Five Years After Wilma: Are We Covered?
McClatchy-Tribune Information Services
October 25, 2010
Oct. 24--This is an anniversary no one is celebrating.
Five years after Hurricane Wilma whipped through
--Claims for Wilma continue to trickle in this year, for damage homeowners say they have just discovered from a five-years-ago storm.
Already, the storm is closing in on the tab for Hurricane Andrew, a far more powerful storm. When it last reviewed the cost of claims from Hurricane Wilma, a Category 2, in 2007, the Insurance Services Office, an industry trade group, estimated the insured losses in
--Several insurance companies have collapsed and those left standing are raising rates. And because an insurance bill passed by the legislature in the spring was vetoed by the governor, now insurers can raise rates first and then ask regulators for approval.
--The state's largest private insurer tried to abandon
--As companies bail or fail, state-run insurer
--Sinkholes, labeled by some as a scourge nearly as big as mold, are being blamed as the source of more claims than ever, including well outside the state's "sinkhole alley" in
--One of the rallying cries of the industry and a concern of regulators is that public adjusters -- who work for consumers who may be having trouble getting help from their insurers -- are driving up costs and filing questionable claims.
"We should be in a heck of a lot stronger position with five years without a hurricane," said
VETO OF BILL A SETBACK
In some eyes, the bill would have been the largest step forward in a while toward stabilizing a shaky insurance market that hasn't found solid ground -- although the state hasn't been hit by a single major storm since Wilma.
"That [bill] was a tremendous beginning to try and straighten things out," Miller said. Next session, "that will be the starting point."
The bill would have limited the amount of time policyholders could file claims after a storm to three years. Neighboring states limit claims to two years, Miller said.
"Does it really make sense that thousands of homeowners are unable to discover damage from a hurricane until three, four and five years after landfall?"
Crist vetoed the bill because it included a provision for companies to increase rates based on increases in the cost of reinsurance and inflation. The increases would have been subject to regulators' approval, but Crist said he could not condone any action that could raise policyholders' premiums.
Among other attempts to curb insurance company expenses, the bill would have further regulated public adjusters, adjusted the way discounts on measures homeowners take to strengthen their homes are handled and withheld payment for claims until homeowners had a signed contract for repairs.
"There's bad in every industry," said
Some consumer advocates agreed with different segments of the bill.
"There were some other things in the bill that would have helped insurance companies; we don't mind doing things that help them become successful," said
But he said one provision of the bill could have been especially helpful to consumers in the long run. It would have given the
Newspaper investigations have found that much of the premium insurers collect from Floridians is sent to these parent companies, but the state has no ability to review the agreements or track the money -- a power many other states give their insurance regulators.
The models that predict the kind of damage her county would experience in a storm aren't quite right. When the Keys are hit by a hurricane, the problem is water, not wind, just like when Wilma hit in 2005, she said.
Last session's insurance bill would have required an annual review of the models on which insurance companies base their risk. Although she wasn't a fan of the provision that allowed insurers to raise rates, she thought reviewing the models could be invaluable.
"If the models were really accurate, the insurance companies would realize we're not such a bad risk," Carruthers said. "They'd come back."
NO EASY FIX
But others maintain that no single bill, regardless of how sweeping, will be enough to clean up
"We continue to view the insurance market as either unstable or fragile," said
He said that a political change of scenery in the governor's office may have an effect on the industry's outlook. But ultimately, whatever legislation ends up affecting the industry,
"The ability to have affordable rates and have capacity from insurance companies is a very difficult balance, both from losses that we've seen and potential losses that we see," Schneider said. "If a Category 4 or 5 were to hit
Florida Insurance Commissioner
"It's still a fragile market," he said. He acknowledged that competition in the riskiest parts of the state --
He said the state must continue giving private companies incentives to come to
"That is something I have been preaching for many, many years," McCarty said. "Until we have a catastrophic event that affects other areas of the country . . . everyone looks at it as a beach bailout for South Beach."
THE STATE OF CITIZENS
While Citizens is in its best financial position ever, it continues to be reliant on assessments if a hurricane strikes
But even after the destruction in
The insurer has been steadily gaining customers as other insurers fail or dump policies.
"I think everyone probably agrees the most healthy market would be where policies never make their way to Citizens," said
Unlike private insurers, Citizens can assess
But the insurer has built up enough in reserves that if another Wilma were to arrive, it might not have to levy such an assessment.
"We're the best we've ever been for sure," Binnun said. Citizens has more than
But including Andrew, Binnun said, "we've never seen a storm like that in
While policyholders may grumble about Citizens' rates, the insurer still doesn't charge what it needs to compensate for the risk it faces in the event of a major storm, hence the gradual increases in rates -- the so-called glide path -- the insurer was granted by
But if multiple Wilma-like storms occurred in the same season, or the storm of the century hits the state, that could throw the insurer off its current track.
But Citizens may grow bigger before that happens, after
It was allowed to shed policies and raise rates in exchange for not withdrawing completely. The insurer contended it couldn't afford to do business in
In addition, the economic downturn, as with similar episodes in the past, may be triggering more claims.
While changes for the industry always seem to be in the offing, with new legislation to regulate the industry more or decrease regulation, the constant attempts at reform make
"The most important thing to us is consistency, predictability," Neal said.
"Virtually every year in
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