Insurer to slam state residents

[Aquawind]

Insurer to slam state residents

Citizens likely to pass on $516 million bill

By PAIGE ST. JOHN
THE NEWS-PRESS TALLAHASSEE BUREAU
Published by news-press.com on June 5, 2005


TALLAHASSEE — Inland Florida residents living far from the coast are about to get the bill for others who built in the face of hurricanes.

On Wednesday, Citizens Property Insurance will vote to hit property insurers with a $516 million bill to help cover last year's hurricane losses.

Almost every property owner in the state, including Citizens' customers, will see the charge added to already rising insurance bills.

Even with the bailout, it leaves the state-run insurer's high-risk account nearly empty entering this year's hurricane season, raising the prospect of another assessment next year if storm forecasts are accurate.

The state-run insurer's assessment on insurers is passed on to their policyholders, an average 6.8 percent increase in your next property insurance bill.

The burden is sure to rekindle complaints that inland residents pay the price for those who live on the coast and their high-risk homes that insurance companies shun.

"Those who are getting the benefit should pay," said B.J. Federico, who lives in Lake City, just about as far from saltwater as one can get in Florida. "I certainly don't want to pay it."

Gov. Jeb Bush said 2004 shows hurricanes don't stop at the coast. He noted hurricanes Charley, Frances and Jeanne plowed deep inland. Even Lake City had damage.

Yet the greatest development, most expensive homes, biggest risk and least-available insurance are on the coast.

Claims records obtained by Gannett News Service show Florida's inland residents subsidize high-dollar shoreline development.

Citizens to date has paid $1.56 billion in hurricane claims from its high-risk account.

More than $1.53 billion of those checks are to ZIP codes within a mile of the water.

Citizens insures 5,371 homes worth more than $1 million. The assessments cover $21 million in checks to 362 of them, including repairs to an $8 million home in Indian River County and a $6.8 million property in Lee.

The most expensive stretch of real estate for the state's insurer-of-last resort is one of the nation's most upscale ZIP codes.

Orchid Island in Indian River County was slapped by hurricanes Frances and Jeanne. The barrier island dwelle's Atlantic Ocean view so far has cost Citizens $156 million in claims.

State-insured homes on peninsular Gulf Breeze and the developed barrier, Santa Rosa Island, are a close second, costing $150 million in claims.

Sanibel Island, one of the wealthiest ZIP codes in Florida where the median home value is more than $390,000, has cost Citizens $62.9 million in claims.

Through the assessment, mobile home dwellers in Desoto and Glades counties will help pay to rebuild those high-priced properties.

"This is the way Citizens was designed," said Rep. Dennis Ross, House Banking and Insurance chairman.

As a Republican from Lakeland, he admits he is an inlander who is not pleased at the prospect of being billed to insure coastal residents.

"Is it the most equitable way? I'm sure at the time, people thought it was," Ross said. "We have to have a method to get them out of insolvency."

State Chief Financial Officer Tom Gallagher this spring proposed an alternative, state sales tax revenues, but lawmakers rejected the plan.

House Speaker Allan Bense said he considered the cost too steep.

That, too, would have spread the cost of coastal insurance to those who live far from the water.

Gallagher, a candidate for governor, last week had no comment on the impending Citizens assessment. He walked away from a reporter who asked about it.

When the assessment is made, companies that shun the coast must pay a greater share, and so will their policyholders.

Companies that are large and stable also must pay more, because 36 small companies with weak financial holdings are exempted.

That means customers of Allstate and State Farm will be billed an extra $21 million, and those with Nationwide will pay surcharges of nearly 10 percent.

Customers of American Strategic, Qualsure and Florida Select Insurance are exempt because those companies are considered financially unable to carry the burden of an assessment.

The remaining 276 insurers pick up the slack.

The surcharge system is designed to keep policies out of Citizens, reducing future assessments, company spokesman Justin Glover said.

"It's designed to encourage companies to write more policies in wind-only areas," he said. "It's such an important thing as far as statewide policy."

The coming assessments have drawn little public debate, even in the Legislature.

"The difference, although annoying, isn't enough to get people up in arms," said Jim McGinley, a Gainesville homeowner who said the charge is not fair but is unavoidable.

"People chalk it up to, 'Nothing they can do.' "


http://www.news-press.com/apps/pbcs.dll ... 50482/1075

YUP! It is really going to kick into hyperdrive now.. Wait till the other states get popped with a major.. EVERYONES INSURANCE IS GOING UP... Insurance is no match for mother nature and besides we have the rest of the planet to take care of..

1.53 billion of the 1.56 billion went to coastal communities..this is only the begining.. The insurance industry has lobbists working 24/7 not only for this years increases or to lessen liability but to position themselves for down the road..they have a big plan and it's to get rich..

It ends up being kinda like the weatherman they can be wrong and still get paid... alot more though..

Paul

[weatherwindow]

call me a pessimist....but i believe that private windstorm insurance in coastal fla will soon be a thing of the past. private insurance is fleeing the state. the exodus will continue. non-renewal and a lock on new policies is becoming the rule. on the margin, the insurance industry is opting to abandon higher risk areas based on the recent upsurge in landfalls. legislation can slow this exodus but cannot prevent it. right or wrong, the insurers will attempt to maximize their return by the risk of payout. the citizens, formerly the jua, will , most certainly, become florda's sole insurer....and yes, unfortunately, it will be expensive!

[jdray]

Why should I help float the bill for someone who decides to build on the coastline when I live 40 miles inland?


Ever think there was a reason for centuries that European settlers kept losing establishments and that the natives lived farther inland?

Wasn't just for food/water reasons.

[CentralFlGal]

First Underwriting Profit Since 1978, Investment Gains Send Industry's Net Income and Surplus to Record Highs

April 12, 2005

Benefiting from a rare profit on underwriting and investment gains, the U.S. property/casualty insurance industry's net income after taxes rose 29 percent to a record $38.7 billion in 2004 from $30 billion in 2003.

Reflecting the industry's income and unrealized capital gains on investments, its surplus, or statutory net worth, increased $46.5 billion, or 13.4 percent, to a record $393.5 billion at year-end 2004 from $347 billion at year-end 2003, according to ISO and the Property Casualty Insurers Association of America (PCI).

In nominal terms, the industry's income in 2004 exceeded all previous full-year amounts. But adjusted for inflation, the industry's income remained 10.6 percent below the all-time high in 1997. However, the industry's surplus at year-end 2004 surpassed all previous year-end amounts, both before and after adjusting for inflation.

"Strong underwriting results powered the increase in insurers' net income, with insurers' $5 billion net gain on underwriting in 2004 constituting a $9.9 billion positive swing from their $4.9 billion net loss on underwriting in 2003. Prior to 2004, insurers suffered a net loss on underwriting every year since 1978. Insurers' net gains on underwriting last year are all the more remarkable in view of the five catastrophic hurricanes that struck in 2004," observed John Kollar, ISO's vice president for consulting and research.
http://www.insurancejournal.com/news/national/2005/04/12/53675.htm

Allstate 2004 net income: $4.54 million
http://www.allstate.com/investor/annual_report/2004/gaap.asp

State Farm:

Total revenue for State Farm, which includes premium revenue, earned investment income and realized capital gains (losses), was $58.8 billion for 2004 compared with the 2003 figure of $56.1 billion. State Farm reported an after-tax net income from all sources of $5.3 billion in 2004 compared with a net income of $2.8 billion in 2003.
http://www.statefarm.com/media/financial04.asp

Nationwide 2004:

Fifty years ago, Fortune Magazine began ranking the largest companies operating in the United States . The Fortune 500, and more elite Fortune 100, list ranks American companies in terms of overall revenue.

This year, for the first time in a decade, Nationwide returns to the top 100 landing at 99. Nationwide, a strong insurance and financial services company saw revenue growth of over 22 percent last year to $20.6 billion. This was enough to bump the company up from its previous spot at 118.

Nationwide CEO Jerry Jurgensen said he was pleased with the new ranking and credits the company's performance on financial discipline, strategic planning, and a talented staff.

Of the thirty Ohio based companies in the Fortune 500 list, Nationwide is now the fourth largest in the state. http://www.nationwide.com/features/oys/index_100.htm

Somebody please explain to me why the guy in the trailer in Marion County fighting to make ends meet is subsidizing the rebuilding of million-dollar estates on the coasts when the insurance companies - who willingly entered this high-stakes gambling contest - refuse to dip into their own pocket and, instead, pass on the cost of doing business to the consumer?

[StormChasr]

Somebody please explain to me why the guy in the trailer in Marion County fighting to make ends meet is subsidizing the rebuilding of million-dollar estates on the coasts when the insurance companies - who willingly entered this high-stakes gambling contest - refuse to dip into their own pocket and, instead, pass on the cost of doing business to the consumer?

Actually, it is a marvelous thing called "deregulation." The elected officials, in their infinite wisdom, gave the insurance companies carte blanche to do as they please, without any government oversight to protect the consumer.

[jlauderdal]

Why should I help float the bill for someone who decides to build on the coastline when I live 40 miles inland?


Ever think there was a reason for centuries that European settlers kept losing establishments and that the natives lived farther inland?

Wasn't just for food/water reasons.

There was plenty of damage done to homes 40 miles inland and claims were made.

[StormChasr]

Why should I help float the bill for someone who decides to build on the coastline when I live 40 miles inland?

Why? Because you live here. That is what Citizens Property and Casualty is all about--SHARED RISKS.

[Aquawind]

Why should I help float the bill for someone who decides to build on the coastline when I live 40 miles inland?

Why? Because you live here. That is what Citizens Property and Casualty is all about--SHARED RISKS.

I think the point is the Premiums should reflect the payouts if were talking geography and hurricanes..Clearly the majority of the damage is along the coast and waterways. After all with all of the talk about how the whole state got blasted look at the actual payouts..

Citizens to date has paid $1.56 billion in hurricane claims from its high-risk account.

More than $1.53 billion of those checks are to ZIP codes within a mile of the water.

Granted that is where most of the people live. Yet to everyones surprise hurricanes all of a sudden do damage inland..like we never knew..thats baloney. They are simpy making an excuse for raising rates on anyone they can. Certainly so if they are raising them anywhere near the proportion that those coastal counties took..

Paul

[drudd1]

Allstate 2004 net income: $4.54 million
http://www.allstate.com/investor/annual ... 4/gaap.asp

Actually, if you look at the report in the link, it says that the net income was $4.54 per diluted share. This figure is not in millions. To tell what the net income was, you have to muliply $4.54 times the number of outstanding shares.

On the linked page you will see a link to download the 2004 Summary Annual Report. At the top of the report it reads, and I quote, "Highlights: In 2004 Allstate incurred $2.0 billion in losses related to the four hurricanes in the Southeastern U.S. Nevertheless, net income grew to $3.2 billion. Operating income by 16.1% to $3.1 billion. We generated a record $33.9 billion in in total revenues. And we delivered a 15% return on on equity."

To summarize, they(Allstate) said despite the $2.0 billion payout on claims, they still increased their net income to $3.2 billion. They were not hurt in the least by the hurricanes, but would prefer you to believe otherwise. Remember, this is net income, not gross income, they are laughing all the way to the bank.

[GulfBreezer]

My advice to anyone , inland or on the coast, should make sure that they insure with a profitable company and one that will not "go under" in the wake of a major disaster. When Andrew hit in 1992, the Florida insurance commission voted to NOT raise rates when they should have to cover the pay outs and it should have been done across the board but what ended up happening was that in 2001, ALL companies had to raise rates to cover what should have been covered in 1993 and forward. My insurance premiums have gone up 300% since 2001. I have State Farm and am very happy that I do.

[corpusbreeze]

Wow, Now you guys in Florida know how we here in Texas feel. The insurance companies have been sticking it to us here for awhile. In one year Farmers increased my home owners up almost $1000. They are a bunch of crooks. Sorry to here about the bad news guys.

[Javlin]

Everybody can be affected by a landfalling hurricane to some degree if they are in the path even 100 miles inland.Why not then spread the increase accordingly.The guy on the coast might pay let's say 50%,ten miles inland to twenty 30% increase and so on.Just something like that.

[Terry]

Ok, if those who own property inland in FLA don't like sharing the expense of the insurance stuff, then let's get a new bill passed in the Legislature that allows coastal property tax income to only be used for coastal communities and not for the rest of the county.

Take a look. Coastal prop. tax income is paying for much (most???) of the infastructure/schools in coastal counties!

No lie. Those of us who own business property or second homes in coastal FLA are paying via property taxes for much of the infastruture of the inner communities.

Be careful what you ask for..... If you inland guys/gals don't want the insurance burdens, then you better watch out. Believe me, there are a large and growing group of us who are working to make changes with the FL Legislature to make our coastal $$$ are spent only along the coast!

Florida has always been good at spreading the income and the expense... education is a great example. I for one hope FL continues this "sharing the wealth and the expense."

note - if there was a Politcal Forum on S2k, I would have posted this there!

[CentralFlGal]

Allstate 2004 net income: $4.54 million
http://www.allstate.com/investor/annual ... 4/gaap.asp

Actually, if you look at the report in the link, it says that the net income was $4.54 per diluted share. This figure is not in millions. To tell what the net income was, you have to muliply $4.54 times the number of outstanding shares.

On the linked page you will see a link to download the 2004 Summary Annual Report. At the top of the report it reads, and I quote, "Highlights: In 2004 Allstate incurred $2.0 billion in losses related to the four hurricanes in the Southeastern U.S. Nevertheless, net income grew to $3.2 billion. Operating income by 16.1% to $3.1 billion. We generated a record $33.9 billion in in total revenues. And we delivered a 15% return on on equity."

To summarize, they(Allstate) said despite the $2.0 billion payout on claims, they still increased their net income to $3.2 billion. They were not hurt in the least by the hurricanes, but would prefer you to believe otherwise. Remember, this is net income, not gross income, they are laughing all the way to the bank.

Thanks for the correction, you are absolutely right.

It's so amazingly wrong for them to what they're doing. They are laughing all the way to the bank - and then some.

Floridians were protected from price-gouging vultures after the storms... where's the cry for that protection now?

[CentralFlGal]

Folks, my intention wasn't to start an "us versus them" debate (unless, of course, "them" refers to the insurance companies).

I just wanted to illustrate the fact that there isn't a need to raise premiums on Floridians when the insurers have very deep pockets to dip into to remedy the situation and still realize a pretty profit. We are all well-aware of the damage hurricanes cause from the beaches to the groves. They affect us all.

My point was that insurance companies chose to run this casino and are shirking their share of responsibility because the odds fell out of their favor (the average homeowner does not have this luxury). They want to keep the bottom line bright and shiny for shareholder value purposes, but they conveniently forget that policy holders are part of that value that keeps their bread buttered.

No hard feelings folks, we're all in this together.