Florida insurance companies trying to limit discounts for storm improvements
12:57 PM EDT, August 9, 2009
MIAMI – Some Florida insurers are trying to limit the amount of discounts receivable for hurricane shutters and other storm mitigation improvements.
State Farm asked for a 47 percent rate increase last year, citing the cost of those discounts as a main factor. Their request was denied, but the state has agreed to review how discounts are calculated. Tallahassee will host the first public meeting on the subject Wednesday.
The discounts have been around since 2003, but they didn’t become widely used until four devastating hurricane seasons sent premiums skyrocketing four years ago. Insurance Commissioner Ken McCarty ordered the discounts be doubled in 2006 because rates were rising so much.
"This is what they wanted and this is what they got," said state Sen. Mike Fasano, a New Port Richey Republican.. "Now they want to take away (the discounts) from homeowners. That’s a promise they’ve broken."
But some in Tallahassee aren’t so sure. State Rep. Bryan Nelson, an Apopka Republican who called for the review, said the issue needs more than a quick fix.
The problem is that so many residents have taken advantage of the policies — 260,000 in State Farm alone.
At issue is how to calculate the value of such mitigation. Should people who don’t protect their home be fined? Are shutters really worth a 30 percent discount?
The Florida Commission on Hurricane Loss Projection Methodology — a committee of regulators, industry and academic representatives — will go over the new research as part of the review that begins Wednesday.
State Farm has already announced it would stop writing Florida property insurance in the next two years. The company says its Florida business might be insolvent in three years if changes aren’t made.