Florida Increases High-Risk Wind Coverage
The Florida Office of Insurance Regulation has authorized a 15% average increase in rates for high-risk commercial windstorm coverage by the state-operated Citizens Property Insurance Corp. The increase is to help Citizens provide wind-only coverage in Florida’s coastal zones.
But it won’t help much, said Citizens spokesman Rocky Scott. “We asked for 300%,” he said.
The increase is actually temporary, and Scott said the approximately 36,000 policies in question are those the Legislature has instructed Citizens to take over from a joint underwriting association created to provide scarce coverage for commercial property in the high-risk zones.
“Those rates haven’t increased since the 1980s,” said Scott.
The 300% increase request included Citizens' costs for purchasing reinsurance, which is not covered by the state’s hurricane catastrophe fund, Scott said. However, the OIR ruled that it couldn’t act on that request until the reinsurance is purchased. That will come in spring, Scott said, as the state readies for the next hurricane season.
“You would expect” another rate request to be submitted, Scott said.
The OIR also has approved a new multiperil commercial nonresidential insurance program that Citizens also was ordered to implement by the Legislature, this time to replace a program operated through a separate joint underwriting association providing coverage outside the high-risk coastal areas. That program will begin on Jan. 1, 2008, Scott said.
As the insurance industry muddles through a soft-rate market, some complain that Citizens is further depressing rates in Florida. J. Hyatt Brown, chairman of broker Brown & Brown Inc., said the industry is “going through a maelstrom” in Florida (BestWire, Oct. 24, 2007).
But this kind of coverage cannot be bought in various parts of Florida, Scott said. “This is just not available. Not even the surplus lines folks are covering it,” he said.
Citizens has become the state's largest residential property insurer since it was created by the state in 2002 to offer property coverage to Floridians without private insurance options.
Source: Source: BestWire Services | Published on November 9, 2007
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