All pain, no gain for Citizens insurance customers

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All pain, no gain for Citizens insurance customers

Unread postby RatPak11 » Mon May 21, 2012 1:06 pm

http://www.sun-sentinel.com/news/column ... 498.column

All pain, no gain for Citizens insurance customers
Road to renewed competition in hurricane insurance market could leave South Florida homeowners broke
Michael Mayo
Sun Sentinel Columnist
4:25 p.m. EDT, May 19, 2012

Paying more and getting less is the new motto for homeowners stuck with state-run Citizens Property Insurance. Old and new customers alike are getting socked with rate hikes, higher deductibles, more exclusions…and no place else to turn for hurricane coverage.

"I was just so happy to get a renewal notice and not a cancellation notice, I didn't really pay attention to the other stuff," said Ira Goldstein, 55, of Delray Beach.

Goldstein's private insurer dropped him in 2010, when his home developed problems with Chinese drywall. In two years with the state-run insurer of last resort, Goldstein's premium has jumped from $1,667 to $2,106, a 26 percent increase.

Meantime, Citizens no longer covers things like sheds, pools and screened-in porches.

Higher rates and diluted coverage are going to be recurring themes in coming years for Citizens policyholders, as company executives and state politicians try to shrink the customer base from its current 1.45 million. Citizens, which had only 1 million policies a few years ago, keeps growing as private insurers flee the state or go bankrupt.

The problem: Citizens is a virtual monopoly in many areas, including large swaths of South Florida, so there is no consumer choice. For many of the 337,000 Citizens customers in Broward and Palm Beach counties (myself included), there is no private insurance alternative. And if private insurers won't come back until rates are allowed to climb to the stratosphere and Citizens bleeds us dry getting there, then a competitive market seems pretty meaningless.

When longtime Fort Lauderdale resident Sherry Friedlander got her Citizens policy renewal earlier this year, she balked at the $4,000 windstorm premium and $38,000 deductible.

"It means I have to pay $42,000 out of pocket before I see one dime after a storm," said Friedlander, who lives east of Federal Highway. "I called my agent and asked who else is writing hurricane policies. He said, 'Nobody.'

So she did something dramatic. She dropped her windstorm policy.

"A lot of my neighbors have done the same thing," Friedlander said. "I'm not happy about it."

Because she owns her home outright and doesn't have a mortgage, she has the option of "going naked" when it comes to property insurance. But homeowners with mortgages are required to carry insurance by their lenders. If homeowners can't find insurance on their own, exorbitant "lender-placed" insurance is imposed.

Property insurance rates might not be high enough to be "actuarially sound" for private insurers spooked by Hurricane Andrew and the freak 2004-2005 storm years, but they're plenty high enough for homeowners battered by the housing meltdown, flat wages and high unemployment.

Digging through my own records was an eye-opener. When I bought my older home in Dania Beach in 2000, I paid a total of $1,493 for separate windstorm, fire/theft and flood insurance policies. With my latest policy renewals, including a 10 percent increase from Citizens, I'll be paying just over $5,000 for property insurance this year.

I can only wonder, how much more actuarially sound can things get before we all go broke?

mmayo@tribune.com or 954-356-4508.
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http://weblogs.sun-sentinel.com/news/co ... ce_me.html

Mayo on the Side
Broward news columnist Michael Mayo

Florida's property insurance mess: No solution in sight


By Michael Mayo May 21, 2012 11:47 AMGot some good reader feedback on my Sunday print column on South Florida's ongoing property insurance mess and the higher costs/lower coverage for homeowners stuck with state-run Citizens Property insurance.

I'll share some feedback below, after the jump. Some readers pointed out that Citizens has been drastically cutting back "mitigation credits" for things like storm shutters and windows, allowing them to raise rates beyond the supposed 10 percent cap. Some readers were irked at getting dropped by insurance giants like Allstate and State Farm, who seem to want all profit and no risk. And some want national catastrophe insurance, but that's going to be a tough sell because of troubles with the national flood insurance program and the smaller-government mood in Congress.

As I wrote in the column:

Higher rates and diluted coverage are going to be recurring themes in coming years for Citizens policyholders, as company executives and state politicians try to shrink the customer base from its current 1.45 million. Citizens, which had only 1 million policies a few years ago, keeps growing as private insurers flee the state or go bankrupt.

The problem: Citizens is a virtual monopoly in many areas, including large swaths of South Florida, so there is no consumer choice. For many of the 337,000 Citizens customers in Broward and Palm Beach counties (myself included), there is no private insurance alternative. And if private insurers won't come back until rates are allowed to climb to the stratosphere and Citizens bleeds us dry getting there, then a competitive market seems pretty meaningless.


From Ben Lowe of Boynton Beach:
Citizens keeps having these new inspections that purposely look for small, insiginificant reasons to raise premiums. In fact, in this last round, I was told I would lose a huge discount because my roof is pre-2001, even thought it is made of solid, concrete tile. The Citizen’s agent admitted to me that I would get the discount if I replaced the roof with a cheap shingle roof even though it wouldn’t be as good as the one I already have.

From Gregory Murphy of Lighthouse Point:
We also dropped our windstorm; we were able to do so because our mortgage has been paid off. Our policy went up 50% this year to $4,000.00 with a $20,000.00 deductible...How will we sell our homes when the windstorm rates plus homeowners rates make our homes unsaleable? Imagine what the rates will become in five, ten or fifteen years. No one will be able to afford the mortgage along with the exponentially exploding insurance rates. A big thank you to our Florida State Legislature for handling this crisis so well!!

From Marc Velletri:
The other thing happening is Citizens is removing all windstorm mitigation credits. Two years ago after I paid for my own wind mitigation inspection, I received $934 in credits from Citizens. This year they demanded a new inspection. I spent two days with their inspector who must have taken 100 photographs of my property and wanted to see original labels of impact windows that were installed in 2005 (he claimed the stamps in the corner of the glass were not legible when any moron can tell they are impact windows). The end result was all credits were removed and I was notified my premium would increase by $975. My neighbor saw his go up by $1,400...We are getting to the point that you have to be rich to afford to own a home in South Florida just because of the insurance and property taxes.

From Thomas J. Hyle Jr.:
I can find no other insurance than Citizens. Me and my family have lived in South Florida for 3 generations. We have always been with State Farm: Only 3 claims in 49 years...2 for robberies and 1 for my screen after Wilma. I was dropped despite that fact that I have always had shutters. All I can assume is that these companies are not really insurance companies ( where there is always risk) but in the guaranteed profit only business.
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