April 5, 2006

Brevard faces grim reality of insurance

Forum speakers agree changes need to be made

BY WAYNE T. PRICE
FLORIDA TODAY

An insurance company representative, a state official and a consumer advocate agreed on one thing during a forum Tuesday night: As wobbly as the insurance industry is, it's likely to get worse.

As the storm level is likely to increase in the next decade, rates will go up. And insurers are likely to remove policies from their portfolios to reduce their risks.

That probably will mean higher premiums; more nonrenewal of homeowners' insurance policies; and special assessments to beef up a troubled, yet profitable, industry in Florida.

Sam Miller, executive vice president of the Florida Insurance Council -- the Tallahassee-based organization that represents the insurance industry -- offered little hope to the thousands of property owners who have agonized over skyrocketing rates or dropped policies.

"I'm sorry for some of the tough decisions we've had to make, and I'm sorry for the inconveniences you've sometimes had to face," Miller told the 200 people who attended a 90-minute FLORIDA TODAY-sponsored public forum on insurance issues in Florida.

"I realize that, sometimes, consumers aren't treated by the policyholders the way they ought to be treated," Miller added. "And the decisions that are made to cancel a policy after you've been with the company for years and years without filing a claim are just hard business decisions. It's nothing personal."

There were some testy exchanges during the event.

For example, when Miller said insurance companies are not making money in the Florida homeowners' insurance market, that caused some people in the audience to react negatively, which angered Miller.

"Since you're not going to listen to me, I'm not going to talk," Miller said, retreating from the podium to his chair.

After a few moments, he continued speaking, and apologized for getting angry.

Joining Miller in speaking at Tuesday's forum -- titled "Hurricane Insurance: The Worsening Storm" -- were Tom Streukens, deputy commissioner of property and casualty insurance of the Florida Office of Insurance Regulation; and Bill Newton, executive director of the Florida Consumer Action Network, a consumer-advocacy group.

While Miller said the decisions of his industry weren't personal, it was hard for some attending the forum not to view it that way, especially after hearing about the billions of dollars in profits that insurance companies have reaped the last few years.

Lori Uffner, who lives in unincorporated Port St. John, said her Nationwide homeowners' rates more than doubled to $1,087 this year from $509 last year.

"It's not a promising situation," said Uffner, who liked the suggestion made by both Miller and Newton that the state-backed Citizens Property Insurance Corp. stop insuring homes of $1 million or more in high-risk coastal areas.

People who own those homes "can well afford to pay for their own insurance," Uffner said.

Newton went much further.

He suggested limiting construction altogether in some of those high-risk coastal areas, where considerable building has taken place, as more and more people flood into Florida. Some of the areas, once destroyed by a hurricane or major storm, are simply redeveloped.

"It's making that same mistake over and over again," Newton said.

Even more radical, Newton said, is having the state take over the insurance industry.

That way, he said, lawmakers and residents would have accurate modeling data on which to establish policy rates.

"That's a radical idea, and it probably won't go anywhere," Newton conceded.

Radical or not, all three speakers agreed that some changes need to be made.

Florida Chief Financial Tom Gallagher, a Republican who also is running for governor, previously has said the eight catastrophic storms to hit Florida over the last two years have caused $30 billion in insured damages within the state.

Predictions for this year's hurricane season -- and through the next decade -- are for a very active and damaging period.

It's those future predictions, Streukens said, that insurers base their rates.

Newton said the system flawed.

"It's costing everyone a lot of money, and it's probably going to get worse, unfortunately," he said.

Cocoa resident David Jones said the forum didn't make him feel any better about rising premiums and dropped policies.

"They said a lot about the insurance companies, and what happened with the hurricanes in 2004 and 2005," Jones said. "But what about all the profits the insurance companies made before the hurricanes? Now they're complaining about spending the money" on paying claims.

FLORIDA TODAY staff writer Scott Blake contributed to this report. Contact Price at 242-3658 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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