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Homeowners Cringe at Insurance: Recent Hurricane History Puts ?the New Florida' Under Pressure

Posted on: Thursday, 1 June 2006, 03:00 CDT

By Kari C. Barlow, Northwest Florida Daily News, Fort Walton Beach

May 29--SANTA ROSA BEACH -- Don't take it personally.

That's what Sandi McDonald's insurance company told her in April when her homeowners' policy was canceled.

"My words were, 'I beg your pardon?' " recalled McDonald, who lives in a tidy, well-kept double-wide trailer in South Walton County. "Is there another way to take this? We could lose our home!"

The retired nurse and her husband, Jeff, say they don't know how to take the news any other way.

They're not alone, especially across the Panhandle. Thousands of homeowners are struggling to pay soaring insurance premiums or find new policies after being dropped.

It is, some insurance industry analysts say, the new Florida.

The one that got hit by eight hurricanes in 15 months. The one that suffered $38 billion in insured losses. The one where construction costs have jumped by 25 to 30 percent.

"That is unprecedented," said Bob Lotane, spokesman for the state Office of Insurance Regulation. "The market is under immense pressure."

Lotane said there is little the state can do to curb ongoing premium increases if companies prove their cases.

"They're saying they need higher rates to pay for future losses," he said. "We aren't going to let them do it if they can't justify it."

Insurance companies are facing a crisis, and homeowners should be prepared for rates to continue rising, said Sam Miller, executive vice president of the Florida Insurance Council.

"This is not about companies trying to make money," Miller said. "We're in a hell of a fix here in Florida."

But homeowners like Richard Williams find the rate hikes -- and random, widescale drops -- hard to swallow.

"I've never filed a claim," said Williams, who's seen the premiums on his Fort Walton Beach house jump from about $600 to more than $1,500. "I don't live on the water. I think people on the sand dune out there should take more of the burden."

McDonald, who has until mid-July to find a new carrier, agrees.

"I'm not frustrated with the hurricanes -- that's nature," she said. "I'm frustrated with the fact that there are milliondollar homes within a mile of us that are costing the insurance companies millions. We're a little mobile home maybe worth $200,000!"

Stephen Holmes, who owns a beachfront home in Santa Rosa Beach, believes he's paying far more than his share.

Since Hurricane Ivan, his premiums for flood and windstorm jumped from $6,000 to $13,000.

He also owns a house that sits behind his beachfront home. Its premiums for wind and flood increased from $1,500 to $8,000.

To guarantee the complete replacement of his beachfront home, Holmes purchased a pricey supplemental policy from Lloyd's of London.

"I'm willing to give it one more (season)," said Holmes, who built his beachfront house in 1998. "I'm generally a patient man, but after a point, I can't afford it."

He doesn't want to leave the area and argues that beach restoration is the key to keeping Florida's economy healthy and insurance rates down.

"It's crucial," he said. "With beach renourishment, insurance rates, if they don't come down, they'll stabilize."

State officials worry some cash-strapped residents may not be able to hold out that long.

"The scary part is how many Floridians will move out of the state because they can't afford the premiums," said Tami Torres, spokesman for the state Department of Financial Services.

McDonald wonders, too.

"This is our home. This is where I was meant to be," she said. "I don't want to leave, but it looks like something we may have to do." Daily News Business Writer Kari C. Barlow can be reached at 863-1111, Ext. 439.

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Copyright (c) 2006, Northwest Florida Daily News, Fort Walton Beach

Distributed by Knight Ridder/Tribune Business News.

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Source: Northwest Florida Daily News

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