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Thursday, June 21 2018

Florida’s Citizens Property Insurance Corp. will wait until December to determine its 2019 insurance rates and whether it will approve a proposed 7.9 percent statewide increase for homeowners policies.

The decision to defer action on the 2019 proposed rates came at Wednesday’s Board of Governors meeting where the board opted to give new water loss policy language changes time to take effect and South Florida policyholders more time to recover from Hurricane Irma, according to a statement from the state insurer of last resort.

Citizens said deferring the decision will allow the company to review initial results of a newly established managed repair program that kicks off Aug. 1, 2018. The program was created to address rising costs linked to water-loss claims, assignment of benefits and increased litigation.

Acknowledging concerns raised by consumer advocates and state leaders, the board voted unanimously to defer action on a proposed 7.9 percent statewide increase for personal lines policyholders – homeowners, condominium unit owners and renters – which would have taken effect on Feb. 1, 2019.

Under the proposed rates, inland homeowners with multiperil policies would see an average increase of 8.3 percent, while homeowners along the coast would see rates climb by an average of 9.5 percent. Commercial lines would increase by an average of 8.9 percent.

The 2019 proposed rates called for increases in homeowners multiperil premiums in 60 of 67 counties (see graphic). Citizens said the statewide rate increases are being fueled largely by increased litigation associated with water damage claims and assignment of benefits abuse. In Southeast Florida, Citizens Chief Actuary Brian Donovan said the litigation rate is around 50 percent, though he said that rate has flattened out after years of increasing, though the reason for that is unclear.

This is the first year many policyholders outside Southeast Florida could see rate increases as AOB and water damage claims abuse appear to be spreading to other parts of the state, Donovan told the board. He said the litigation rate outside of Southeast Florida has increased from the single digits to 15 to 17 percent.

“In the past couple years these policyholders actually have been receiving rate decreases,” he said. “However, due to the increase in litigation, this year the recommendation is to increase the rates in that region.”

Wednesday, June 20 2018

Just six months after the punishing 2017 season battered the Sunshine State, most Floridians are still not prepared for the potential assault of another hurricane season, according to a survey by the FAIR Foundation.

The survey, released last week and conducted just days after Subtropical Storm Alberto, found that more than three-quarters of Floridians expressed concern about potential hurricanes this year – yet only half have reviewed their home insurance policies to be sure they’re covered.

The survey was conducted June 1 through June 4 from responses through a random sample of registered Florida voters through the Florida Voter File. The survey of 1,000 Floridians found that 76 percent feel very or somewhat concerned about the new hurricane season. Only 5 percent said they are not at all concerned.

Among Florida voters who own their homes, 50 percent have reviewed their homeowners insurance policy since last hurricane season and about 21 percent had updated it. Thirty percent of respondents said they had done neither.

“Hurricanes Irma and Maria last year should have been enough to convince every Floridian of the vital importance of preparing for the worst – but it doesn’t seem that’s really happened,” said Guy McClurkan, executive director for the FAIR Foundation. “The 2018 hurricane season is already off to a fast start, so it’s crucial that everyone review their family’s safety and evacuation plans, check their insurance coverage and consider purchasing separate flood insurance, since floods aren’t covered by a typical homeowners policy.”

The most recent survey also found that Floridians are more focused on their safety and comfort at home following a significant storm event, further emphasizing the need for home hardening and other preparations.

Asked which conveniences they would choose to have in the four days following a hurricane, most chose a refrigerator (74 percent) over a fully charged cell phone (26 percent) and air conditioning (77 percent) over a fully charged cell phone (23 percent). An even larger majority – 83 percent – would prefer internet access rather than cable television access (17 percent). That sentiment was echoed through all age groups, from 92 percent among millennials to 88 percent among those ages 35 to 54 and 74 percent among those ages 55 and older.

The FAIR Foundation said it urges Florida residents to prepare well in advance for the unknown. The Florida-based organization said a separate survey it commissioned in December for the National Hurricane Survival Initiative found that 64 percent of those who attempted to purchase flood insurance as Hurricane Irma headed for Florida were unable to do so.

“You simply can’t wait until the last minute as the storm approaches – not to prepare your home, and not to secure flood insurance to cover losses your regular homeowners policy won’t,” McClurkan said. “Even though hurricane season has already begun, it’s not too late to get ready and get yourself, your family, and your home protected.”

FAIR Foundation has launched Get Ready, Florida! – an on-going statewide initiative to spur awareness, involvement, and action by Floridians targeting hurricane-safety. The campaign features hurricane safety checklists and a television special with information for Floridians.

The FAIR Foundation, an affiliate of the Florida Association for Insurance Reform (FAIR), is a 501(c)3 non-profit organization educates consumers on the risks of water, wind and other natural disasters, promoting wind and flood mitigation and reducing uninsured risk.

Thursday, June 14 2018

As Hurricane Irma bore down on Florida last September, the top U.S. disaster response official ordered all hands on deck.

With 4,500 Federal Emergency Management Agency staffers already helping survivors of Hurricane Harvey in Texas, FEMA chief Brock Long told managers in an internal memo to ready every member of the agency’s on-call reservist workforce for deployment.

In the following months, thousands of FEMA reservists, who account for about half of the agency’s disaster response personnel, would descend on Florida, Puerto Rico, California and elsewhere to help recovery efforts after an unprecedented string of natural disasters.

But not all would respond. About 500 reservists, or one of every twelve workers, ignored FEMA’s deployment request, current and former officials told Reuters.

“We didn’t even hear from them,” Patrick Hernandez, who oversees FEMA’s disaster workforce, said in an interview. “We need to get people in here who understand the system and adhere to the protocols.”

With the 2018 hurricane season already underway, FEMA is scrambling to hire more people who are willing to depart at a moment’s notice for assignments that can last months at a stretch.

Internal documents obtained through a Freedom of Information Act request show the agency’s disaster-response force is understaffed by 26 percent. And as last year revealed, many of those who sign up don’t always respond when needed.

That comes at a cost. At times, staffing shortages force FEMA to shuffle personnel from one disaster to the next and in some cases rely on workers who do not know how to do the job effectively, according to interviews with 15 current and former FEMA workers.

Some local officials say the agency’s central mission – getting federal aid where it is needed – is undercut by the constant turnover.

“They had no knowledge of the system. They had no knowledge about how to do anything but fill out forms,” said Junior Shelton, mayor of Central, Louisiana, which experienced catastrophic flooding in 2016. “We’re still sitting around waiting for that money to get here.”

Hernandez said staffing issues have not affected FEMA’s ability to get the job done. “I would not agree with that statement wholeheartedly,” he said.


The extraordinary string of domestic disasters in 2017 continues to weigh on the U.S. agency. With thousands of workers still out in the field, official figures show that 33 percent of FEMA’s disaster-response workforce is available for deployment, down from 56 percent at this time last year.

Some specialties are stretched especially thin: Only 13 percent of the workers who direct federal aid to pay for rebuilding costs after a disaster hits are currently available.

“That’s a very low number, and that would be very scary going into more disasters,” said Elizabeth Zimmerman, a former senior FEMA official.

Unlike military reservists, those who work for FEMA don’t have a guarantee that their regular jobs will be available when they return home. As a result, most are retirees who don’t need steady work or recent college graduates who don’t yet have a full-time job, current and former managers say.

Reservists are allowed to turn down up to three assignments each year, meaning FEMA cannot count on a full reserve force during peak periods. According to internal figures, FEMA’s reservist corps has grown by roughly 1,000 workers over the past year. Still, it remains 3,700 workers short of the 10,949 reservists it has determined it needs to be able to respond to several disasters at once.

Some reservists say they are not in a position to accept months-long assignments far from their homes.

“I could get a phone call tomorrow telling me to go to Puerto Rico, but the truth is I’m not going to go,” said Alessandra Jerolleman, who said family obligations prevent her from leaving Louisiana.

FEMA officials point out they can pull in other types of workers when needed. Some 22,000 federal employees from agencies like the Defense Department participated in disaster relief work with FEMA in 2017, for example.

“We rely on our reservists and we love them,” said FEMA’s Hernandez. “But FEMA’s made up of a lot of different elements.”


FEMA also hires residents of disaster zones to help out, a practice that is widely praised for boosting employment and harnessing local knowledge. But some say it can hinder FEMA’s effectiveness.

Carlos Mercader, Puerto Rico’s top lobbyist in Washington, said he received numerous complaints of poorly trained FEMA workers who assess damaged houses in a seemingly arbitrary manner. While one might be declared a total loss, another that appeared to suffer similar damage might be denied reconstruction assistance, he said.

Local hires accounted for more than half of the 2,878 FEMA employees in Puerto Rico in May, according to agency figures obtained by Reuters. Only 100 are permanent FEMA employees. “They probably should be sending us more people with as much experience as possible,” Mercader said.

FEMA officials say Congress could help with recruiting and retaining reservists by guaranteeing they can keep their regular jobs while on assignment, as is the case with military reservists. Officials have also asked Congress to change hiring laws to give reservists preferential status when they apply for a full-time FEMA job.

Congress has yet to act on those requests.

But FEMA’s own actions may also drive away some who are willing to serve, reservists say.

Paul Seldes, 59, said he tried unsuccessfully since 2011 to find an assignment that matched his background in field operations.

Instead, the agency repeatedly asked him to report to a telephone call center to screen financial-aid requests from disaster survivors. By last fall, he no longer bothered to respond to such deployment requests, he said.

“I have this capability, I have this knowledge, I have this training – why don’t you want to listen to me?” he said.

Wednesday, June 13 2018

The federal government, seeking to protect itself from the growing cost of natural disasters, is borrowing a technique from the private sector and buying reinsurance.

The Federal Emergency Management Agency, which started purchasing reinsurance last year for the National Flood Insurance Program, is now exploring the expansion of the program, spokesman Michael Hart said by email Tuesday.

Reinsurance is coverage bought by insurers — or, in this case, FEMA — as protection against unexpectedly high claims.

As the federal government’s exposure to extreme weather and associated natural disasters has grown, so has the reinsurance industry’s role in helping cover that risk. In 2014, Freddie Mac and Fannie Mae began buying reinsurance to protect against a drop in the value of their mortgage loans, including losses caused by natural disasters.

FEMA worked through Guy Carpenter & Co. LLC, a subsidiary of Marsh & McLennan Cos., to buy $1 billion worth of reinsurance in 2017 from 25 carriers for the flood insurance program. This year, the agency bought $1.46 billion of reinsurance for the program.

Related: Insurance Pitch: Keep Your Profits Safe as the Epidemic Spreads

In April, the agency announced its intention to buy a so-called catastrophe bond, which works like reinsurance, with the investor getting a return unless disaster costs to the government exceed a certain threshold. FEMA didn’t say how much the bond would pay out.

Separately, Republican Representative Dennis Ross of Florida, the vice chairman of the House Financial Services Committee’s Subcommittee on Housing and Insurance, has introduced a bill that would direct FEMA to look at buying reinsurance or similar products for part of its overall disaster costs — not just flooding.

Ross said that change would protect taxpayers from a sudden spike in costs, and also better protect the public from disasters by increasing the government’s incentive to reduce risk — for example, by restricting development in vulnerable areas, or imposing stricter building standards.

Private Capital

“Private capital is going to impose good risk-management procedures,” Ross said in an interview. “Those are market forces that help dictate safe communities, safe environments, better cities.”

The Reinsurance Association of America, a trade group for the industry, has backed Ross’s proposal, telling him in a letter May 31 that “disaster victims, businesses, and communities could greatly benefit from a reinsurance risk transfer program.”

Disaster and insurance experts said that reinsurance would probably work at sheltering taxpayers from unexpected costs. But they said it’s far from clear that reinsurers would exert enough influence on the government to enact policies that reduce Americans’ exposure to risk — policies that tend to be unpopular, which is why they haven’t been adopted yet.

Reinsurers have significant influence over the decisions made by primary insurers, whose business models depend on reinsurers agreeing to buy their risk, according to Peter Kochenburger, a professor and deputy director of the Insurance Law Center at the University of Connecticut School of Law. But he said that same dynamic doesn’t hold for the government.

The federal government “can use reinsurance to reduce its risk, but it doesn’t need reinsurance in the way that many insurers do,” Kochenburger said. If reinsurers insist on unpopular changes to where or how people build, FEMA or Congress can say no.

Another problem is that FEMA doesn’t have direct control over building codes or development decisions. Paula Jarzabkowski, a management professor at Cass Business School in London, said reinsurance programs can spur policy changes, but it’s easier when the agencies facing higher premiums also have the authority to make those changes.

“There needs to be a concerted effort to join the parts of government,” Jarzabkowski said.

Jeffrey Czajkowski, managing director for the Wharton Risk Management and Decision Processes Center, said the rising costs of disaster, rather than pressure from reinsurers, is what’s most likely to spur more aggressive federal policy on climate resilience.

“If we have 2017 every year, we’re not going to make $70 billion available to the State of Texas every single year,” Czajkowski said. “We just can’t keep doing that.”

Thursday, June 07 2018

Hurricanes can have a major impact on our lives, disrupting our work or damaging our homes and businesses. DEO is proud to announce a new website,, to help businesses in times of disasters. This toolkit streamlines the information and resources available to assist businesses before, during and after a disaster.


In 2017, our state was reminded about the drastic impact a natural disaster can take on businesses. The new provides key resources and information to help Florida’s job creators in the face of a disaster. We know that businesses, like individuals and families, must be prepared with a plan, and will guide businesses step-by-step to help them prepare and recover quickly from an emergency.


Hurricane Irma taught us that the sooner businesses can recover, the quicker communities can recover as well. When businesses reopen after a disaster, communities and families can get back to normal. By taking steps to prepare now, Florida’s businesses and communities will be more resilient.


For more information and to view the website click here.


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