FORT LAUDERDALE, FL – Frances, Jeanne and Wilma; sounds like it could be a gathering of gal pals for a fun night out on the town. However, these are not your run of the mill ladies; they are the names of destructive back to back hurricanes that hit Florida just over a decade ago.
Frances was first in 2004, drenching the entire state with floods of up to 20 inches. A few weeks later came Jeanne, which charged through Palm Beach clocking winds as high as 120 mph and tearing off roofs across central Florida. A little over a year later came Wilma which lingered over much of Miami/Dade, Broward, and Brevard counties, pummeling residences from single family homes to condominiums with 115 mph sustained winds.
A lot has changed in the Florida property insurance market in the last decade since these destructive hurricanes. Despite a long and lucky run with no major storms, large national carriers have continued to flee the state. In the last few years alone Citizens has shed nearly a million policies. Fortunately, a robust private Florida market has evolved to assume all of these policies. These companies must comply with strict financial standards from Insurance Commissioner McCarty and private rating agencies like Columbus, Ohio based Demotech—standards that require the financial wherewithal to pay claims from a series of violent storms so destructive that it’s never before happened in recorded history. But stuff happens. Insurance companies fail. So we have an additional safety net. It’s called the Florida Insurance Guarantee Association (FIGA). Formed in the 1970s, FIGA set coverage limits for homes and condos which reflected both the value of money and real estate at that time. A few years back the limit for houses was increased to $500,000. But the limit for condos was never increased. It doesn’t take a rocket scientist to realize this is a big problem. In fact, a recent study conducted by industry stakeholders estimates that over 62% of the state’s commercial residential structures would not have enough FIGA coverage to rebuild; a situation that would be devastating to the banking industry and the Florida economy overall in the event of a catastrophic loss.
Fortunately, there is an easy fix to this problem. It’s called ‘condo parity’. The legislature has already increased the FIGA limit for houses; why should they treat condo owners any differently?
The Florida Association for Insurance Reform (FAIR) in association with a coalition of insurance agents, banking institutions and condominium boards are supporting legislation to increase FIGA’s reimbursement limit for condos from the current $100,000 per unit to $500,000 per unit, which is the same statutorily mandated amount for single family homeowners. Legislators need to act now before storm season starts on June 1.
If you would like to support this, please send a message to your state representatives by signing the ‘condo parity’ petition online at www.fairfl.org. Paul Handerhan is the founder, Board member, and Vice President of Public Policy for FAIR, the Florida Association for Insurance Reform.