Florida Insurance Revisited

TAMPA (2009-01-09) Some homeowners are upset with the "take-out" or shifting of insurance policies from Citizens. The idea is to lower the state-run insurer's risk exposure. But, consumers believe it's putting them at risk. It's a part of the state's ongoing attempt to stabilize Florida's property insurance market.

During the 2004-2005 hurricane seasons, a total of eight storms cost Florida billions of dollars in property damage. Insurance companies stopped writing new policies and there was a stampede to not renew current policies.

Like tens of thousands, Michael Letcher, a former bank executive and licensed CPA, had his policy canceled.

Letcher's hunt for a company to insure his Lake Worth home led to the creation of his online Home Insurance Buyers Guide. His independent company helps homeowners find, screen and contact insurance companies that are writing new policies in their area.

The state offers a similar site: shop and compare rates.com.

State incentives have helped to increase the number of companies writing property insurance, but Letcher says more is needed.

"These are pretty staggering numbers, if you think about the whole state of Florida there are about 450 licensed homeowner insurance companies," Letcher says. "And of those 450, there are only 41 that are actually writing any new business."

One incentive program offered $250 million in low interest state loans to insurance companies that put up matching funds and committed to writing more policies or face penalties.

That program still exists, but all the money is committed and legislative attempts to expand it were vetoed by the governor.

Another effort to stabilize the property insurance market is the state backed re-insurance that requires companies to pass their savings on to policy holders. State regulators say premiums have gone down on average 16 percent.

And, in the last three years, about 30 new property insurance companies have come into Florida according to Ed Domansky, communications director for the Florida Office of Insurance Regulation which licenses and oversees the rates and financial solvency of insurance companies.

Domansky believes smaller companies are getting a bad rap in part because they're linked to the legislature's "take-out" program designed to reduce the number of policies held by state-run Citizens Insurance.