Thursday, September 21, 2000 | ||||||||
Windstorm insurance plan may affect coastal residents HERALD STAFF AND WIRE REPORTS
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TALLAHASSEE - The state agency that provides windstorm insurance to Floridians who can't get coverage any other way plans to push thousands of the policies into the commercial market. For Florida's coastal residents, including those in Manatee and Sarasota counties, that could mean short-term rate increases for many people whose policies will be moved from the state-run Florida Windstorm Underwriting Association to private insurers. But Rebecca Fussell, the windstorm pool's executive director, said that aspect will change over the next three or four years as the underwriting association phases in higher rates. The first windstorm pool rate increase in July boosted rates an average of 96 percent for coastal homeowners, who since Hurricane Andrew are often denied wind damage coverage by the traditional insurance market. The underwriting association is a state-created insurance pool that provides coverage to some 450,000 people in 29 counties where private insurers refuse to cover wind damage. Manatee County policyholders numbered 2,958 as of February, with liability coverage of $666 million. The association covers homes within 1,000 feet of a gulf, bay, lake or river in Manatee County. In Sarasota County, there were 30,209 policyholders with liability coverage totaling $6.3 billion. The association covers only homes within the Sarasota city limits. The pool has said it doesn't have enough money in reserve should a big hurricane hit and needs to raise rates, as much as 380 percent for some customers, although state regulators have fought the increase. Officials with the underwriting association say that rate increases are the only way to achieve parity in Florida and make coastal homeowners pay their fair share for the risk of owning waterfront property. Ron Natherson, public affairs manager for the Jacksonville-based association, says the issue is critical, in part because of the number of large, expensive waterfront homes in south Florida. In a recent briefing paper, Natherson said that "90 percent of Florida's policyholders must pay assessments to subsidize the artificially low hurricane insurance rates paid by the 10 percent who live along the coast. Often, that translates to the less affluent subsidizing the more affluent. Approximately 35 percent of (the underwriting association's) policyholders live in another primary residence. In fact, 21 percent of (the association's) policyholders list another state as their primary residence." The state's other insurer of last resort, the Joint Underwriting Association, by law has to charge more than the private market as a disincentive for homeowners to become part of the state pool. It has used bonuses to entice private insurers to take over most of its homeowner's policies. Unlike the JUA, the wind pool's plan to shrink doesn't require private insurers to take over lots of plans at one time. Private insurers instead will be able to pick policies to assume one at a time. Policyholders whose policies will be moved into the private market will receive notice 90 days before their renewal dates. They would not have the option of staying in the wind pool. The state associations were set up in the wake of insurance coverage cuts that followed the hit of Hurricane Andrew in south Florida in 1992. The storm cost $16 billion in insured losses and caused some insurance companies to limit coverage, pull out of Florida or go out of business.
Total uninsured and insured damage from Andrew topped $30 billion, making it the nation's most costly natural disaster.
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