IHPA GENERAL MEETING

All are welcome, members and potential members, to the next scheduled IHPA meeting to be held at noon Thursday October 13, 2005, at the Fort Myers Holiday Inn Select, 13051 Bell Tower Dr., Fort Myers, FL [phone (239) 482-2900].

In addition to regular committee reports, question and answer sessions will be held with guest speakers Joe Belcher, JDB Code Services, who will bring the attendees up to date on proposed building code changes and how they will effect the hurricane protection industry; Dave Olmstead, director of research, PGT Industries, who has been nominated to sit on the Florida Building Commission will speak on emergency changes in the Florida Building Code that will take effect November 1, 2005; and Don Leggett, Insurance Office of America, will answer questions on the changes in property insurance and challenges surfacing in the workers compensation arena.

For reservations please contact Carol at the IHPA office: (561) 433-2101.

2004 HURRICANE SEASON CONTINUES TO CHALLENGE FLORIDIANS

Consumers will pay to bail out Citizens Insurance Corp. Citizens, the state sponsored insurance carrier, reportedly incurred some $2.4 billion in hurricane claims, which left its treasury $516 million short. This deficit will be paid by an assessment on every other homeowner’s policy sold in the state.

The irony of the assessment is that every policy holder in the state of Florida except policy holders with Citizens Insurance will be assessed to make up for the inadequate rates charged by Citizens.

The assessment is not going to make anyone happy. Those persons who pay the assessment are upset about paying for losses sustained by other insured policies and the persons insured by Citizens are going to be angry with the new rates that have to allow for a similar season.

Citizens’ request came to light just as State Farm, Florida’s largest insurer, asked state regulators for permission to raise homeowner insurance premiums statewide by an average of 8.6 percent. Some counties will exceed the percentage. In Palm Beach County and the Treasure Coast, both hit hard during last year’s storms, State Farm has asked for rate increases that will amount to as much as 34.5 percent. It’s State Farm’s second rate hike request since December, when the company asked for and received a five percent premiums increase.

Allstate Insurance and Nationwide Insurance also have asked for significant rate increases. The Florida Department of Insurance granted a 21 percent hike for Nationwide and a 26 percent increase for Allstate Floridian.

Even with the increased rates, Allstate, the No. 3 writer of homeowners insurance in Florida has decided to stop writing homeowners policies in the state and has notified the department of insurance that it will not renew 90,000 policy holders (see HP, Summer 2005, page 6).

Nationwide released a report saying that it will no longer sell new policies in Florida as of September 1, and is considering dropping up to 30,000 homeowners statewide.

This revelation follows on the heels of an announcement in which the company indicated it would not write new policies in Florida after September 1. Nationwide becomes the seventh company to announce it is leaving Florida, or not writing new policies in the state since last year’s devastating hurricane season.

TAKING NAMES AND IMPOSING FINES

Investigators from the Department of Financial Services Division of Workers’ Compensation have announced the results of a recent two-day sweep of construction sites in Florida. In all, 848 site visits were made during the sweeps resulting in 100 stop-work orders (SWOs) being written against employers without legitimate workers’ compensation coverage.

Under Florida state law, businesses engaged in the construction industry with one or more employees must provide workers’ compensation coverage, which protects workers who are injured or killed on the job.

Florida’s Chief Financial Officer Tom Gallagher noted that contractors who provide coverage to protect their workers find it difficult to compete with those who cheat the system.

Twenty-five supervisors and investigators from Miami, Plantation, and Fort Myers conducted sweeps in Miami. That operation made 333 contacts and wrote 35 SWOs. Thirty-six supervisors and investigators from Jacksonville, Pensacola, Orlando and Tampa conducted sweeps in the Orlando area. They made 515 contacts and wrote 65 SWOs. In many cases where it was difficult to establish whether adequate coverage had been obtained, a request for business records was issued.

Under an SWO a business must immediately cease all operations. The SWO is lifted once the employer obtains the proper coverage and pays a civil penalty equal to the amount of 1.5 times the workers’ compensation premiums avoided. Employers who violate an SWO face a penalty of $1,000 per day of violation and may also face criminal charges.

During the 2003 legislative session, Gallagher called on lawmakers to make several important reforms to the workers’ compensation system in an effort to stem the tide of rising premiums. As part of the reforms, the Division of Workers’ Compensation was granted greater enforcement authority to ensure businesses provide coverage for their employees. Many of the violations uncovered during this week’s sweep fall under the new authority. Since the reforms were passed, workers compensation rates have fallen overall by over 19 percent statewide. 

To increase competition among businesses operating in Florida, the legislature in 2003 required:

• Out-of-state businesses operating in Florida pay Florida-approved workers’ compensation rates for coverage.

• Employers who misrepresent the number or classification of their employees be subject to an immediate stop-work order.

• Employers wishing to exempt themselves from coverage requirements obtain a new exemption, providing greater tracking ability to state regulators.

The legislature also recognized the value that the Division of Workers’ Compensation investigators bring to Florida and more than doubled the number working in the state to 71.

FROM DENNIS TO KATRINA

Hurricane season got off to a swift start with Hurricane Dennis swelling to a Category 4 as it roared through the Gulf of Mexico causing extensive damage to numerous offshore oilrigs. The damaged platforms are contributing to the current high prices of gasoline.
When Dennis hit the coast of Florida it had been downgraded to a Category 2, which reduced the amount of damage inflicted upon coastal residents, many of whom have not recovered from last year’s Hurricane Ivan. The damage for insured and uninsured will top the $1 billion mark.

As bad as Hurricane Dennis was, however, it could have been much, much worse. After lashing Haiti and other Caribbean nations, the storm came ashore on the southern coast of Cuba with winds approaching 150 miles an hour. At least 20 deaths were reported as a result of the hurricane’s rampage across the Caribbean, which began July 5.

Crossing Cuba disrupted the hurricane’s organization, however, and by the time it passed over Havana and emerged in the Gulf of Mexico, its strength was greatly reduced.

Residents on the Gulf Coast had feared that Dennis would inflict massive damage and had prepared for a battering. About 500,000 people moved inland as Dennis approached. In Alabama, state officials stopped southbound traffic along a stretch of Interstate 65 during the weekend so all lanes could be used for northbound traffic leaving the city of Mobile.
But the storm struck a less populated area of Florida’s Panhandle, and its smaller size reduced the area that was exposed to its strongest winds. No deaths were reported in the area where Hurricane Dennis came ashore.

Meteorologists noted that wind shear (a pattern in which winds at various layers of the atmosphere blow at different speeds and in different directions) is typically high in the Atlantic Ocean during July, normally a calm month for hurricanes. But that didn’t happen this year, and the month produced two major hurricanes that made landfall, Dennis and Emily. They were the strongest July storms in at least 154 years.

August began relatively calm. But warning signs were there. Hurricane Katrina blew up quickly and although it crossed southern Florida as a Category 1 storm it strengthened over the Gulf of Mexico to Category 5 before turning to hit Mississippi and Louisiana.
Will this trend continue? September is typically the busiest month of hurricane season and after the storm season of 2004 and the early strikes of this year no one is prepared to say that this will not be an active season. In fact, the country’s top hurricane experts are indicating this could be the most active hurricane season on record (see page 17).

For more information about joining the International Hurricane Protection contact membership chairman Don Leggett: (888) 269-6019.