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.

Local insurance hikes will be steep

Local insurance hikes will be steepTHIBODAUX – Insurance-rate hikes for Louisiana Citizens policy holders will be much higher in most parts of Lafourche and Terrebonne parishes than the 7 percent statewide average.

Set to go into effect April 1, premium increases for policyholders with Louisiana’s insurer of last resort will be 22 percent for Terrebonne Parish residents north of the Gulf Intracoastal Waterway and 33 percent south of the Intracoastal Waterway.

In Lafourche, Citizens’ customers south of the Intracoastal will see a 32 percent increase. The only local area falling below the state average will be in Lafourche north of the Intracoastal. Policy holders there will see a 6 percent increase.

The 7 percent average increase statewide is the outcome of a settlement between the state Department of Insurance and Citizens, It falls below the hike proposed by Citizens in October.

Projected to produce $15.3 million of additional revenue for Citizens, a state-sponsored insurer, the 7 percent change is part of a plan to ensure its premiums stay above the offerings of private companies.

The intent is to move policyholders away from the state-sponsored program and to a private insurer, according to Insurance Commissioner Jim Donelon.

Citizens primarily provides homeowner coverage for people who can’t find it elsewhere.

The rate hike proposed in October, approved by a 4-3 vote of Citizen0’s board members, meant Lafourche and Terrebonne customers were looking at increases as high as 43 percent in some coastal regions.

But the estimate used to compute the increase wasn’t on par with actuarial standards and was tossed, Donelon said.

The department must choose the higher of two homeowner premium estimates, in accordance with a state’s law intent on encouraging private competitions. One is based on surveying companies about their rates, and the other is based on a formula evaluating risk.

Donelon said he took the market estimate, which was lower, after staff members noted the other estimate included unaudited data.

The April hikes, which will come when policies are renewed, could be just one of two increases this year.

April’s increase is a 2008 rate adjustment, necessary because John Wortman, chief executive of Citizens, wants to avoid risking a delay for the 2009 rate analysis.

Citizens will begin that rate analysis between April and June, so policies renewing in the fall could experience the 2008 and 2009 spike at the same time.

6 Tips to Save on Insurance Costs

More than other age groups, people over the age of 65 are reluctant to consider changes in their insurance needs, according to a national survey of homeowners by Trusted Choice and the Independent Insurance Agents & Brokers of America.

Overall, nearly 24 percent of Americans have made changes to their auto, home, life, or health insurance coverage in the past year in order to reduce costs; 18 percent have considered such changes in the past few months; and 33 percent would consider insurance cutbacks in 2009. The overwhelming reason for the reductions is the sorry state of the economy.

Compared with those overall responses, however, older consumers were less likely across the board to make reductions. Only 9 percent of respondents ages 65 and older had made insurance reductions in the past year; 12 percent had considered them recently; and only 10 percent said they would consider them in 2009.

According to the 2007 survey of consumer household expenditures by the U.S. Labor Department, average after-tax income of households led by people ages 65 and higher was about $39,180. Of this amount, health insurance spending averaged $2,770, car insurance cost $975, and $329 was spent on life insurance and other types of personal insurance.

There was no breakout for home insurance, but even without that expense, average insurance payments were about $4,700, or more than 10 percent of after-tax income. By comparison, annual household spending on food—including food at home and meals away from home—was only $4,515.

So, while older consumers might be reluctant to reduce their spending on insurance, they should think about whether some wise trims can be made without sacrificing their key insurance safeguards. Here are tips for where to look for auto, home, life, and health insurance savings:

1) Many seniors have older vehicles and do not need expensive low-dollar deductibles for collision and comprehensive coverage. Consider selecting higher deductibles. However, do not scrimp on liability protection or uninsured motorist coverage. More people are dropping their car insurance because of the tough economy, so you need to make sure you're covered should you be in an accident with an uninsured driver.

2) Some insurers have responded to last summer's $4 gasoline by expanding their reduced-driving discounts to better serve people who have cut back on their driving. If you do not drive many miles, you may qualify.

3) When you rent a car, odds are you do not need rental-car insurance and can rely on your existing car insurance policy to protect you. You will, however, be on the hook for the deductible payment should you be in an accident that is your fault.

4) Inflation protection is a must-keep feature of home insurance, but like millions of seniors who have downsized, you may have reduced your possessions. Review whether you still need special riders on jewelry, furs, computers, and other items.

5) Life insurance is designed to help loved ones, providing them money to replace the income lost by your death and helping to conserve assets in your estate should you have enough wealth to trigger estate taxes. As we age, the protective objectives of life insurance diminish and you may not need as large a policy.

6) Substitute generics for brand-name drugs. The U.S. Food and Drug Administration has a tool to identify generic equivalents of brand-name prescription drugs. Use it and see if you can save money.

La. homeowners to get cash from incentive fund

Louisiana homeowners could receive cash from the unused portion of an expired pot of government money used to lure insurance companies to the state, Insurance Commissioner Jim Donelon said Monday.

Donelon estimated the checks would total $50 or more, though he's not sure when the Department of Insurance will mail them.

The money comes from the remainder of a $100 million fund set up in 2007 as matching grants for private insurance companies that agree to begin writing policies in coastal areas.

The incentive program was aimed at improving homeowners' access to private insurance after the 2005 hurricanes, and to reduce the number of policies written by the state's "last-resort" insurer, Louisiana Citizens Property Insurance Corp.

The insurance department issued $29 million in grants, and state law says the remaining money should be divvied up and given to holders of homeowners policies.

Donelon, speaking to the Press Club of Baton Rouge, also said he plans to back legislation this spring that would help consumers by eliminating a health-insurance loophole that can produce bills from radiologists, pathologists and anesthesiologists. Donelon said a small percentage of those specialists do not fall under health insurance plans, and their care can trigger bills on top of patients' deductibles.

Donelon said he expects the bill to encounter opposition from the insurance and hospital industries.

Beaumont Insurance Agencies Are Reporting More Drivers Dropping Insurance To Save Money

Insurance agencies are reporting more drivers are letting their car insurance lapse because of the sour economy and that is putting themseleves and others at risk.

According to the insurance research council several hundred thousand drivers dropped their insurance in the past year as the jobless rate climbed.

Online Agency Insurance Dot Com says it's also seeing evidence recently of more uninsured motorists.

Another factor may be that many people faced with huge bills from hurricanes let their insurance lapse, but this could be a costly decision.