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Insurers brace for storms, both real and financial

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Published:   |   Updated: March 18, 2013 at 04:27 PM
TAMPA -

The wind and rain beating against the Grand Hyatt Tampa Bay conference hall seemed particularly appropriate Friday. After all, it was the first day of hurricane season, and the hotel was packed with insurance industry representatives and elected officials tackling Florida's property insurance crisis.

The weather also prompted State Rep. Dean Cannon, a Winter Park Republican, to remind the group of Tallahassee's Plan B the past half-dozen years:

"Pray we don't have a hurricane," he said.

Plan A remains a work in progress. The mission of Friday's session was to gather recommendations on how to wean off some of the 1.5 million policyholders from state-created Citizens Property Insurance Corp.

After several years of no hurricanes hitting the state, Citizens is in its best financial shape ever. But the insurer's huge exposure — an estimated $504billion — to cover major storm losses has state officials and Citizens executives alike seeking solutions, which prompted Friday's gathering in Tampa.

Citizens was created as an insurance company of last resort but now covers more Florida residents than any other insurer. It has a legislative mandate to "de-populate" — reduce the number of policyholders — but the path to achieving that is far from clear, proposals from Friday's session indicated.

The insurer has tried to make private insurance more attractive by not offering some types of insurance, such as for carports and screened enclosures. As private insurance companies shy from storm and sinkhole insurance in many areas of the state, though, Citizens has become the only option for many residents.

Attendees offered two big-picture recommendations along with smaller ones such as improving information flow to policyholders to make private-sector alternatives to Citizens more enticing.

State Sen. Mike Fasano repeated last year's to rid both Citizens and private-sector firms of the mandate to provide windstorm insurance.

Instead, Fasano proposes creating a pool to which all who buy insurance would contribute to cover hurricane, tornado and other windstorm damages.

"Managing that pool could become the role of Citizens," said Fasano, who said a similar pool could be created for sinkholes.

The New Port Richey Republican said residents have been forced to turn to Citizens because their private-sector insurer dropped sinkhole coverage or storm insurance in specific geographic areas.

"We cannot ask home owners to de-populate Citizens if they have no other choice," Fasano said.

Officials from private insurance companies, though, said the truth is some Citizens policyholders have to get used to paying more for the coverage they want.

"Look at it this way," said Paresh Patel, chairman and chief executive of Homeowners Choice in Tampa, which has taken on 100,000 Citizens policies. "If you are trying to get people off a ship that represents Citizens — the S.S. Titanic — you have to make worthwhile for another ship to pull up alongside."

One million of the Citizens' policyholders are paying adequate rates, the other half-million are paying "such low rates," Patel said.

Citizens was formed in 2002 from two state insurance associations — including one focused on providing windstorm coverage mostly around Florida's coast — to become the "insurer of last resort" for people unable to purchase property insurance from private sector insurance firms.


tjackovics@tampatrib.com (813) 259-7817

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