Hurricane Preparedness Summit

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Hurricane Preparedness Summit

• An Update Prepared by the Grassroots Organization
  FIRM
• Fair Insurance Rates in Monroe
• June 2, 2008

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Outline

• Background
• 2008 Legislative Session
• Future Goals
• Practicalities
• Insurance Preparedness
• CPIC Claims Handling Changes
• Mitigation
• Questions Answers

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Background Whats FIRM?

• Grassroots group founded in February 2006
• Grown from 32 neighbors in Key West to 5,000
  members Keys-wide
• Run by volunteers and funded by donations
• Currently a 501(c)(6) organization
• Not-for-profit, but donations are not
  tax-deductible
• Allows us to advocate and educate
• Successfully worked to lower windstorm rates for
  Monroe residents and for insurance reform
  statewide

OUR MISSION To advocate for, promote and
encourage the promulgation of fair, impartial and
actuarially sound windstorm insurance rates for
owners of commercial and residential properties
within the geographic boundaries of Monroe
County, Florida.
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2008 Insurance Legislation

• CPIC rate freeze extended until January 1, 2010
• New 2010 rates must be actuarially sound
• Use and file repealed until January 1, 2010
• Homestead distinction eliminated
• CPIC may offer wind-only coverage where not
  available in the private market
• CPIC Coverage exemption now applied to
  two-million dollar homes

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2008 Insurance Legislation(continued)

• Greater transparency required
• CPIC rates must be vetted through Florida Public
  Hurricane Model
• Private firms must share trade secrets with OIR
• OIR must have access to all factors used in
  rate-setting
• Consumers must have access to rate-filings via
  website
• Consumers who challenge claims must have access
  to all their files

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2008 Insurance Legislation -- Additional
Provisions Citizens Property Insurance
Corporation

• Consumers cannot be taken out of CPIC if the
  premium of the new provider would exceed that of
  CPIC by 15 or more
• Coverage of manufactured and mobile homes built
  before 1994 will be limited to cash value (not
  replacement value)
• Consumers must have 180 days written notice of
  cancellation
• CPIC may not file an administrative review or
  judicial challenge to an OIR finding
• A task force will be convened to return CPIC to
  its former status as an insurer of last resort

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2008 Insurance Legislation -- Additional
Provisions Citizens Property Insurance
Corporation (continued)

• As of January 1, 2009, any home with an insured
  value of 750,000 or more must have shutters to
  be insured by CPIC.
• As of January 1, 2011, any buyer of a residential
  property (regardless of insured value) located in
  the windborne debris region must receive a
  written disclosure of the structures windstorm
  mitigation rating from the seller.
• A prior stipulation that homes constructed after
  January 1, 2009, within 2,500 feet of the
  shoreline must be built to code-plus standards
  in order to be insured by CPIC has been
  eliminated.

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2008 Insurance Legislation -- Additional
Provisions Citizens Property Insurance
Corporation (continued)

• Assessments to cover existing CPIC deficits will
  now kick in when CPIC deficits exceed 6 of their
  projected direct written premium for that year.
• Emergency assessments may be required when/if
  regular assessments are insufficient to recover
  the existing deficit, and may be levied for as
  many years as necessary to eliminate the deficit.
  Such emergency assessments may not exceed 10 of
  the amount required to eliminate the deficit or
  10 of the statewide premium, whichever is
  greater.
• If a new deficit is incurred after 2008, all CPIC
  policyholders may be levied a surcharge of up to
  15 for a period of 12 months to cover the
  deficit.
• Should CPIC actually collect surcharges in excess
  of any deficits, the excess will remain with CPIC
  to offset any future deficits (and the potential
  for any future surcharges or assessments).

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2008 Insurance Legislation -- Additional
Provisions General Property Insurance Providers

• Mitigation
• Commission will bring consistency to application
  of mitigation credits pursuant to the uniform
  home grading scale by February 1, 2011
• As of January 1, 2010, anyone purchasing a home
  over 500,000 in insured value must receive
  written disclosure from seller of the structures
  windstorm mitigation rating.
• Insurers must pay undisputed claims amounts
  within 90 days of receipt of the claim

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2008 Insurance Legislation -- Additional
Provisions General Property Insurance Providers
(continued)

• Capital Build-Up Incentive Program
• allows start-up companies to build the capital
  required to satisfy regulatory standards of
  solvency by taking funds from the state in
  exchange for surplus notes from the insurer
• open to insurers that commit to increasing their
  writings of property insurance, including wind

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FIRM Next Steps

• Work with FIU to determine if Monroe County
  factors are accurately addressed in the FPHM
• Factors include
• Construction history (building code, height
  restrictions)
• Geography (linear island string, undeveloped
  mainland)
• Meteorological history
• Topography (wind versus flood)
• Construction costs (labor and materials)
• Will address
• Residential dwellings
• Condominiums
• Commercial properties

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FIRM Next Steps (continued)

• Monitor all rate filings
• Participate in ongoing and new task forces
• Work for permanent repeal of use and file
• Lobby for dedication of windfall sales tax for
  hurricane-related uses
• Work towards a federal catastrophic mechanism,
  similar to flood insurance

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Practicalities INSURANCE PREPAREDNESS

• Take detailed, dated photographs of your home and
  belongings prior to hurricane season
• Provide a set to your insurance agent
• Secure a set in a waterproof container
• Gather all paperwork (deeds, drawings, plans,
  receipt) related to your dwelling and secure in a
  waterproof container
• Review your policy with your insurance agent to
  make sure coverage is appropriate

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Practicalities CPIC CLAIMS HANDLING IMPROVEMENTS

• Significantly increased claims handling staff
• Moved to electronic claims handling
• Educated outside adjusters in advance of
  hurricane season
• Created mobile units to respond quickly
• Empowered field adjusters to distribute ALE
  checks on site
• Built redundancy into call handling centers

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Practicalities- MITIGATION

• Mitigation factors all work together to save you
  money. There are four significant factors that
  can reduce your premium
• Shutters. Class A, B or C shutters can save you
  up to 33.
• If your home is compliant with the current
  Florida Building Code, either through new
  construction or renovation, you may be able to
  save up to 45.

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Practicalities MITIGATION (continued)

• Roof Discounts.
• How your roof is connected to your walls can save
  you money. Hurricane straps are a big help.

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Practicalities MITIGATION (continued)

• Roof Discounts.
• How your roof is covered can also save you money.
  A small mitigation credit is available for metal
  roofs.
• However, there is no pre-designated space on
  insurance applications to account for these
  discounts. Ask your agent to make a special note
  if you have a sheet metal roof to qualify for a
  discount.
• FIRM continues to advocate for greater discounts
  for metal roofs due to their superior performance.

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Practicalities MITIGATION (continued)

• Construction. A hip roof may save you up to 23.

SIMPLE HIP ROOFA gable roof with the ends
brought together at the same pitch as the rest of
the roof.
PYRAMID HIP ROOFA hip roof built on a square
base with eaves of the same length.
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CPIC Policyholder Forum

• Thursday, June 12, 2008
• 400 to 700 p.m.
• Harvey Government Center in Key West
• Forum will be taped and broadcast on the
  government channel
• Attendees will include
• Insurance Commissioner Kevin McCarty
• Representatives from CPIC
• FIRM
• You!

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Get Information at

• www.FIRMkeys.org