Homeowners in South Florida, as well as in many other parts of the state, should expect additional rate increases next year from the state-run insurer of last resort.

Citizens Board of Governors approved recommended rates and policy changes for 2018 that the company said reflect rising nonweather water losses, abuse of a policyholder right referred to as assignment of benefits (AOB) and out-of-control litigation that, left unchecked, will force rate hikes for years to come.

By unanimous vote, board members recommended a 5.3 percent statewide increase for personal lines policyholders – homeowners, condominium unit owners and renters – with most increases concentrated in three South Florida counties where, according to Citizens data, water losses, AOB abuse and litigation are disproportionately severe.

Board members also approved a series of policy changes that the insurer hopes to implement to reduce claims costs for nonweather water losses that it says have been pushing rates higher for South Florida customers over the last few years. If approved by the Florida Office of Insurance Regulation (OIR), the changes would take effect in February 2018.

Among the major policy changes is a $10,000 cap on water loss repairs for customers who decide not to participate in the Citizens Managed Repair Program, which links customers with a network of vetted contractors. The voluntary managed repair program, coupled with a free emergency water removal service, will become available to new Citizens policyholders after July 1, 2017, and for existing customers when their policies renew.

Other policy changes include expanding obligations to third parties that accept an assignment of benefits. Currently, contractors who accept an assignment are not bound by the same obligations, including allowing Citizens adjusters to inspect a claim in a timely manner or providing proof that a loss has occurred.

“These proposed rate increases and product changes are critical for Citizens’ efforts to bring some relief to a market that is being made increasingly expensive by unnecessary litigation and out-of-control water loss claims,” said Chris Gardner, chairman of the Citizens Board of Governors. “Unfortunately, we are making it more expensive for many of our customers to own a home.”

The 2017 legislative session concluded in May without making significant changes to state law regarding assignment of benefits and the “one-way attorney fee” statute that many stakeholders agree are driving up costs that must be paid through higher premiums. Citizens joined other insurers, business and consumer groups pushing for reform.

“It’s ironic that our rates for wind coverage are coming down, but Citizens policyholders in South Florida still must brace themselves for continued rate increases,” Gardner said. “We don’t want to raise premiums, but Citizens is obligated by statute to set actuarially sound rates.”

The 2018 rate proposal continues a recent trend in Miami-Dade, Broward and Palm Beach counties. Homeowners with multiperil coverage in Miami Dade County, for example, will see an average increase of 10.5 percent, or $359, from 2017 premiums. Broward and Palm Beach county homeowners will see rates increase by 10.4 percent and 9.3 percent respectively.

Outside of the Tricounty area, many policyholders will see rates decrease or remain flat. Citizens’ homeowners policyholders in 56 of 67 counties will see average rates decrease under the set of proposed rates.

Proposed rates and policy changes must be approved by OIR, which oversees all Florida property insurers. Both the new rates and policy changes would take effect in February 2018.

“We were hoping for legislative change and a surgical solution,” said Barry Gilway, Citizens president/CEO and executive director. “Given that this did not occur in 2017, we cannot wait for the trends to worsen and take no corrective action.”

The full rate kit can be viewed on Citizens website.

Almost five years after Superstorm Sandy, one third of homeowners in several coastal states are still unaware of hurricane deductibles and how they work, new insurance research has found.

Not only did 33 percent of respondents say they had never heard of these deductibles or were not sure what they were, one quarter of respondents lacked an understanding of deductibles in general.

The Insurance Research Council (IRC) released its poll results as the National Oceanic and Atmospheric Administration projects two to four major hurricanes this hurricane season, which lasts from June 1 through November 1.

Homeowners in New Jersey, North Carolina, South Carolina, Florida and Texas were asked whether they were familiar with hurricane deductibles, which is a higher deductible found in homeowners insurance policies that applies when a hurricane occurs.

“The findings from this survey suggest that ample room exists for educating homeowners about a key feature of every homeowners insurance policy—deductibles,” said Elizabeth Sprinkel, senior vice president of the IRC. “The need is especially acute as the 2017 hurricane season gets underway and insurers hope to minimize post-event misunderstandings with their policyholders regarding deductibles.”

Hurricane deductibles were a prominent issue in 2012, with misunderstanding and confusion due to the fact that Sandy did not make landfall as a hurricane. These deductibles, which became more common after insurers suffered heavy losses from Hurricane Andrew in 1992, are often calculated as a percentage of the insured value of a home — another concept the IRC survey found unfamiliar to homeowners.

One in three respondents with percentage-based hurricane deductibles did not know or were unsure of the percentage applicable to their deductible, and four in 10 did not understand the basis for calculating the deductible. One in four respondents incorrectly thought the percentage was applied to the total amount of their claim.

The survey also found that the level of understanding of hurricane deductibles varied across the five states studied. Compared with respondents in the other states, New Jersey respondents demonstrated the lowest level of awareness and understanding of several hurricane deductible issues, despite the fact that about 346,000 homes in New Jersey were damaged or destroyed by Sandy.

The report, “Public Understanding of Hurricane Deductibles, Need for Consumer Education Persists,” is based on an online survey conducted by GfK Public Affairs & Corporate Communications on behalf of the IRC. A total of 1,047 homeowners were surveyed – 200 or more in each of the five states studied. Only homeowners living in selected counties where the home involved was their primary residence and with insurance coverage purchased exclusively from private insurance companies were included in the survey.

https://www.thig.com/hurricane-tracker/

https://www.thig.com/learning-center/natural-disasters/hurricane-season-2017-need-know/

http://www.stjohnsinsurance.com/claims-hurricane.aspx

Hurricane Information

Weathering A Hurricane

Hurricanes are not strangers to homeowners in the Southeast. Knowing what to do can make the difference when it comes to protecting yourself and your home.

Before Hurricane Season Begins

• Plan an escape route.
• Have a stockpile of emergency supplies on hand (drinking water, canned goods, non-perishable foods, manual can opener, flashlights, batteries, candles, first aid kit, essential medications, matches in waterproof containers, portable radio, etc.)
• Develop an emergency communication plan in case you’re separated from loved ones.
• Hurricane shutters are your best protection. If you do not have them, you can use marine plywood panels cut to fit your windows. Pre-drill holes every 18 inches for screws and mark which board fits which window.
• Keep trees free of weak or dead branches.
• Have a video or photographic inventory of your possessions stored in a safe place away from your home. If your home’s damaged it will be invaluable in settling the claim.
• Review your homeowners insurance to ensure it is adequate. Remember, flooding is generally not covered by a homeowners policy. So if you do not have flood insurance, you may want to talk to your agent.

During A Hurricane Watch And Warning

• Pay close attention to progress reports.
• Protect windows.
• Check emergency supplies, make sure you have a full tank of gas in your car and review your evacuation plan.
• Bring outdoor furniture, etc. inside. Anchor items that can not be brought in.
• Set your freezer and refrigerator at the highest setting in case you lose power. (If power is lost, turn off major appliances to avoid power surge.)
• If you are in a surge zone, elevate your furniture to protect it.
• Store valuables and papers in a watertight container at the highest level of your home.
• If evacuation is necessary, unplug appliances, turn off electricity and the main water valve and leave as quickly as possible.

After The Hurricane

• If you evacuated, return home only after authorities say that it is safe. Stay away from flooded roads and washed-out bridges.
• Avoid dangling power lines and report them immediately to the power company, police or fire department.
• Enter your home cautiously. Sometimes snakes, insects and animals are driven to higher ground by flood water.
• Open windows and doors to ventilate and dry your home.
• If your home has been damaged, check for gas leaks (open a window, leave and call the gas company if you find one), obvious electrical problems and sewer and water line damage.
• Take pictures of the damage – inside and out. You will need it for your insurance company.

The First District Court of Appeal in Tallahassee has upheld the 14.5% rate increase in Florida workers’ compensation rates that was approved by the Office of Insurance Regulation (OIR) in October of last year.­ The rate increase, which took effect for all new and renewal policies starting December 1, 2016, had been challenged in court but will now remain in effect as a result of the Court’s order.­

The District Court of Appeal overturned and reversed a Leon County Circuit judge who had ruled that NCCI’s rate filing and the Insurance Commissioner’s subsequent rate order approving the 14.5% increase was invalid because the process violated Florida’s Sunshine Law.­ In a lengthy opinion, the Court ruled that both NCCI and OIR had properly complied with the laws governing rate-making for workers’ compensation insurance in Florida.

The effect of the Court’s Order is that the 14.5% rate increase that has been in effect since December 1, 2016, will remain in effect.

It goes without saying that June 1 has a special meaning to Floridians: the start of the Atlantic Hurricane Season. Last fall, Florida's 10-year hurricane-free streak was broken as Hurricane Hermine made landfall near the coast of St. Marks. About one month later, Hurricane Matthew made landfall over Haiti as a Category 4 hurricane, later embarking on a three-day journey up Florida's east coast and into Georgia and the Carolinas, causing damage that exceeded $729 million generated by 112,000 insurance claims. In total, Floridians last year filed nearly 130,000 insurance claims totaling roughly $800 million in losses. The question now is: If a storm were to reach Florida's shores next week, would you be prepared?

Last year's hurricane season affected a large majority of our state, leaving many of us with wind-damaged property, flooded homes and one big headache. As some of us learned, sandbags and boarded windows will only get you so far. In some ways, our destiny will be defined by Mother Nature, regardless of what may lay in her path. Experts are predicting that the United States should prepare for another active season with an estimated 11-14 named storms and four to seven hurricanes, with two to three of those storms growing to category 3 or higher. But remember, it only takes one.

With the start of the 2017 Hurricane Season quickly approaching, it is up to you to make sure your emergency preparedness efforts reach beyond bottled water and batteries and include being financially prepared for a hurricane event. I encourage all Floridians to start putting together an insurance and financial packet that you can easily take with you should you need to leave your home in a hurry. Be sure to include documentation associated with property and health insurance policies as well as financial account information and contact information for banks and insurance companies. Having these documents put together ahead of time allows you to have ready access to all of the information necessary to file an insurance claim during an emergency evacuation.

If you need a hand getting your insurance-related preparation underway -- no problem. We've created a simple, easy-to-use financial preparedness toolkit to assist with this process. Our toolkit provides a single place to jot down and keep track of all of your insurance information. In the event that a storm directly affects you and your family, this toolkit can help you keep a list of adjuster contacts, emergency service contacts such as the Red Cross, FEMA and the Department's consumer helpline, as well as a log of any calls you've made to insurance companies or agents about claims you may have to file.

Our toolkit can be downloaded in ENGLISH, SPANISH and CREOLE and serves as an essential tool to supplement your preparation efforts. To learn more, please visit our website for additional tips and tools at http://www.myfloridacfo.com/division/Consumers/Storm/.

Take a minute and dust off your preparation materials and ensure you and your family will be financially prepared for this year's hurricane season.

Property insurance rates in Florida are on a steady climb.

Pundits blame claims abuse as the primary culprit, specifically the abuse of assignment of benefits which makes the claims process litigious and costly.

Assignment of benefits (AOBs) involves allowing policyholders to sign over their claims to a contractor, which gives the contractor the right to collect payments from the insurance firm. Local media outfit Naples Daily News reports that these AOBs cost state-owned Citizens Property Insurance Corp $27 million in losses last year.

Michael Peltier, a Citizens spokesman, also said in the report, “The disturbing part is we are expecting an even greater loss for the upcoming year.”

The rising premiums from the past five years were also less to do with natural catastrophes than broken pipes, dishwashers and water heaters. Insurers say the rise in claims is largely due to fraudulent activity.

“The private market is experiencing the same trend that Citizen is, from all of the indications we’ve gotten,” Peltier added. “It’s not just our problem.”

Legislators are acting to address the abuse. State Senator Kathleen Passidomo recently sponsored a bill that would curb claims abuses, but it did not pass legislative muster.

“It was really a consumer protection bill that would allow consumers to get out of some of those contracts that they unknowingly signed,” she told the Daily News. 

“It had some really good provisions that the Office of Insurance Regulation, the insurance industry and consumer advocates all supported. That bill was not heard.”

Passidomo and Senator Dorothy Hukill are currently working on another bill that they plan to file in the next congressional session and they’re “going to pursue this with a vengeance,” the senator said in the report.

She added that legislative remedies are needed because the fraud is spreading to other parts of the state.

Democrats and Republicans, who have agreed on little this year, have found common ground on plans to give private insurers greater access to the $5 billion flood insurance program and to offer more buyouts for homeowners in areas likely to be repeatedly submerged.

“Flood insurance seems to be one of those few areas where Democrats and Republicans see the same problems and, in a lot of instances, see the same solutions,” Rob Moore, a senior policy analyst with the National Resources Defense Council, said in an interview.

At issue is the National Flood Insurance Program, which is $25 billion in debt. Congress has until the end of September to reauthorize the federal program. If it doesn’t act the real estate market along coasts and rivers will come to a halt, because homeowners need that insurance to qualify for federally-backed mortgages. In the wake of Hurricane Sandy the program paid out $8.4 billion to help cover the costs of rebuilding.

Last Thursday, Republican Congressman Sean Duffy of Wisconsin, chairman of the subcommittee that oversees the program, released draft legislation to overhaul it. Those changes overlap heavily with change House Democrats are seeking, according to a document from the Democrats on the House Financial Services Subcommittee on Housing & Insurance obtained by Bloomberg.

The bipartisan agreement among the House lawmakers covers a range of topics, including expanding the role of private flood insurers, getting the federal program to buy more reinsurance on the private market, and making it easier for homeowners that keep getting flooded to move somewhere else.

“This shows an incredible amount of work,” Roy Wright, the deputy associate administrator at FEMA who oversees the National Flood Insurance Program, said in an interview. He said the odds are good of Democrats and Republicans eventually reaching a deal.

The process has a long way to go before these changes would become law. Even if the House agrees on these reforms, the Senate and President Donald Trump must agree as well. And, as happened in the last flood insurance overhaul, changes may end up being rescinded after they become law if they cause premiums to skyrocket.

And some areas of disagreement remain among the House lawmakers.

In the draft legislation released Thursday, Republicans propose ejecting from the program homeowners who keep getting flooded but don’t want to sell their houses. Democrats wouldn’t eject them. And Republicans would impose fewer conditions on private insurers who want to sell flood insurance.

Still the main areas of agreement between the parties is large. The “draft incorporates ideas from both Republicans and Democrats,” Mark Bednar, Duffy’s spokesman, said in an email.

Under these plans, insurers and reinsurers would see an increase in their potential market. The federal flood insurance program takes in about $3.5 billion in revenue each year, and covers about $1 trillion in risk. While private insurers can partner with the program, signing people up in return for a share of their premiums, few private insurers sell their own policies. The program recently bought reinsurance for the first time.

Expanding the space for private insurers could benefit Marsh & McLennan Cos. and Aon Plc, the largest insurance brokers by revenue in the U.S., according to data compiled by Bloomberg. Swiss Re AG, Munich Re and Transatlantic Reinsurance Co. have signed reinsurance agreements with the Federal Emergency Management Agency, which runs the program.

The changes could also reshape coastal neighborhoods. Both parties say they support more voluntary buyouts of homes that repeatedly flood. Under that approach, the federal government uses money that comes in through flood insurance policies to purchase high-risk homes, then demolishes them. Expanding those buyouts could shrink neighborhoods along the Atlantic and Gulf Coasts, in such places as New Jersey, Virginia, Florida and Louisiana.

Both parties also want the federal government to shield poorer households from rising flood insurance premiums, by offering vouchers or other subsidies based on people’s incomes. They would increase the amount of money available to protect homes from flooding, such as moving buildings onto stilts.

“A fair amount of this will be part of the final legislation,” Larry Larson, senior policy adviser for the Association of State Floodplain Managers, said by email after the Republican draft was released. Still, “it has a long way to go yet.”

Lead by example, so goes an old adage.

Especially in driving, as a new study has found that teenage drivers, who are most susceptible to car crash fatalities, take their cue from their parents when it comes to driving behaviour.

The Chicago Tribune reports that a joint study by Students against Destructive Decisions (SADD) and Liberty Mutual found that parents set a pretty bad example for teens to follow, particularly with regard to using their cell phone.

“Parents are not great role models,” Gene Beresin, SADD senior adviser, said in the Tribune report. “As a matter of fact, they’re pretty poor role models for teenage driving.”

Specifically, the study noted that distracted driving now accounts for one in four car crashes.

The study surveyed 2,500 teens and 1,000 parents. Among others, it found that 55% of parents use apps while driving and 62% say they use their phone to take calls while behind the wheel.

Thirty three per cent of teens have asked their parents to put a stop to such behavior, the study also found.

The risky behavior also extends to parents calling their teens even if they know that the youngster is behind the wheel: 50% said they were guilty of calling their teens, while one third expect a response before their teenager reaches their destination.

“The good news is this sets the stage for a conversation between parents and teenagers,” Beresin observed.

The report outlines some suggestions to prevent fatal teen car crashes. Among them:
 

• Do not let your teen drive when they are tired. Encourage them to call you to pick them up or call a cab to ride home because the survey found that 10% of teens have admitted to falling asleep behind the wheel due to tiredness
• Program navigation and music apps prior to a trip. These are the two most commonly used apps by teens and have often been a source of distraction. “Program a playlist ahead of time. If the phone is within reach and you hear or see a notification, you’re going to be very tempted to either look down or pick it up. And the bottom line is you don’t need to,” Beresin emphasized.
• Set a distinctive ring and text tone for emergencies so your teen can ignore their phone when the call is not urgent