increases, which angered customers and inspired Monday's legislation. Now the state assumes the risk and would have to recoup losses if a major storm hits the state.

"We would have to fill coffers with something, which is taxes, putting more taxpayer funds possibly at risk," Oelrich said.

He said he was concerned about the government getting into private enterprise by allowing Citizens — originally intended to be the insurer of last resort — to offer competitive rates and additional lines of insurance.

"In the interest of the overall state, I did vote for this bill," he said.

While not as bad as coastal increases, local policies have increased 40 percent to 50 percent in the past few years, Scarborough said. For example, a $200,000 wood frame home built within the past 20 years would have premiums go from $1,000 to $1,500, while a brick home's premiums would go from $800 to $1,000. An older wood house would now pay $3,000 in premiums.

Rates for condominium and homeowner's associations have increased more, especially if they are wood frame. Sherry Patrick, president of the Gainesville-Alachua County Association of Realtors, said one local condo association's rates went from $19,000 for hazard insurance to $117,000.

Melissa Burdick, association manager with Management Specialists, said people in homeowner's associations who were paying $600 annually are now paying $6,000 for their share and often have to resort to Citizens.

Other local homeowners have seen their carriers, such as Safeco, leave the state, or drop local policies. Allstate transferred 1,800 Alachua County policies over the past three years to Royal Palm Insurance of Palm Coast and still holds 5,300 here, according to Allstate spokesman Ryan Priest. The local transfers were not a reflection of local risk, but went as a package with more risky coastal policies, he said.

State Farm has not dropped existing home policies, but has stopped writing most new ones. "If you were to open my market up, I could write 50-75 new a month," said McGriff, the State Farm agent. "Last month, I probably wrote four. How do you stay alive if you can't write new business? That's how it affects me."

Anthony Clark can be reached at anthony.clark@ or 374-5094.

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