More Feel Insurance Crisis Pinch
Published: Aug 12, 2006
ADVERTISEMENT
More from this channel:
Search for more information:
PINELLAS PARK - Florida's high-priced insurer of last resort, Citizens Property Insurance Corp., is increasingly becoming the only choice for thousands of condominium associations, resulting in skyrocketing unit maintenance fees and special assessmentsto pay the rate increases.
Since April, the number of condominium associations covered by the state-sponsored insurer has gone from 3,500 to 5,000, Citizens officials said, and new applications are coming in at a clip of 250 a week.
The increase is because of major insurers such as Allstate, Nationwide and State Farm exiting the condo market. That comes on top of the financial insolvency in June of Southern Family Insurance Co., a Poe Financial Group company and a major insurer of condominiums.
Over the past few months, Citizens has become the largest property insurer in Florida, mainly from homeowners who can't find coverage elsewhere.
"We are a symptom of a sick market," Christine Turner, Citizens director of consumer and legislative affairs told a group of condominium association officials in Pinellas Park on Friday.
"Eight hurricanes in two years has all but shut down the property insurance market in Florida," she said. "In the short term, Citizens is only the answer."
That answer, however, translates into much higher rates as condo owners discover the pain that hundreds of thousands of homeowners already have experienced as Citizens policyholders.
Condominium associations are seeing rate increases, of 100, 200, even 500 percent over rates in the voluntary market, said insurance brokers present at Friday's meeting.
In turn, the associations are sharing that cost with individual owners.
Condominium association insurance covers the common parts of a complex, such as unit exterior walls, roofs, foundations, clubhouses, swimming pools and grounds. It is in addition to an individual unit owners' own insurance.
Larry Huffman, the finance chairman of the Paradise Village condominium in Treasure Island, said the 51-unit complex is being dropped at the end of the year by its private insurer, and Citizens is the only insurer willing to cover it.. He said premium rates are expected to more than quadruple from $87,000 annually to nearly $400,000 for the complex.
Huffman said that will raise his individual monthly insurance fees, part of his maintenance payment, from $390 a month to $600.
Although most condo owners have benefited by rising property values exceeding 100 percent, they worry that the higher monthly insurance costs will show up in reduced prices when it comes time to sell.
"The higher insurance rates will make units less marketable," he says.
The news only will get worse, said Paul Palumbo, Citizens chief underwriting officer. Starting Aug. 1, Citizens raised rates by 100 percent for condominiums in wind pool areas, which include the barrier islands in Pinellas County, he said.
In March, a second increase will occur as Citizens complies with a legislative mandate to ensure the company can better cope financially with a major hurricane, he said.
He did not have details on that increase but said "it would be significant."
Reporter Randy Diamond can be reached at 813259-8144 or
