Citizens will pay for $485,000 Keys insurance study [Florida Keys Keynoter, (Marathon, Fla.)]

Dec. 15--Florida Keys property owners got an early Christmas present Friday when the governing board of Citizens Property Insurance Corp. agreed to fund a $485,000 study on the windstorm risks for Monroe County.

Once completed, this could set the stage for possible rate reductions or even moving Keys windstorm insurance policies to another entity.

"Citizens stands to drop $11 billion in exposure if an alternative is found for Monroe County," Monroe County Commissioner Heather Carruthers told the Citizens board, which met in Tallahassee.

She described the study as a win-win for the beleaguered state insurer of last resort, noting the study will either validate the current higher rates applied to the Keys or establish a lower risk premium that could allow the Keys to leave Citizens altogether.

"If this independent [study] suggests a lower probable maximum loss and indicated rate, then we have the opportunity to find alternatives, whether through private insurers, some form of self-insurance or other innovative structures within our county," she added.

In August, Fair Insurance Rates for Monroe, known as FIRM (Carruthers is a co-founder) began a series of presentations to municipal officials throughout the Keys in hopes of garnering support to help fund the study independently.

Friday's action by the Citizens board appears to fund projected costs for the study, which Carruthers said will include independent analysis of the latest data and risk models, inspections of Keys building techniques and hurricane code enforcement, and perform "state-of-the-art modeling and loss forecasting."

FIRM has argued that windstorm insurance rates in Monroe County are too high based on actual damages paid compared to premiums collected. The group notes that most claims in the Keys come from storm surge and flooding, which are not part of windstorm policies but come under the National Flood Insurance Program.

"Between 2003 and 2011 -- through two of the worst storm seasons in history -- Monroe County generated a gross profit [premiums less claims] for Citizens of $504 million," FIRM officials said in May.

On Friday, Carruthers told the Citizens board its investment in the study is good public policy and cheap by any measure: "Monroe County residents pay over $79 million a year in Citizens premiums. This proposal equals less than 1 percent of that premium."

She said the average policy holder pays $3,000 every year to Citizens, while the study would cost the equivalent of $20 per policy. "These policy holders would be happy to see you spend their premium to help them understand their financial future," she said.

Citizens insures 25,000 windstorm policies in the Keys.

It wasn't clear Friday when the study will begin or how long it will take to crunch the data and bring back findings to Citizens for further action.

But Citizens President Barry Gilway told his board that the study "should be under the direction of FIRM, managed by FIRM ... and [that] the results are really 100 percent owned by FIRM."

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