Enough is Enough

By Hays B. and Sara M.

FIRM Fights Recent Citizens Rate Hikes

How much more can locals keep shelling out for wind insurance? According to FIRM (Fair Insurance Rates in Monroe), Citizens Insurance siphons $50 to $60 million a year from Monroe County while premiums for wind insurance have more than doubled since 2010. According to FIRM’s Board Vice President Steve Russ, the average rate increase has been 10 percent per year.

Although premiums vary with the size and value of the home, the median increase in 2016 was $273.10 per policy. If this isn’t enough, on Feb. 1 homeowners could see another significant 8 to 11 percent rate increase.

“Initially, we filed a complaint with Citizens seeking a pause in the rate increase for Monroe County due to the large discrepancy in the catastrophe models with an 8 percent decrease up to a 77 percent increase. Citizens denied our pause,” said FIRM president Mel Montagne. Citizens is using the higher windstorm projection models to substantiate its claim for higher rate increases. FIRM’s argument is the models are flawed and too vague.

“We have now filed a similar letter with the state Office of Insurance Regulation and we anticipate hearing from them,” continued Montagne. Although it was filed in November of 2016, the agency has yet to respond. FIRM is pursuing other means of recourse in order to battle rate increases depending on the outcome.

“Insurance can be a tremendous burden on homeowners and, the sad part, has the potential to change the nature of our community,” said Russ, who recognizes lower- and middle-class families will be pushed out of the Keys with rising costs.

Meanwhile, what can homeowners do?

“Make sure that they have all of the available windstorm credits  that they are entitled to,” said Montagne, urging homeowners to consult their insurance agents. “Verify that the replacement value on their home is correct and not over-insured. Finally, become a member of FIRM and donate to the cause.”

Joe Roth of Regan Insurance in Tavernier said he’s been able to help local homeowners secure wind insurance through carriers other than Citizens.

“We’ve been very successful with Frontline Insurance Co. and a homeowner’s policy that also includes wind damage coverage,” he said. “One of the nicest features is that some policies have a disappearing deductible. After the sixth year, the deductible for wind goes to zero.”

One of the hidden swords in a Citizens policy, Roth said, is the “tier one assessment” clause. It states that if Citizens suffers a loss anywhere in the state, a policy holder can be assessed up to 45 percent of the premium the following year to build up Citizen coffers.

“So, even if you’re paying the same exact premium, a private insurer like Frontline may be the way to go,” Roth said. “You’re removing yourself from the prospect of paying that ‘tier one assessment’ if there is a storm.”

A wind insurance rate hike can cost our local economy $5 to $6 million dollars a year.” — Steve Russ, of FIRM


$avings for Monroe County

The City of Marathon’s application paperwork for a FEMA flood insurance reduction was a foot thick. It represented hundreds of hours of work, but with a huge payout: of the estimated $4 million flood insurance premiums in the Middle Keys, homeowners can expect a 20 percent reduction — $800,000 in savings citywide.

Marathon isn’t the only municipality in the Keys to enjoy the savings from the regulation change implemented in 2013 by the Federal Emergency Management Agency. In October, Monroe County also announced a 20 percent reduction for homeowners living in the Special Flood Hazard Area (SFHA) and Key West announced a 15 percent discount.

FEMA sets the Community Rating System (CRS) by assessing points such as floodplain mapping, open space preservation and stormwater management. Monroe County and Marathon both scored a “6” to earn the 20 percent reduction. Key West has a rating of 7 (15 percent) and both Key Colony Beach and Layton scored an 8 (10 percent). To put that in perspective, about 200 municipalities in Florida have applied for the reduction. Of those, about 60 have earned a 6, and 30 have earned a 5. Only one city in Florida earned a lower score — the city of Ocala rated a class 3.

“This is the first year we’ve prepared for, and submitted, an application,” said Marathon City Manager Chuck Lindsey of the process, praising city staff who worked on the application for months. ““When you start talking about ground-level, pre-FIRM houses, it’s a tremendous savings,” Lindsey said, referring to a home built before 1975 when the initial Flood Insurance Rate Map went into effect.

Flood insurance is provided by private insurers, but underwritten by the federal government National Flood Insurance Program (NFIP) guarantee much like the Affordable Care Act. Joe Roth of Regan Insurance in Tavernier, said the number of private flood policies — he calls them “excess and surplus market lines” — is a small percentage of the market.

“At our agency, probably 98 percent of the policies are through the NFIP,” Roth said. Some homeowners choose a private insurer because they find a special deal, he said, but he cautions that the so-called private insurance policies aren’t standardized and might include special limitations or exclusions that put the homeowner’s investment at risk.

The Community Rating System is part of a larger overhaul of the federal flood insurance program. Hurricane/Superstorm Sandy brought the program’s flaws to the forefront in 2012 when the storm caused an estimated $50 billion in damage in the Northeast.

The overhaul, specifically the discounts in flood insurance for Monroe County, also affect another hot topic — affordable housing. Ground-level homes pay a much higher flood insurance rate than stilt-homes. Because many of the ground-level homes are older, they often serve as de facto affordable housing and landlords are likely to pass on the cost of flood insurance to renters. With the discount on flood insurance, officials are hopeful renters will have more options when it comes to finding cheaper rents.

A ground-level home in Marathon with $5,500 a year in flood insurance premiums will have premiums at $4,400 when the policy renews.

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