Tim McCoy salvages a tennant's belongings at a Cocoa Beach condo after Hurricane Frances in September 2004.(Photo: Craig Rubadoux, Florida Today)
MELBOURNE, Fla. — Ten years have passed since four hurricanes pummeled Florida.
Also pummeled was the state's insurance industry. Thousands of homeowners lost coverage as major carriers shed riskier policies and focused on safer areas. Rates skyrocketed for millions of property owners, to the point where Florida, by one estimation, leads the nation in premium costs.
Now, a decade after Hurricanes Charley, Frances, Ivan and Jeanne and the more than $45 billion in estimated property damage those storms caused, indications are the insurance industry in Florida is calming with prices moderating and more private insurers writing policies.
That would be welcomed by many. As of 2011, Florida homeowners were paying the highest insurance premiums in the United States — $1,933 on average — nearly double what the average American homeowner paid, according to the most recent report from the National Association of Insurance Commissioners.
And one good indication of a stabilized market is that Citizens Property Insurance Corp., known as the state-backed "insurer of last resort" because it writes policies for property owners who can't get coverage elsewhere, is starting to shift many of its customers to the private market.
"Barring any major catastrophes or any major changes in the legal system, we're hopeful that we'll have a constant stable market," said Rich Koon, Florida's deputy commissioner of property and casualty insurance.
"I don't see anything on the horizon that would suggest that rates wouldn't continue to creep down," Koon said.
Hurricane Jeanne was at full fury on Sept. 26, 2004, along the Indian River Lagoon, wreaking havoc on the Castaway Point area of Palm Bay.(Photo: Tim Shortt, Florida Today)
Sam Miller, executive vice president for the Tallahassee-based Insurance Information Institute, said, "Most major insurers, after several years of increases, have begun to reduce their rate. The market has evolved. It's totally different now."
In response to major insurers cherrypicking homes that seemed "safe" because they were inland and exposed to less hurricane risk, the state legislature created opportunities for smaller insurance firms to enter the marketplace, by allowing them to have less capital on hand to pay claims and by reducing requirements for reinsurance policies that insurance companies use to financially protect themselves from catastrophes.
Then there is Citizens, which has approximately 933,807 policies statewide as of July 31, down from 1.43 million in May 2012.
Last month, Citizens started to advise many homeowners with expiring policies that they have to go through an electronic clearinghouse intended to shift more policies into the private market.
The state-backed insurer started to send letters this week to multiperil policyholders with coverage that expires Nov. 1 that they will be the first renewals placed in the computerized system that could spin them toward one of six private carriers if equal or lower rates are available.
The Atlantis building in Indian Harbour Beach, Fla., was heavily damaged by Hurricane Frances.(Photo: Craig Bailey, Florida Today)
Citizens views the clearinghouse as a means to reduce both its overall number of policies and the financial risks for the carrier and its customers.
"Many customers will benefit from more-comprehensive coverage, lower pricing and vastly reduced assessment risk in the event of a major storm," Citizens President Barry Gilway said in a prepared statement released last month on the clearinghouse.
Republican U.S. Rep. Bill Posey spearheaded insurance reforms as a Florida state legislator. He helped pass discounts for homeowners who "hardened" their homes by making property renovations that decrease the potential for storm damages. Some of those provisions eroded over time, and some of the discounts were lowered. But the discounts that remain are a crucial way to encourage hurricane preparedness, Posey said.
"We know that the surest and best way to prevent hurricane damage is to harden homes," he said. "I know if you don't offer those discounts, people don't harden their homes."
The legislation is seen by some to have helped spur increased competition among property insurers, a gradual lowering of insurance costs and the steady exodus of homeowners from Citizens.
Florida really hasn't suffered a major hurricane or tropical storm since 2005. That's nine years of shoring insurance resources and being able to assess the market.
The best that can be said now is so far, so good.
A 2014 insurance industry audit requested by Florida's chief financial officer, Jeff Atwater, revealed that the majority of in-state property insurers are lowering their rates.
In that audit, Florida Insurance Commissioner Kevin McCarty wrote: "There is reason to be optimistic that the Florida homeowners market is steadily improving. Not only are rates trending downward, record depopulation of Citizens is underway, new companies are coming to Florida and competition in the homeowners market is robust."
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