Brevard premiums skyrocket

 

Florida Today
 

BY SCOTT BLAKE
Contact Blake at 242-3644 or sblake@flatoday.net

2/6/2006

 

 
Eighty-five-year-old Olga Radick's voice cracked with emotion as if she had lost someone close to her.
But the cause of her dismay was her homeowners' insurance bill.
Her insurer, Nationwide Insurance Company of Florida, informed her that her annual premium will more than double in March, from about $900 to more than $2,000. Radick, who lives on a fixed income with her elderly husband in a remote area south of Palm Bay, said she has been with Nationwide for seven years, and never filed a claim.
Throughout Brevard County, homeowners' insurance policyholders are seeing eye-popping premium increases. In many cases, homeowners are reporting that annual premiums are rising from 50 percent to 100 percent and even more.
After nearly a half-hour on hold listening to recorded music on a state-run telephone hotline set up to help consumers shop for homeowners' insurance, Radick could wait no longer to speak to someone, and hung up. Overcome by worry and frustration, she began sobbing.
"We just can't afford it," she said.
Insurers raising homeowners' rates in Florida say the increases are needed to prepare for potential future losses. The industry was hit with billions of dollars in claims from the hurricanes of 2004 and 2005.
Insurers also are not renewing policies for tens of thousands of Florida homeowners, saying they are dropping customers to reduce their "risk exposure." Some of those customers said they are having problems finding affordable insurance with another carrier.
In some cases, insurance companies are putting rate increases into effect while awaiting approval from state regulators -- which they are permitted to do under certain filing rules. If regulators reject or reduce the increases, insurers must issue refunds or credits to customers.
The rate increases and the nonrenewals -- which affect tens of thousands of homeowners in Brevard -- started last summer and will continue into next summer, as homeowners' previous policies expire.
When told about the Radicks' predicament, Nationwide spokesman Joe Case didn't seem surprised.
With approval from state Office of Insurance Regulation, Nationwide -- Florida's third-largest private insurer -- started raising rates by an average of 21 percent in September for its roughly 240,000 homeowners' insurance customers in Florida.
The 21 percent "is a statewide average, and that may be higher in some parts of the state, depending on the location of the dwelling and the type of dwelling," Case said.
In Brevard County, where Nationwide has about 10,000 customers, the average rate increase is 33 percent.
Case said the increases are based on "computer modeling of our future risks."
Also, in March, Nationwide will begin dropping 35,000 customers in Florida as their homeowners' policies expire, including about 3,000 in Brevard, in an effort to "reduce our high-risk exposure," he said.
In 2004, Nationwide's parent company, Nationwide Mutual Insurance Co., reported more than $1 billion in profits, up 54.7 percent from 2003, according to Hoovers.com, a Web site that specializes in corporate information. Nationwide's financial results for 2005 are not available.
Same situation
Homeowners with Allstate Floridian Insurance Company, the state's second-largest private insurer, are in the same situation.
Angel and Eileen Gonzalez of Merritt Island said their Allstate premium is going up this year from $1,837 to $3,396 -- an 85 percent increase.
"It's kind of strange, because I've been with them for about 29 years, and I've never filed a claim for anything, and the rate is still going up," Angel Gonzalez said.
Allstate spokesman Ryan Priest said different divisions of the company are raising homeowners' rates statewide by an average of 16.3 percent and 24.4 percent for Allstate's roughly 640,000 customers in Florida, including about 25,000 in Brevard.
Meanwhile, Allstate, like Nationwide, is dropping 95,000 customers statewide, including about 2,100 in Brevard.
Priest wouldn't say what Allstate's average rate increases are in Brevard.
The state Office of Insurance Regulation initially rejected the increases, but the company was permitted to put the increases into effect while it tries to negotiate a compromise with the state.
Meanwhile, Allstate customers in Brevard said the company is billing them for premium increases of 60 percent to 100 percent, with the largest increases usually for customers who live on the beachside.
Referrals
At the same time, Allstate has been referring customers whose policies have been dropped to another company, Universal Insurance Company of North America. Some of those customers, too, said they are seeing similar rate increases from Universal, compared with the rates they had been paying under Allstate.
Satellite Beach resident David Tincher said his annual premium with Allstate has increased from $658 to $1,130.
Tincher, who described himself as a disabled Vietnam War veteran, said he will have to use nearly all of a cost-of-living increase in his military pension -- his first in several years -- to pay for the Allstate increase.
In about 17 years as an Allstate customer, Tincher said he never filed a claim. So he called Allstate and spoke with a company representative about his big rate increase.
"They said, 'It's been bad year, and everyone is going to have to suffer.' But the line got mysteriously silent when I asked what kind of a cut the CEO of Allstate is taking to his bonus," Tincher said.
Allstate Corp. -- Allstate Floridian's parent company -- reported last week that its profits in 2005 dropped to $1.77 billion, down 45 percent from $3.18 billion in 2004.
'Ripped off'
Lewis Firley of Rockledge was referred to Universal Insurance after being dropped by Allstate. He was at his summer home in upstate New York when he received the notice, and signed up with Universal before returning to Florida for the winter. He said his annual premium went up from $275 with Allstate to $668 with Universal.
Firley sent Universal a check for the full amount, but now he regrets not waiting and shopping around for another insurance company.
"My gut feeling is that I got ripped off," he said. "I never filed a claim while insured with Allstate."
Merritt Island resident Kevin Courtney also saw his premiums more than double. Courtney said he also signed up with Universal after being dropped by Allstate, and his annual premium shot up from about $873 to $1,887. For now, at least, he's sticking with Universal.
"There's really not many options around," Courtney said.
At random
Priest of Allstate said the company's nonrenewals and rate increases were not based on customers' claim history. The company randomly selected policies not to be renewed to limit its potential for losses, and the rate increases were based on location of homes, among other risk factors, he said.
Firley said he wonders whether Allstate and Universal have some sort of "sweetheart deal."
Priest said the two companies reached an agreement for Universal to offer coverage for the customers whom Allstate dropped, but he would not disclose details of the arrangement.
Going up
Citizens Property Insurance Corp., the state-run insurer of last resort and Florida's second-largest homeowners' insurer, with more than 800,000 customers, has requested premium increases averaging 44.9 percent statewide. The increases would be the second part of a 60.8 percent statewide rate increase by Citizens.
State Farm Florida Insurance Co.. the state's largest private homeowners' insurer, with about 941,000 Florida customers. will start putting rate increases into effect in February and March after receiving state approval last fall, said Chris Neal, a company spokesman in Florida.
Neal said State Farm's premium increases will average 6.9 percent statewide, but the increases "really vary greatly, based on location and a variety of factors."
Neal said he didn't have a breakdown on what the increases will be in Brevard. He also would not disclose how many customers State Farm has in Brevard, but said State Farm is the largest private homeowners' insurer in virtually every county in the state.
State Farm's 2006 rate increases follow a 5 percent "across-the-board" increase that all State Farm homeowners' policyholders in Florida received in 2005.
"You're well-aware of the last two hurricane seasons we've had. The rising cost of (building) materials has put pressure on rates," Neal said.
No new policies
Unlike the state's two other big insurers -- Allstate and Nationwide -- State Farm said it is not reducing its customers through nonrenewals.
However, State Farm is not writing new homeowners' policies in a total of five counties in southeastern Florida and the Tampa area, where the company has deemed it already has reached its "maximum exposure," and has limited its policy growth in some other counties to 1 percent or 2 percent, Neal said.
"I know we're writing new policies" in Brevard, he added. "In areas close to the coast, that number could be zero. In inland areas, that number probably is a little better."
Profits at State Farm's parent company, State Farm Mutual Automobile Insurance Co., rose to $5.3 billion in 2004, up 89.3 percent from 2003. The company is scheduled to release its 2005 financial results in late-February.
While the company as a whole boosted profits in 2004, State Farm's Florida subsidiary lost $771 million that year, according to Dick Luedke, a spokesman at State Farm headquarters in Bloomington, Ill. Previously, State Farm's Florida subsidiary lost a total of $150 million in 2000 and 2001, and made profits totaling $139 million in 2002 and 2003 -- for a net loss of $11 million during that four-year span, he said.
'A dilemma'
Finding affordable homeowners' insurance has become an emotional issue for homeowners such as Indialantic resident Kristen White.
White, an Allstate customer, wrote to Gov. Jeb Bush, asking him to "find a way to control" insurance companies, after she and her husband got a notice from Allstate that their annual premium will shoot up from $1,747 to $3,400, effective in March.
"What have they done with the premiums I have paid them over 20 years? I have only filed one claim in all those years, relating to Hurricane Jeanne" in 2004, she wrote. "This increase is a dilemma for many hard-working individuals. . . . Soon, only the rich will be able to afford this small slice of paradise."