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Insurance Consumer Advocate

Sha'Ron James

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Tallahassee, FL 32399-0308

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FIRM shows and tells


BY Timothy O'Hara and Mandy Miles, Citizens Staff

Florida Keys insurance rate watchdogs for years have been telling state insurance officials that the county's exacting building code requirements have resulted in structures that are stronger than most and thus represent less of a risk for insurance providers.

The same local leaders have been telling officials from the state-run Citizens Property Insurance Corp. that Monroe County property owners are being subjected to unfair rate hikes and overpriced premiums for windstorm insurance.

Following years of telling, representatives from FIRM (Fair Insurance Rates for Monroe) got the chance to show the folks in Tallahassee what they mean.

Florida Keys leaders and insurance rate advocates took state legislators, consumer advocates and insurance officials on a field trip Monday to give them an up-close look and better understanding of the local building codes and structural integrity of buildings.

Board members from FIRM, local contractors, Florida Keys State Rep. Holly Raschein, Citizens Property Insurance representatives and state Insurance Consumer Advocate Robin Smith Westcott and her staff toured six different homes -- from historic structures in Old Town Key West to new homes and modular homes in the Lower Keys.

City of Key West and Monroe County building officials also participated in the tour and spoke about stringent local building codes.

During much of the morning tour, the local contractors and Citizens Insurance representatives debated how risk models are calculated and how rates are derived.

The contractors argued that Citizens is not recognizing the technology local builders use and the strict building codes required by the county and local municipalities.

"Our building restrictions are extremely stringent," said Stan Shaw, owner of Shaw Construction.

The contractors also reminded the Citizens and Consumer Advocate officials that many of the homes in Key West were built by master ship builders and designed to move and sway during storms as a way to withstand the strong winds. Some of those homes have withstood the elements for more than 100 years. That type of craftsmanship is not recognized in state hurricane models and Citizens' rate structure, the contractors argued.

"We're only as good as the data we collect," Westcott said.

Having strong building codes and compiling the data is also important to state and local emergency management officials, Westcott said.

"It makes us all safer," Westcott said. "We can't just look at this from an insurance point of view."

The morning tour coincided with an evening Windstorm Insurance Forum at the Casa Marina Resort. The Key West Chamber of Commerce sponsored the forum as a fundraiser for FIRM, and by about 6 p.m., it sounded as if FIRM's oft-repeated message had gotten through.

"Some of the building codes we saw this morning were unbelievable to me," said Christine Ashburn, director of legislative and external affairs for Citizens Property Insurance. "...we now acknowledge that there doesn't seem to be an accurate reflection of Monroe County's building codes on our [mitigation inspection] form."

Her comments came when the panel discussion turned to the state's contentious mitigation credit program, which provides windstorm premium discounts for various "storm-hardening" features on buildings, such as roof straps, storm shutters, impact resistant windows and other adjustments.

The credits are awarded following an inspection and according to the answers submitted on a specific form that asks about the structure.

That form was changed recently, and led to the loss of millions of dollars worth of mitigation credits for property owners.

"The process needs to be fixed, folks," said Jay Neal, president and CEO of FAIR (Florida Association for Insurance Reform, which is similar to FIRM but on a statewide level. "Citizens is dealing with a very flawed process, but the fact remains that the single biggest thing we can do to stabilize premiums is to mitigate our buildings."

Neal acknowledged the strength of Keys buildings and the historical knowledge of FIRM leaders.

"It's pretty clear those suckers are built to handle whatever comes at the Keys," Neal said, ecnouraging FIRM and others to continue their quest for fair insurance rates in Florida.

"You guys have other folks paying attention now because 250,000 people throughout Florida lost mitigation points, and they're listening."

One audience member exemplified the problem in Mornoe County when he stood and told the panelists, "There's something wrong when my house is a tank, and I'm paying $6,000 a year for windstorm insurance."

FIRM also enlisted National Weather Service meteorologist John Rizzo to educate Citizens and Office of the Insurance Advocate representatives on how storm surge impacts homes and businesses during tropical storms and hurricanes. Storm surge and flooding are bigger issues than windstorm, and those damages are covered by the National Flood Insurance Program, not Citizens.

FIRM has embarked on a $485,000 study to accurately gauge Monroe County's windstorm risk.

The study will identify characteristics that show how a structure can withstand hurricane-force winds, calculate damage attributable to storm surge, estimate the exposure in the Keys and evaluate alternatives for insuring Monroe County's windstorm risk, said FIRM board President Heather Carruthers, who is also a county commissioner.

The study, when complete, could be used to lower rates or help Citizens reduce its number of policyholders, if it leads to another insurer agreeing to write policies that would cover the Keys.