Skyrocketing Homeowners Insurance Premiums

Last Wednesday, a state Senate committee heard projections that some Citizens Property Insurance policyholders will face premium increases that will be equal or more than their mortgage payments. In fact, all Florida property owners will face steep increases in early 2006, in part, because of the massive deficit's faced by Citizens Property Insurance Corp. Citizens was set up by the Florida Legislature to cover home owners who cannot get coverage in the private sector and is funded by every other policy holder in the state when it loses money. Citizens' deficit of $950 billion in claims from hurricane damage will probably translate into an extra assessment to non-Citizen policyholders of 10 to 11 percent of their premium. This surcharge would add $220 to $2,000 bill to some policyholders. This estimated 11% surcharge is in addition to the 6.8% surcharge all policyholders will be required to pay with policy renewals next year. Governor Bush and Senate leaders are now suggesting broad changes are in order to correct the problems with Citizen Insurance. Last spring, facing the forecast of massive insurance premium increases for all property owners of the state, Tom Gallagher, the Chief Financial Officer for the state of Florida, requested the Legislature assist homeowners with the more than $800 million in hurricane related sales tax revenue collected in 2004 to offset the substantial deficit that was apparent with the Citizens Insurance. Mr. Gallagher also estimated that the state would reap millions more in additional sales tax revenue as people buy supplies to repair their homes from this year's hurricanes destruction. His request to the Florida Legislature was accompanied by a method to allow condominium associations to build catastrophe reserves. Mr. Gallagher also called for a $1 million cap on policies issued by Citizens Property Insurance. Unfortunately, Mr. Gallagher did not have a legislative sponsor to carry the proposals to fruition. Hindsight is never a good policy but the $800 million in sales tax revenue from 2004 would have certainly eased the pain that all homeowners will feel over the coming months when their homeowners insurance comes up for renewal, or worse yet, when they receive a cancellation notice. We can only hope our Legislature, with Governor Bush's assistance, begin immediately to correct the problems we all are enduring with the insurance crisis in this state.