Article Courtesy of The Tampa Tribune

By James Rosica

Published January 2, 2014

TALLAHASSEE — Tampa Bay area residents probably won’t be surprised: Floridians pay the highest homeowner insurance rates in the country, according to a national report released this week.

The average premium for most Florida homeowners is $1,933 a year, or nearly twice the national average of $978, according to findings by The National Association of Insurance Commissioners.

Florida’s insurance rates have been steadily going up for the last several years, even though the state has not been hit by a hurricane since 2005.

But that’s not to say one or more won’t affect the state next year, and insurance companies don’t want to be caught without reserves to pay claims. The Atlantic hurricane season runs from June 1 through Nov. 30.

In any given year, “carriers just don’t know what their exposure will be,” said Ray Bouchard, president of Bouchard Insurance, headquartered in Clearwater.

“It’s the potential for catastrophic loss that worries them, and that is never going to go away,” he said. “Nobody wants to find out, in a time of need, that their insurance company is insolvent.”

The report is based on 2011 rates and for the first time includes premiums paid by customers of Citizens Property Insurance. State-created Citizens is Florida’s largest insurer, with more than 1 million policyholders.

State regulators have continued to approve rate increases this year, although there are signs rates may finally be stabilizing, with some insurers filing for rate decreases.

Chief Financial Officer Jeff Atwater, who has complained that insurance rates in the state should be coming down, said he’s not surprised by Florida’s top ranking.

Atwater has asked Florida’s top insurance regulator to give a detailed report about why most insurers in the state are not lowering their rates since reinsurance costs, one of the biggest expenses for companies, have been going down.

Reinsurance is a kind of insurance for insurers.

Insurance Commissioner Kevin McCarty was supposed to deliver the report this week, but he has asked to delay presenting his findings until mid-January.

Earlier this year, McCarty said in a letter to Atwater that “there has not been enough time for most insurance companies to reflect any decreases in (reinsurance costs in their) insurance premiums.”

He also said that the cost of reinsurance from one source, the Florida Hurricane Catastrophe Fund, has gone up.

Five of the six states with the highest rates are along the Gulf of Mexico. Louisiana had the second-highest rates, followed by Texas, Mississippi, Oklahoma and Alabama.

The report breaks out homeowners insurance by various types of policies, but it found the average premium was $1,933 for the main kind of multi-peril homeowner policy that is the most commonly purchased in Florida.

Some in the industry have contended that there are legitimate reasons for the current rates in Florida.

Joseph Petrelli, president of the ratings agency Demotech, wrote to Atwater last month and said some insurers have purchased more reinsurance protection as the cost has gone down.

He also said overall repair costs continue to mount.

“Upward pressure on premiums from the underlying costs of repairs and the ongoing annual purchase of a substantive, conservative reinsurance program does not lend itself to across the board rate decreases,” Petrelli wrote.

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