FLORIDA CHIEF FINANCIAL OFFICER TOM
Volume 1, Number 40,
October 4, 2004
It’s Fire Prevention Week.
This time next year, when I look back 12 months, I hope to
be able to say that no Floridian died as a result of fire. I’d like to ask you
to help me make that possible.
First, make sure you have working smoke alarms in your home
and in your office. Working smoke alarms were present in fewer than 5 percent of
the 58,000 fire incidents reported to the State Fire Marshal’s Office in 2003,
and 109 Floridians died in those fires.
Sit down with your family, make an escape plan and practice
it. Do the same at the office. Each year, fire claims the lives of Florida’s
elderly more than any other age group. The second group most often killed or
injured in fires is children.
Also, please visit
www.MyFloridaCFO.com/sfm for more fire safety tips and information.
Our citizens are struggling to recover from the impact of
four hurricanes that struck our state in a span of less than two months. We
can’t do anything to avoid a hurricane, but we can do a lot to protect ourselves
from the risk of fire.
-- Tom Gallagher
GALLAGHER KICKS OFF
FIRE PREVENTION WEEK 2004 WITH NEW EDUCATION PROGRAMS, EMPHASIS ON SMOKE ALARMS
Hurricane Jeanne recently claimed its seventh
Florida victim, but not with wind or rain.
In Port St. Lucie, a Waste Management worker was electrocuted when a downed
power line set fire to his truck. It was one more reminder of the grim hazards
fire poses as Florida observes Fire Prevention Week, Oct. 3-9.
“Every year, fires claim the lives of many Floridians, and injure hundreds of
others,” said Florida’s Chief Financial Officer and State Fire Marshal Tom
Gallagher. “But there are steps we can take to protect ourselves and reduce our
risks of being injured by fire. One of the simplest but most important steps is
to install a smoke alarm in your home or business—and make sure it works.”
Statistics bear this out. Working smoke alarms were present in fewer than 5
percent of the 58,000 fire incidents reported to the State Fire Marshal’s Office
in 2003, and 109 Floridians died in those fires.
“It’s a simple job, but it can mean the difference between life and death,”
Gallagher told about 40 senior citizens at a Fire Prevention Week kick-off
program at Georgia Belle Apartments, a Tallahassee independent living facility
where 10 years ago more than 100 people were injured in an early morning fire.
Gallagher told them that fire claims the lives of Florida’s elderly more than
any other age group.
To combat that sobering trend, the Department of Financial Services and State
Fire Marshal’s Office have teamed up with the Department of Elder Affairs to
launch a new education program targeting the state’s seniors. The new
educational package will be distributed to fire departments throughout the
state, and includes training materials and a DVD with tips and tools to help
local firefighters and fire safety educators provide the elderly with
information that can save lives.
The State Fire Marshal’s Office also continues to place special emphasis on
education for children. The department’s “Safe House Mouse” program offers tips
for kids and suggestions for parents and teachers to share practical advice on
how to prevent and escape fire. That program can be found at
http://www.MyFloridaCFO.com/SFM/SafeHouse/index.html. And, the State Fire
Marshal’s Office has created fire-safety bookmarks specifically targeting
The State Fire Marshal’s Office is also promoting fire safety at the state’s
colleges and universities. This week, fire prevention specialists will be
visiting university campuses to draw attention to the special risks students
living away from home for the first time can face. The specialists will be
armed with a new campus fire safety video the State Fire Marshal’s Office
produced. Another new program geared toward college students is “Candle with
“Floridians have endured a great deal this year,” Gallagher said, referring to
the hard-hitting hurricane season. “As we come together to recover after these
extraordinary events, it’s also important that we remember the everyday
precautions that can protect us from further tragedy.”
HURRICANE STATUS REPORT
(as of September 28, 2004)
ESTIMATED INSURED DAMAGES
(Estimates based on data call through the Office of Insurance Regulation)
Charley: $6.5 Billion
Hurricane Frances: $3 Billion
Hurricane Ivan: $1 to $3 Billion
Claims filed to date: More than 1 million (one in every five homes damaged).
Expect as many as 2 million claims to be paid out.
Hurricane Jeanne: $4 to $8 Billion (Industry estimates)
OF FLORIDA HURRICANE CATASTROPHE FUND
Hurricane Catastrophe Fund (Cat Fund) provides reinsurance to insurance
companies writing homeowners coverage in Florida. It was created after
Hurricane Andrew to ensure companies could quickly pay claims after a major
hurricane and still have the ability to write coverage. The Cat Fund also
offsets rising homeowners’ premiums because insurance companies are purchasing
reinsurance at significantly lower prices than what is available in the private
Fund currently provides $15 billion of capacity, or reinsurance. It has a
current cash balance of $5.6 billion and is expected to make all payments for
reinsured losses from the recent back-to-back storms with available cash.
OF CITIZENS PROPERTY INSURANCE CORPORATION
Property Insurance Corporation, Florida’s unique insurer of last resort for
consumers unable to obtain property insurance coverage from the private market,
was created by the Florida Legislature just two years ago to achieve tax savings
($300 million to date) and enhance consumers’ access to comprehensive coverage.
Citizens currently provides coverage for 815,000 policyholders.
To date, approximately 78,000 claims from the recent storms have been filed
totaling more than $1.8 billion. Until we know the extent of damage and
claims from all four storms, it is impossible to determine the financial impact
to Citizens and Florida policyholders in general. However, we do expect claims
to be paid in a timely, efficient manner.
ACTIONS TAKEN TO HELP CONSUMERS
Instituted a moratorium on insurance companies canceling or non-renewing
homeowners during hurricane season or because they have filed a storm claim.
Working with insurance companies and policyholders to resolve cases
involving multiple deductibles.
a 10 percent cap on what public adjusters can collect on a homeowner’s
insurance claim and prohibited them from charging fees up front.
Required Florida’s health insurers and HMOs to waive restrictions on
prescription refills to enable citizens to fill prescriptions in advance.
banks and credit unions to expedite loan applications, eliminate late fees
on loans and waive ATM and check-cashing fees for storm victims.
Mediation centers will soon be open in key areas to ensure consumers have a
program in place, at no charge to them, to quickly and fairly resolve claim
August 13, the day Hurricane Charley made landfall, the department has
received more than 40,000 calls and is currently working on nearly 11,000
consumer requests for assistance.
each storm, mobile response units were deployed to impacted areas and mobile
command centers were up and running within 72 hours of landfall.
than 150 department employees are in the field providing insurance help,
with the assistance of 30 insurance experts from eight other states.
are 35,000 adjusters now working storm claims. Of this number, 11,000
emergency adjuster licenses were issued to expedite the payment of insurance
RESPONSE (FIRE MARSHAL/FRAUD)
Coordinated 230 search and rescue missions –mobilizing more than 400 local
Cleared access routes to help emergency responders get into damaged areas.
Provided law enforcement to prevent looting and other crimes associated with
natural disasters, including insurance scams and price gouging.
arrests to date of unlicensed adjusters.
AMERICAN SUPERIOR INSURANCE COMPANY CONSENTS TO
REHABILITATION DUE TO UNPRECEDENTED STORM LOSSES
American Superior Insurance Company, an insurer that writes homeowners insurance
coverage for nearly 60,000 Floridians, voluntarily consented to be put into
rehabilitation in response to losses sustained by the recent back-to-back
hurricanes. The company’s premium volume in 2003 was $34 million, representing
less than 1 percent of the total homeowners insurance market.
The Florida Department of Financial Services, Division of Rehabilitation and
Liquidation, will serve as receiver for the company. As receiver, the department
will take over the company’s operations and work to get claims resolved.
“Our number one priority will be to take care of policyholders with storm
claims,” said Florida’s Chief Financial Officer Tom Gallagher, who oversees the
According to Gallagher, the department, as receiver, plans to hire more claims
adjusters to handle the increased claims workload brought on by the recent
Gallagher said the department has also established two toll-free numbers to
assist policyholders. Policyholders who need to report a claim for the first
time should call 1-800-270-8043. Policyholders with existing claims can call
1-866-928-4312. Policyholders can also report a claim by contacting their agent
or following the claims reporting directions on the company’s website at
Under the receivership terms, no policyholders will be cancelled.
QUESTIONS ON INSURANCE CLAIMS
insurance companies cover temporary housing if a house is unlivable?
A: Yes, additional living expenses are covered initially, generally at a rate of
10 to 20 percent of the value of the dwelling.
concerns about mold growing from moisture damage, do I have to wait for an
adjuster to survey the damage before doing work?
A: Temporary repairs can be done and are encouraged to mitigate further damage
and help protect the integrity of the house. Take before and after photos and
keep all receipts if you want to reimbursed for repairs.
Should I report my claim or wait?
A: Report your claim as quickly as possible.
do I know which policy to file my claim under (homeowners, flood, windstorm)?
A: File your
claim with all three policies, the adjuster(s) will take care of determining
which policy or policies cover your loss.
Should I paint my insurance company name and policy number on my house?
A: If forced to evacuate, take your insurance company contact info with you. If
your house is uninhabitable, then put your insurance company's name on a piece
of wood and prop it up against the house. NEVER put the policy number or you
could be left vulnerable to scam artists.
long should it take for an adjuster to come to my house and assess the damage?
A: It depends on the severity of damage caused by the storm. Adjusters come into
the disaster areas as soon as permitted by emergency officials. Call
800-22-STORM for help with this issue.
Q: What is a public
adjuster? What should a storm victim know about adjusters?
A: There are adjusters who work for insurance companies, and there are public
adjusters who work under a contract with a homeowner and receive a percentage of
the settlement. CFO Tom Gallagher issued emergency rules after Hurricane Charley
banning public adjusters from requiring cash up front and limiting fees to no
more than 10% of the claim. These rules are still in effect.
there any financial help available for people who are uninsured?
A: Contact FEMA at 1-800- 462-9029.
about financial assistance for deductibles?
A: You can contact FEMA at 1-800-462-9029 to apply for assistance. FEMA will
first refer your application to the Small Business Association (SBA) to see if
you will qualify for a low-interest loan. If you do not qualify for a loan,
then FEMA will evaluate your application for further assistance with grants.
if I have damage from Hurricane Charley and now from Hurricane Frances, Ivan or
Jeanne? Will I have to pay a second deductible?
A: A majority of insurance policies require one deductible per event. CFO
Gallagher recognizes the financial hardship this may cause many Floridians.
Consumers who sustain additional damage from a subsequent storm should call the
department and we’ll work with the consumer and the insurance company to
determine if back-to-back storm damage is considered a single event.
Charley caused several billion dollars in damage. If more storms hit, will my
insurance company go bankrupt?
A: The insurance industry learned its lesson from Hurricane Andrew. At that
time, rates were woefully inadequate and as a result, nearly a dozen insurance
companies became insolvent and several others stopped writing and starting
non-renewing customers. Since then, rates have increased significantly so money
was available to pay claims should another catastrophic storm make landfall in
Florida. At this time, the insurance industry is financially prepared for a $25
more storm hits, will my insurance rates go up?
A: There are a number of factors that contribute to the rising cost of
insurance. However, we do not anticipate rates to rise with the damage sustained
during Hurricane Charley. It is too early to speculate what changes will happen,
if any, due to Frances, Ivan or Jeanne.
another storm result in my insurance company going bankrupt?
A: Insurance companies operating in Florida are well capitalized and are
required to have reserves and reinsurance in preparation for a catastrophic
storm. Frances, Ivan and Jeanne, on the heels of Charley, will certainly have a
financial impact on the industry but we don't know the extent of insured damages
at this time. The Office of Insurance Regulation is carefully monitoring the
financial health of the industry.
did we learn from Hurricane Andrew?
A: : We learned to take hurricane warnings seriously, and understand the need
for better coordination among federal, state and local agencies, and the need
for stronger building codes. The experience of Andrew spurred the creation of
the catastrophe fund and insurer of last resort.
Floodwaters damaged the first floor of my house and wind tore off the roof.
Will my insurer pay for the repairs of all of my damage?
A: Your homeowner’s insurance policy should cover the roof damage, minus your
deductible. If you don’t have flood insurance, however, you may be in trouble.
Most homeowners’ policies cover wind damage — not flood damage. Flood insurance
is underwritten by the federal government and provided through the National
Flood Insurance Program.
Q: The storm flooded my expensive landscaping and uprooted a tree which then
tore up my roof. Will my policy cover replacement of my plants and tree?
A: Because the tree has damaged an insured building your insurance company
should pay to repair the roof – and remove the tree in the process. However,
most policies do not provide for damaged landscape – including trees – to be
hauled away or replaced if the damage doesn’t directly impact an insured
agent says the claim check will be made out to me and the bank who holds my
A: Your insurance company will consider that the bank also owns the house, and
as a result, also has a claim on your insurance – so in many cases the check
will be made out to both parties. Your bank should be cooperative with you
about getting the check cashed because it has vested interest in getting you the
money you need to repair the damage.
policy calls for me to be reimbursed the amount it costs to replace my loss.
The agent says I will get two checks from the insurance company. First, they
will pay the depreciated value. Later, after the damage is repaired, the agent
says they will pay the balance of the replacement cost. What does that mean?
A: Many policies will allow this. The insurance company can pay you for the
depreciated value of your loss. Once the repair is made and you have a receipt
showing the repair expense, the company must reimburse you the full amount up to