FIRM: Insurance-rate study to be done in November [Florida Keys Keynoter, (Marathon, Fla.)]

By Larry Kahn, Florida Keys Keynoter, (Marathon, Fla.)
McClatchy-Tribune Information Services

Dec. 22--Now that the governing board of Citizens Property Insurance Corp. has agreed to fund a $485,000Florida Keys study of windstorm rates, the mechanics of getting that study done begin.

"The whole process should take about 10 months," said Monroe County Commissioner Heather Carruthers, a founding member of Fair Insurance Rates for Monroe, which will oversee the study. "We hope to know by next November what our risk is."

On Dec. 14, Citizens' governing board agreed to pay for the study after years of FIRM lobbying for lower Keys windstorm rates. The grassroots organization argues that Monroe County property owners pay far more into the risk pool of the state's insurer of last resort than they request in claims from storm damage.

Citizens holds around 25,000 windstorm policies in the Keys. The average policy holder pays around $3,000 annually, FIRM says.

Firm says that each year, Monroe property owners pay more than $79 million in Citizens premiums, far more than they should considering the windstorm risk. Between 2003 and 2011, the group says, the Keys generated a gross profit -- premiums minus claims -- for Citizens of $504 million.

FIRM hopes the study will not only get those premiums down but even result in the Keys being removed from Citizens altogether, likely by creating an independent Florida Keys insurance pool.

The first step, Carruthers said, is creating requests for qualifications for risk companies to perform the study, which will entail inspecting homes and other buildings, and studying the Keys' history of building codes.

"The RFQs will be for vulnerability analysis, the storm surge and then natural catastrophe," Carruthers said. "We hope to have it done by the end of January, so [FIRM Executive Director] Annalese [Mannix] will do the heavy lifting here in terms of writing the RFQ."

"We will probably send it to some of the big risk [modeling] firms," Carruthers said. "We're also going to see if we can publish it on," a website used for government contract bidding.

"We expect we'll give people three to four weeks to respond," she said. "Hopefully we'll be able to make a decision by March. We think once we select an initial vendor, we can get going in two weeks."

"In some cases," Carruthers said, "we'll be able to identify the specific homes to be in the model. When we do the profile, we'll actually send engineers to the houses, with the homeowners' permission, to confirm everything that exists on paper conforms to reality."

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"We need to determine what the profile needs to look at. For example, look at a certain number of homes from each decade to correspond to the changes in the building code. It will probably be a couple of hundred homes that will be physically inspected.

"We'll also look at some of the institutional buildings [such as hospitals and schools] because they tend to be sturdier. It will be interesting, though, because even some of our old homes have been rebuilt" to tougher building codes.

Once the study is done, Carruthers said, "Then we go back to Citizens and say, You guys were right [about Keys windstorm rates], which I doubt; or we say, You were wrong."

At that point, Carruthers said, if the Citizens board decides the study shows that Keys property owners pay unfairly higher rates than property owners in the rest of the state, the board can decide to lower Monroe County rates or let the island chain leave the company altogether -- which goes along with Citizens' goal of depopulating its base, anyway.

If that happens, FIRM would start work on either creating a Keys insurance pool or looking for private firms to take on Monroe properties. If it doesn't, the next step is unclear.

When approving paying for the $485,000 study, Citizens President Barry Gilway said the study "should be under the direction of FIRM, managed by FIRM ... and [that] the results are really 100 percent owned by FIRM."


(c)2012 the Florida Keys Keynoter (Marathon, Fla.)

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Distributed by MCT Information Services



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