PROView - October 2007 - (Page 8) PRO ACTIVE Property Insurance Update by Mike Mayo, Director of Public Affairs With all the focus on property tax reform over the past few months, we have not been paying nearly as much attention to property insurance relief and reform – an issue that dominated the public policy agenda at the beginning of the year. Skyrocketing property insurance rates are seriously undermining the American dream of homeownership and hurting the real estate business in a very profound way. As a result, the Florida Legislature met in special session back in January and a series of reforms designed to reduce property insurance rates were passed. The question now, several months later, is what the actual impact of these reforms on the property insurance market has been. The reforms included many provisions, including but not limited to expanding consumer choice by eliminating the cap on deductibles and allowing homeowners to exclude windstorm coverage; a new mitigation program; an end to a form of “cherry picking”; prohibiting excess profits by property insurers; enlarging the state’s reinsurance pool, the Florida Hurricane Catastrophe Fund; giving insurance companies less expensive reinsurance from the state with the requirement that they pass savings along to consumers; elimination of the arbitration panel that had the final say over requested rate hikes; and reforming the government-run Citizens Property Insurance Corporation (CITIZENS) to make it more competitive with the private insurance industry. As it specifically concerns reforms to CITIZENS, if an insurer’s offer of coverage is more than 15% greater than CITIZENS premiums, the policyholder is automatically eligible for coverage. Additionally, CITIZENS policyholders no longer have to accept an offer of coverage from a private insurer. The bill also allows CITIZENS to write commercial insurance policies outside of areas considered to be at high risk of hurricane loss. While critics contend the reforms will expose the state 8 PINELLAS REALTOR® ORGANIZATION to greater financial risk in the event of a catastrophe, regulators suggested rates would drop by 24%. According to Governor Crist, “rates would drop like a rock” Unfortunately, that is not what most consumers . and REALTORS are seeing in the marketplace. In fact, according to a survey of Florida voters conducted in July, 31% said their insurance rates have increased, 4% said their rates have decreased, and 51% contend the new law will have only a minor impact on lowering rates. Approximately 300 carriers filed their initial rate rollback by March 15, and their decreases ranged from the low single digits to 40%. However, the average decrease is expected to be around 11 to 12%. As of this writing, the Office of Insurance Regulation (OIR) reports that a small percentage of the market has filed the second required filing. So far, 35 out of 46 insurers actually filed rate increases averaging 37.3% It is expected that when 37.3%. all companies complete the required filing process the results will be as follow: some companies will pass along minimal savings or perhaps even seek somewhat higher rates but other companies will file relatively significant reductions. That being the case, OIR must still review these filings, and one can expect an aggressive review of any rate increase or minimal rate decrease filing. Another important point is that policyholders who have not reached their renewal date and whose company was granted a rate increase prior to enactment of the new law will still have that increase passed along at renewal. Every company has its own business model and reinsurance program and all pay varying rates for reinsurance. For instance, national carriers such as State Farm often purchase reinsurance from the parent company at very competitive rates and are expected to net little savings under the new law. However, smaller carriers with books of business consisting of polices taken out of CITIZENS pay higher reinsurance rates and could yield significant savings. October 2007
Table of Contents Feed for the Digital Edition of PROView - October 2007 PROView - October 2007 Contents Chairman’s Notes Feature Story ProActive 2007 Annual Membership Meeting and Luncheon Marketplace Analysis Home Sales Report MLS Update MLS Upcoming Events Calendar of Events & Programs PRO Biz Welcome New PRO Members Welcome New PRO Affiliate Member News PROView - October 2007 PROView - October 2007 - PROView - October 2007 (Page Cover1) PROView - October 2007 - PROView - October 2007 (Page Cover2) PROView - October 2007 - Contents (Page 1) PROView - October 2007 - Chairman’s Notes (Page 2) PROView - October 2007 - Chairman’s Notes (Page 3) PROView - October 2007 - Feature Story (Page 4) PROView - October 2007 - Feature Story (Page 5) PROView - October 2007 - Feature Story (Page 6) PROView - October 2007 - Feature Story (Page 7) PROView - October 2007 - ProActive (Page 8) PROView - October 2007 - ProActive (Page 9) PROView - October 2007 - 2007 Annual Membership Meeting and Luncheon (Page 10) PROView - October 2007 - 2007 Annual Membership Meeting and Luncheon (Page 11) PROView - October 2007 - Marketplace Analysis (Page 12) PROView - October 2007 - Home Sales Report (Page 13) PROView - October 2007 - MLS Update (Page 14) PROView - October 2007 - MLS (Page 15) PROView - October 2007 - Upcoming Events (Page 16) PROView - October 2007 - Calendar of Events & Programs (Page 17) PROView - October 2007 - PRO Biz (Page 18) PROView - October 2007 - PRO Biz (Page 19) PROView - October 2007 - PRO Biz (Page 20) PROView - October 2007 - PRO Biz (Page 21) PROView - October 2007 - Welcome New PRO Members (Page 22) PROView - October 2007 - Welcome New PRO Members (Page Cover3) PROView - October 2007 - Welcome New PRO Members (Page Cover4)
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