Florida, we have a problem. Our property insurance crisis is out of control! We’re getting beat and hammered with policy premiums jumping 200-400 percent from one year to the next. We have retirees who can no longer afford to live in Florida and business owners who are having to consider leaving the state. We hear mumblings of promised relief, and repetitious statements, “we’re working on it”, bouncing around. What we are not hearing are the echoes of a State that has tried its best to get this crisis under control.
Excuse me if I don’t define “best effort” as the final day, final hour attempt known as Senate Bill 1980. While this piece of legislation was very well intentioned and does contain many good provisions, it was hardly a “best effort”. While I believe the legislation was a step in the right direction, we need so much more.
We know the proximity of our state. We understand the risks. Assuredly, it’s no one’s fault that we are geographically in the footprints of nature’s fury. The storms we love to hate are caused by the same warm air and tranquil water that is at the center of why we love Florida so much. I focus on the hurricanes because this fury of nature lies as the main element of our property insurance crisis.
Insurers virtually deserted Florida after eight hurricanes and four tropical storms left us with $39 billion dollars in insured losses. The new property insurance law carries incentives aimed to attract them back, but these incentives do very little to help the pockets of policy holders. It is understandable from the insurers standpoint that it is not profitable to write policies in a state with risks as high as ours. However, insurance companies cannot expect us to participate in their pity party. For decades, the hurricane seasons have not sequentially been as brutal, and yet, the insurance companies were still receiving their payments; likely paying out a miniscule percentage of their annual profit. Try to imagine paying your insurance policy for 30 years, on time, with no claims on your record. Disaster occurs, you lose your home, and you call your insurance company to make a claim on your loss. After significant delays in the process, your claim is finally denied or reduced to a small fraction, making it impossible recover your loss. Now you are remembering how much you always hated to write that check to the insurance company, but you did it anyway. Now you take out a pen and pad and begin calculating all the dollars you sent the insurance company over the years and wondering why you cannot rely on that money. I think this scenario poses a significant problem to resolve, but it is not as simple as it sounds.
Insurance companies are not banks. They are not an institution holding a savings account for you to withdraw from. They are playing a game of risk and betting on your life circumstances; gambling on whether or not you will need them. They play this game the way anyone would play; protect yourself. National insurance parent companies are isolating their liability from Florida insurers to safeguard their profits from being divvied out on Florida policy claims. The new law created a “take-out bonus” effective January 2008 that will pay $100 per policy that insurers take off the hands of Citizen’s Property Insurance if the policy is written for five years. If a private insurer offers to insure your home, you are automatically booted from Citizen’s. Recently, private insurer’s policies have been at a nearly 200 percent increase in many instances, leaving policy holders with no options, and a bill they simply cannot afford.
I am happy to hear Governor Bush talking about this problem during his final days in office. A special session is necessary to deal with the insurance crisis and help policy holders as well as insurance companies survive this difficult time. I don’t feel sorry for insurance companies because it’s a voluntary profession and that industry can fight for itself. I am concerned about the rest of us and our growing inability to deal with the unpredictable rising costs to live in America. We need more champions in the process for the people who can’t show up to fend for themselves.