Windstorm insurance coverage causes legislative conflict

Earlier Story

Proposal could remove upscale coastal homeowners from Florida windstorm coverage

MIAMI -- Feb. 20, 2002 -- Escalating windstorm insurance rates -- set to increase on average another 40 percent in July for coastal homeowners insured through the Florida Windstorm Underwriting Association (FWUA) -- have prompted a slew of bills dealing with the issue in the 2002 Florida Legislature. But some of the proposals have conflicting aims when it comes to changing the state's hurricane coverage.

For example, one proposal would allow property owners to challenge rate increases in court, while another measure would eliminate the highest-risk coastal homeowners from being in the state windstorm insurance pool, saving other Florida residents from bearing higher costs if those homeowners experience catastrophic losses.

While the Miami-Dade legislative delegation considers changing the state's windstorm insurance coverage its top priority for the 2002 session, its proposals -- especially the one that would give the public more ways to seek relief from rate increases -- appear to be in limbo for now. At the same time, legislators from areas other than South Florida are protesting that their constituents are unfairly being asked to help pay for coverage for coastal residents in case of losses due to major storm events.

Here are some of the factors fueling the legislative conflict. Over the past few years, the windstorm insurance premium for a typical $150,000 Miami Beach home has gone from $281 in 1995 to a current cost of $1,432. This July, that premium is set to rise to $2,000.

Also, about 410,000 homeowners obtain hurricane insurance from FWUA, Florida's insurer of last resort for people living in hurricane-prone areas of the state. Of those policyholders, six of every 10 live in Broward, Miami-Dade, Palm Beach or Monroe counties. But if hurricane-related losses exceed the money held in reserve in the state's windstorm pool, all of Florida's insurance policyholders -- not just those in the FWUA -- will pay to make up the difference.

The FWUA began to implement windstorm insurance rate increases in 2000, with the increases scheduled to take effect over five years. FWUA officials said that the higher rates were needed because previous rates had been too low and therefore did not bring in enough money to ensure adequate reserve funds to pay claims if another major hurricane or storm hits South Florida.