Homeowners Insurance Lowdown

Citizens Property Insurance To Issue Refunds

Florida’s state-sponsored insurer, Citizens Property Insurance Corp. recently announced a timetable for its rate reductions. It will also be mailing a refund check to each of its 1.3 million customers soon. 20,000 policyholders will begin seeing checks as early as April 15 following the rate reduction.

A special session of the Florida legislature was held to address the rising costs of homeowners insurance. The refunds came after this session. During the last few hurricane seasons, rates went up as much as 22 percent for some of Florida's ‘high-risk’ homeowners.

The rate cuts are going to be anything but even however. For some reason, hurricane prone Palm Beach County will only see an average drop of 2 percent, while Martin County will see rates fall by around 14 percent.

Farmers Insurance To Cull Rates

By Priya Jestin, Staff Writer

Here’s some really great news for Californians who have taken homeowners insurance from Farmers Insurance. Farmers Insurance, the second largest writer of homeowners insurance in California, recently requested an 18 percent overall reduction in its homeowners insurance rates for policyholders.

The proposed rate decrease, which stands at $171 million, will impact nearly one million homeowners and renters and may take effect in June 2007. The rate cuts will benefit their Special Form, Protector Plus, Renters and Condominium Owners customers. There’s still more good news. Farmers is also planning to introduce a “claim forgiveness” policy for customers who remain “claims free” with the company for six or more years prior to filing a single claim.

I wonder if all this large heartedness is thanks to Insurance Commissioner John Garamendi’s review of the insurance industry. Last year, Garamendi ordered Allstate, State Farm, Farmers and Safeco Insurance to justify their homeowner rates. Whatever be the case, it still is good news and probably it will have a domino effect on the other insurers as well. Let’s wait and watch.

Your Insurer May Lose Billions Soon

By Priya Jestin, Staff Writer

Mark Landry could well be the face that inspired thousands. Hurricanes Rita and Wilma may be a distant memory now, but for those who suffered from its fury, the pain is still palpable. What has kept the memory of those painful days alive is the highhanded attitude of the insurers especially, insurer of last resort, Citizens. The end to this painful drama seems to be nearing finally. Landry recently won a case in the 15th Judicial District Court that, if upheld after appeals, may hold insurance companies accountable for billions of dollars in additional hurricane-related claims.

To begin at the beginning, Landry and his wife, Barbara, lost everything to Rita. Their home in Erath was a total loss, as wind and flood conspired to damage everything possible. But the loss of their home was probably not as painful as the denial of their claim by Louisiana Citizens Property Insurance Corp. The insurer denied the claim because floodwater was excluded from their policy. And the best part? Citizens failed to mention this fact in their policy application!

In his recent ruling, District Judge Edward Rubin said the insurer was liable to pay for damage to a house destroyed by Rita’s winds and floods even if the policy says floods aren’t covered. Why? Because that particular statement was left out of the application.

And now comes the interesting part. Homeowner policies usually exclude coverage for damage caused by floods, high water, waves and storm surges. So if this ruling holds, it means that the $28 billion paid in insurance claims from hurricanes Katrina and Rita actually covered only a small amount of the total damage. That means we are set for some really interesting times ahead.

No Sinkhole Insurance Please, Plead Homeowners In Florida County

By Priya Jestin, Staff Writer

Residents in Pasco County, Florida may get some relief on the homeowners insurance cost front. That’s if you believe the state lawmakers who say they have a possible solution at hand. Florida’s insurance regulation commissioner is considering a proposal to allow residents to opt out of mandatory sinkhole coverage. This coverage is currently required for all Citizens’ customers in Pasco County.

Most homeowners in this region feel they are forced to buy unnecessary coverage. They claim that they shouldn’t be required to purchase sinkhole protection when most sinkhole claims are filed west of US 19 along the coast. Citizen’s Insurance claims that it pays out, nearly 90 thousand dollars per sinkhole claim.

Compare Insurance Rates Online

One thing constant about homeowners insurance rates is that they fluctuate. And pretty wildly at that. I’m sure there’s no one out there who’ll think of this as a joke. People have suffered too much to find the fluctuating rates funny. The worst part is when your insurance is due for renewal and you see that your insurance firm has upped its rates. That sets you running across town trying to find a better bargain somewhere.

Well some people may not have to do this running about much longer now. Consumers in Delaware have something to cheer about. A recently launched website will allow them to compare homeowners insurance rates from a wide variety of companies. This new facility, which will be up by spring 2007, will allow users to contact companies they are interested in after they view rate comparisons. At present, the site only offers auto insurance facilities. The site is called comparedelawareinsurance.

Floridians: Finally Awake

--By Priya Jestin, Staff Writer

You cannot suffer in silence forever can you? Well, I always wondered how these Floridians managed to accept the frequent hikes in their homeowners’ insurance rates. Sure, there were murmurs of discontent, and a little noise here and there. But now, I guess things have finally come to a head.

Recently, around 100 residents and real estate agents took to the streets of Merritt Island. The sharply rising residential and commercial property insurance bills forced them to demonstrate for state insurance reforms. Our group of demonstrators then met state Rep. Bob Allen, R-Merritt Island, who, to put it briefly, wasn’t too positive about the immediate future. According to him, meaningful financial relief for consumers may well be an uphill battle.

And the government too seems to be intent on proving this prediction true. The Florida Property and Casualty Insurance Reform Committee -- created by Gov. Jeb Bush -- is being seen as too little, too late. Quite a few people have criticized the plan for not going far enough. The Bush committee has not recommended anything that would directly reduce premiums without decreasing coverage or requiring policyholders to spend money to fortify their homes against storms.

And some of our demonstrators are also calling for an investigation of the insurance industry. If you ask me, this was something I’d have proposed long ago. There does seem to be an unholy nexus somewhere – we just gotta find out where and what it is. Probably we should take the demonstrators’ suggestion and hold our politicians accountable for this problem. We must especially target those who may have accepted money from the industry.

Protests Against Rate Hikes Gather Steam

Residents from at least three counties met in front of the West Pasco Government Center recently to let off steam about rising homeowners insurance. The nonprofit group Homeowners Against Citizens organized the rally, its first since forming this year after a similar protest in Tallahassee. Tbo.com reports:

Although the group's primary beef is with Citizens Property Insurance, the state's insurer of last resort, its members and those at Saturday's rally are directing their ire at the state insurance industry as a whole. "This is a wake-up call," said Nicole Deg, a New Port Richey resident who helped form the group, which claims a membership of about 800. "We want to show unity; we're all different, young and old. But we're all here to tell our government we're not going to take this anymore."

Read more: Hundreds Protest Insurance Industry, 'Crazy' Rate Hikes

It's Insurance Evaluation Time Again

It’s that time of the year again: open enrollment time. This means you will be among millions of workers who will be evaluating their health-, home-, life- and disability-insurance options. Choosing the right coverage can be a trying experience and you need to check every aspect before you zero in on the policy that's best suited to your needs. Columbusdispatch.com reports:

Have a home office? Did you know all that expensive equipment might not be adequately covered under your homeowners policy? That was news to me. If you have a home-based business, get a business-in home rider, Lankford advises. This will increase your coverage for business property and liability. It will cost you about $150 a year if you have a basic consultant’s office with a computer system and you don’t have clients visiting your home.

Read more: It’s a good time of year to learn more about insurance costs, options

New Insurance Rules For Florida

Gov. Jeb Bush and the Florida Cabinet recently approved two insurance rules, one that could double the discounts homeowners get on their insurance premiums for making their residences more hurricane-safe. The other one finalizes state-funded property insurance for businesses. Palmbeachpost.com reports:

Under the new rule, insurers will now be required to give homeowners a break on their insurance premiums that will double what most now provide. In the past, the Office of Insurance Regulation offered a range of premium discounts when owners upgrade their homes by securing roofs to walls or buying hurricane shutters, for example. A separate rule now forces insurers to specify the discount for each type of home improvement.

Read more: Bush, Cabinet approve new insurance rules

In Florida, Your Home Is Hostage To High Insurance Rates

Want a home in Florida? Be very sure you know how much you'll have to pay as homeowners insurance or you may end up like this guy. This buyer was set to close on the $299,000 home when he learned his insurance would cost him $4,700 a year. The big premium pushed his monthly payment past the lender's comfort level, and approval for the loan was yanked. Palmbeachpost.com reports:

The scotched sale is a scenario that's becoming all too common amid Florida's housing hangover, say real estate brokers and affordable-housing experts. Even as some sellers have lowered their asking prices, skyrocketing insurance premiums and property taxes have killed deals and sent buyers to the sidelines.

Read more: Nobody's market: Homeowners insurance, taxes vex would-be buyers

S.C. Requires A Few Insurance Lessons From N.C.

You know I’ve begun to believe in that funny saying about the crying baby getting the milk. In South Carolina, everyone seems to be worried about the rising insurance rates for businesses and condo owners along the coast. Nobody seems to give a thought to the poor individual homeowner who has also been subject to the same unwarranted increases or cancellations in homeowners insurance. And their situation is more precarious than businesses and condo owners.

Moreover, critics believe that the S.C. Department of Insurance is only a politically appointed group. It seems to have little clout regard the premiums paid by harried customers. One possible solution that was put forth by a harried citizen was that the S.C. Director of Insurance should meet with her counterpart in N.C. who has been on the job for 20 odd years. The reason should be quite obvious since N.C. has managed to retain its insurance rates at a considerably lower level than what consumers in S.C. pay. Myrtlebeachonline.com reports:

In South Carolina, insurance company cherry-picking to get high profit margins is allowed, as is either denying coverage or raising rates as much as 700 percent for homeowners, apparently with Kitzman's blessing.

Read more: State should stand firm in insurance crisis

Citizens Insurance Spent $312,000 Of Your Money On Brochures

There’s a brochure doing the rounds of Florida. A brochure with lots of happy people, smiling because they’ve got homeowners insurance cover. No problem with that, coz jut about every firm advertises. The problem is with the firm that is giving around these pamphlets – Citizens Insurance. Citizens is supposed to be the insurer of last resort and hence really doesn’t need any advertisement. But that isn’t what got Floridians angry.

Actually, all Floridians have no choice when it comes to paying for Citizens. Because every policy holder in the state, regardless of what company that have insurance with, pays a 9 percent surcharge that goes to Citizens. In addition the company receives $750 million dollars from the state to keep it afloat. And the reason why this brochure angers them: It’s costing a total of $312,000 dollars for the pamphlet plus an additional charge for postage – and all this is paid for from the money collected from the common folk of Florida. Tampabays10.com reports:

Not only are Citizens policy holders captive customers, they are also paying the highest rate possible. Under state law citizens can not charge rates lower than the most expensive insurance company in an area. An anti Citizens group, homeowner against Citizens estimates the average Citizen's policy is 20 percent more expensive than other insurance.

Read more: Citizens Insurance spend hundreds of thousands on pamphlet

Crist Blasts Citizens

At last, some respite, somebody really had the gumption to stand up to Citizens and call its bluff. Attorney general and gubernatorial candidate Charlie Crist recently pushed through a measure that forces Citizens to hold three public hearings and forbids it from hiring outside lawyers to fight for rate increases. Palmbeachpost.com reports:

Crist persuaded Gov. Jeb Bush and the other two Republicans on the Cabinet to reject Citizens' proposed "plan of operation" for failing to keep the interests of its 1.2 million residential policyholders in mind.

Read more: Crist blasts Citizens, pushes restrictions

Insurance Hikes, Not Storms, Submerge Florida

Some more good news... for insurers that is -- four more companies have joined the list of insurance sellers that want Florida homeowners to pay more. Federated National Insurance Co., Homewise Insurance Co., Liberty American Insurance and Florida Family Insurance Co. are seeking double-digit rate increases. These hikes are expected to affect more than 180,000 Florida customers. Heraldtribune.com reports:

Federated National wants to boost its homeowners insurance rates an average 49.5 percent in Florida. The company has 42,578 homeowners policies, including 1,790 in Sarasota, Manatee and Charlotte counties. Homewise has filed for a 75.8 percent increase for its 17,404 policyholders, including 1,197 in this area. Liberty has two companies seeking higher rates. Liberty American Select Insurance Co. wants an increase of 44.8 percent on homeowners and 96.2 percent on dwelling fire coverage.

Read more: Insurers ask for rate hikes

Citizens Needs Bailing Out, Floridans Need Money

Officials with Citizens Property Insurance Corp recently decided that all Floridians who pay homeowner insurance premiums will have a one-time charge added to help cover the state-backed home insurer's $1.7 billion deficit in 2005. The extra cost will be $20.70 for every $1,000 of annual premium paid and will be in addition to the insurance price increases that consumers already are paying to insure their homes. Sun-sentinel.com reports:

The timing of theCitizens extra levy adds to the financial burden many Floridians already have because all of the state's major insurers have moved to raise premiums after the two recent storm seasons. Some State Farm Florida Insurance Co. customers are bracing for two double-digit rate hikes this year.

Read more: All Florida insured homeowners to help bail out Citizens with fee

Upgraded Your Home? You Could Still Lose Your Insurance Policy

Did I ever tell you that installing storm shutters in your home could get you a discounted rate on your homeowners insurance policy? Forget I ever said that. After reading this bit of news, I'm really irritated. I mean, here we have government agencies telling us how to fortify our homes and a woman (Virginia Neill) follows this advice. And what does she get in return for sinking $15000 into storm shutters for her home in Florida? A notification that her homeowners insurance policy was being canceled!

Not one to give up, Neill gets a professional home inspection done and sends the results to her insurer. They still don't relent. But they do ask her to replace her roof -- and they still offer no guarantee that they will renew her insurance policy. Reason? The company no longer accepts new applications on houses more than 50 years old and Sunshine State's records indicate Neill's home was built in 1955! Brandenton.com reports:

The case illustrates the confusion surrounding a push in the state to strengthen homes against storms. "Home-hardening" and "wind-protection retrofitting" are terms that have been bandied about lately as a solution to mounting damage claims in the state following the past two storm years.

Read more: Homeowner's dilemma: Shutters fail to save policy

Rate Cut: Insurance Firms’ Gift To Homeowners?

Some really good news for Californians! State Farm, California’s largest homeowners insurance company recently proposed a rate cut that would save customers millions. Over 1million customers could save around $103 a year through this 11 percent rate cut if the state approves. The reason given for this generous cut is that the number of claims is down, so State Farm’s reserves are healthy.

Actually, there seems to be quite a bit of health going around after State Insurance Commissioner John Garamendi asked the industry to justify their homeowners’ premiums. Since June, when the insurance commissioner made the announcement, three insurance companies have applied for a rate cut. But this latest rate cut may not be good enough to satisfy the insurance commissioner. Abclocal.go.com reports:

His department found less than 40 percent of the money was paid out in claims over the last two years -- a period that saw small scale disasters or losses: no major earthquakes and no major firestorms.

Read more: Major Homeowners Insurance Rate Cut Proposed

Regulator to hear from insurance companies

The Florida Office of Insurance Regulation (OIR) recently scheduled public hearings on rate filings submitted by Companion Property and Casualty Insurance Co., Vanguard Fire and Casualty Co., Omega Insurance Co. and Tower Hill affiliate insurance companies. The requested rates for all the companies are not uniform. Some areas in the state are subject to higher or lower rate changes. Southflorida.bizjournals.com reports:

Tower Hill filed for statewide average increases of 27.2 percent, 21.5 percent and 18 percent for its various homeowners insurance lines in Florida, as well as 32.9 percent for one of its dwelling fire insurance programs.

Read more: Regulator to hear from insurance companies

Lessons Learnt, Preparations Made

In Florida, tropical Storms no longer create the kind of storm they did last year. Lessons learned from devastating hurricanes in recent years have led major insurers to rethink their exposure to catastrophe prone areas such as Florida. Marketwatch.com reports:

After this hurricane season, Allstate, which received an 18.2% insurance rate increase in Florida in October, says it will no longer renew its smaller property lines such as landlord package policies, residential fire policies, and manufactured home policies.

Read More: Insurers Better Prepared To Weather Major Storms In 2006

Competition Drives Insurer to Foreign Shores

With home-grown competition eating into its profits, Australia’s biggest auto and home insurer is looking to expand its operations across the ocean in Asia. Insurance Australia Group Ltd. reported a 13 percent decrease in its second-half profit; the company was forced to reduce policy prices with Promina Group Ltd. taking a major chunk of its clientele.

Promina announced that its first-half policy sales were up by 3.7 percent while Insurance Australia reported a 3.7 percent drop in premium revenue for the same period. Michael Hawker, CEO of Insurance Australia, has added to the company’s Asian assets with the acquisition of 24.9 percent of China Pacific Property Insurance. The Chinese insurance outfit serves 12 percent of China’s property and casualty insurance market.

Antitrust laws do not permit Hawker to expand in Australia. Insurance Australia has more than 40 percent of the auto and home insurance market down under. With units in Thailand, Malaysia, and Singapore, the company is looking to secure at least 40 percent of its premium revenues outside Australia and New Zealand. 

Hike, Hike, Hike – Florida Homeowners Face more Hikes

Insurance companies in Florida are chomping at the bit to increase their rates, and the Florida Office of Insurance Regulation is giving them a fair hearing before deciding one way or the other. The insurance regulator has turned down one filing, with three more to go. First Home Insurance Company, which sought a hike of 73.4 percent across the state for its homeowners policies and an increase of 43.8 percent for its dwelling/fire lines, had its request shot down.

Hearings are also scheduled for rate filings submitted by Metropolitan Casualty Insurance Company, Southern Fidelity Insurance Company, and First Community Insurance Company. Metropolitan is looking to raise homeowners’ rates state-wide by 95.7 percent, while First Community has filed for an increase of 64.6 percent for its dwelling/fire insurance lines in Florida. Southern Fidelity is hoping to raise homeowners’ rates by as much as 57.3 percent and dwelling/fire lines by 40.4 percent.

The hearings, which are open to the public, are to be held on August 31. Besides this, they will also be available as taped versions here.

Unhappy Anniversary For Katrina Victims

The results from the first anti-insurance company lawsuit are still hurting the people who’ve lost their homes and much else. But is the media overdoing it when it paints insurance companies as the villain? Businessandmedia.org reports:

Since the first suit was filed, the media have ignored or downplayed the flood exclusion in private contracts, even though the government’s NFIP has offered flood insurance since 1968. Private insurers can’t compete in price with the federally subsidized program…. Insurance companies have been cast as Big Business out to stick it to already-traumatized homeowners.

Read more: Unhappy Anniversary: Katrina Insurance Battle Continues

Citizens Rate Hike Turned Down

An appeal by Citizens Property Insurance Corporation to hike insurance rates in Monroe County in Florida has been turned down by the Insurance Commissioner of Florida. Rubbing salt in the wound already inflicted, Kevin McCarty also ordered the state insurer to reduce rates for homeowners in the area.

Citizens, by virtue of being a state-run unit, is allowed to charge higher rates than private outfits. But with the lack of competition in Monroe County, the Commissioner did not see it necessary to justify the rate increase. The insurance agency had asked to raise rates by 25.9 percent for homeowners’ policies; instead it found the tables turned on itself with the Office of Insurance Regulation ordering it to reduce rates by as much as 32.2 percent. Mobile home owners will also benefit from a reduction by 15.2 in their policies, according to a decree from Commissioner McCarty.
Citizens has been asked to refund the excess amounts it has already collected in anticipation of the hike approval. McCarty said that the revised rates issued to the insurer were based on data derived from Florida’s public hurricane model.   

Citizens’ management was in the firing line of questions thrown at them from members of the Office of Insurance Regulation and the advocacy group Fair Insurance Rates for Monroe County, and representatives of Monroe County, at a televised public hearing held on August 1 to discuss the rate filing.

Auto Insurer Offers Home Insurance Too

Homeowners in Ohio, Pennsylvania, and Oregon can now purchase insurance from Progressive Corp. The company, which is the eighth-largest direct writer of property and casualty insurance in the United States, will distribute homeowners’, renters’ and condominium insurance policies written by the Homesite Insurance Group. The three-state deal has the potential for expansion next year depending on the success of the trial. The company’s net income for July increased 3 percent. Reuters Today reports:

The venture could help Progressive attract customers looking to buy auto and homeowners' insurance in a single step, Meyer Shields, an analyst with Stifel Nicolaus said, although he did not expect it to add materially to Progressive's premium growth through the end of next year. 

Florida Homeowners Get New Option

A new entrant to the Florida insurance market as of August 15, Northern Capital Insurance Co. will have its hands full with the insurance problems plaguing the state. The company will use its financial clout to initially insure a few thousand homes and properties while it builds a surplus that will allow it to expand operations at a future date. Wayne Fletcher, the president of the firm, said that Northern Capital will start out by providing insurance in 10 counties in the state. Insurance Journal reports:

According to Fletcher, Northern Capital has put together a reinsurance program comprised of U.S. and Lloyd's of London reinsurers, in addition to the protection provided by the Florida Hurricane Catastrophe Fund.

Musings On the Katrina Judgment

So why did the federal judge side with the home insurance companies and rule that they did not have to pay for the flooding that destroyed tens of thousands of homes in Hurricane Katrina? After the initial rage at the decision has died down and we calmly think about it, the decision isn’t as flawed as it seems. Firstly, the insurance companies didn’t get an absolute victory. The judge rejected attempts by the insurers to cancel coverage for wind damage when it occurred in combination with the flooding.

This means homeowners whose claims have been denied may have the opportunity to present proof in court that at least some of the damage resulted from wind — which is the main protection provided by home insurance policies in hurricanes. What the ruling did was to uphold a longstanding practice of insurers of not covering flood damage, which is typically insured through the federal government. The insurance industry had stated that a ruling requiring insurers to pay all flood damage would have meant that the courts could rewrite their policies or contracts. This might have led some of them to withdraw from the home insurance business.

No Flood Compensation for the Leonards

If a hurricane destroys your home, how do you decide the percentage of damage that was caused by wind and the percentage that was caused by flood waters swept in by the hurricane? Do you even stop to think twice if your homeowners’ policy covers both damage due to wind and floods?

This couple is paying the price for not reading the fine print. A U.S. District Court judge ruled that Paul and Julie Leonard were not entitled to any claims on flood damage from Hurricane Katrina. The court offered them a small amount as compensation for wind-induced damage, a ruling that the couple’s attorney called a small victory.

Nationwide Mutual Insurance, the insurance company on the other side of the case is jubilant with the judge’s decision. It should be, considering that the court saved the company from having to shell out $130,000 claimed as flood damage by the couple. The insurer is liable to pay only $1,228 to cover wind damage.

Minorities Run Risk of Foreclosure

The national Association of Community Organizations for Reform Now (ACORN) has released the results of a study of homeowners in Kansas City and 129 other cities in the United States. The report states that home owners belonging to minorities and those with low incomes are more susceptible to foreclosure. Rising mortgages are forcing even homeowners who are not in foreclosure to sell their homes, according to ACORN activist Deni Coker. Kansas City reports:

The ACORN study found that one in five Kansas City area homeowners were making payments on higher-cost sub-prime mortgages but that African-American borrowers were 4.4 times more likely than whites to receive the loans. Latino borrowers were 2.1 times more likely.

Insurers Win Katrina Case

So now it’s official – a federal judge recently ruled that insurers did not have to pay for the flooding that destroyed tens of thousands of homes in Hurricane Katrina. The ruling upholds a longstanding practice of insurers of not covering flood damage, which is typically insured through the federal government. Nytimes.com reports:

It was not a total victory, however. The judge rejected attempts by the insurers to cancel coverage for wind damage when it occurred in combination with the flooding.

Read more: Judge Rules for Insurers in Katrina

Insurer Enters South Carolina

Houston General Insurance Exchange is entering the automobile, home and personal possessions insurance market in South Carolina. Independent insurance agents will market the company’s OneChoise Auto, OneChoice Homeowners and OneChoice Package insurance options. Houston is offering members added advantages such as assistance during emergencies involving insured vehicles, identity theft resolution services and travel assistance. Claims Guide reports:

Houston General Insurance Exchange is managed by Houston General Insurance Management Company, a subsidiary of Boston-based OneBeacon Insurance Group. South Carolina is the second state for Houston General; the company has conducted business in Arizona since November 2005.

Cape Cod Insurance Hiked

The harrowing wait for homeowners in the Cape Cod area is over, and the news is not good. State insurance regulators have approved a 25 percent hike in premiums for homeowners who are subscribed to policies from the Massachusetts FAIR Plan, an industry consortium of insurers. The rise follows revised hurricane projections that forecast heavy damage in the area. Insurance Commissioner Julianne Bowler gave her blessings to the increase, which includes a rise of 20 percent for premiums in New Bedford and parts of the counties of Plymouth and Bristol, and an average of 12.4 percent all across the state. FAIR Plan, which insures 8 percent of homes in Massachusetts, predicts more hikes next year. Boston News reports:

The average FAIR Plan annual premium on the Cape now costs about $1,300. The plan has swelled into the Cape's largest insurer, covering 43,000 properties, or about a third of the market. Six years ago, the FAIR Plan had about 6,000 Cape policies.

Homeowners insurance rates reduction proposed

United Services Automobile Association (USAA) has recently put forward a proposal to cut rates for homeowners policies by 22%. This proposal is under consideration by the state Department of Insurance. This landmark move would impact at least 182,000 customers. The cut would ensure an average annual saving of $244 to $381 for the customers. USAA is California’s fifth largest homeowners insurer and its effort is being praised by the Insurance Commissioner John Garamendi.

According to recent study by the Department of Insurance it was found that four of the largest homeowners insurers, represent 51% of the California homeowners insurance market. It was also found that these companies pay much less than 50 cents of each premium dollar to settle policyholder claims. The commissioner has ordered these four insurers to prove that their charges are not excessive. These companies are State Farm, Allstate, Farmers, and Safeco. If the companies fail to prove that their charges are fair and reasonable, they will be formally asked to reduce their rates.

Texas Select Customers Face Uncertain Future

More than 150,000 Texans face losing their homeowners insurance later this month after insurance company Texas Select folded recently. Insurance agents around the state are trying to let those homeowners know they need to take action and get new insurance. Customers wanting to get more information about Texas Select can visit the Texas Department of Insurance Web site. Wacotrib.com reports:

The Texas Department of Insurance “had to take over and close down” Texas Select Lloyds Insurance Company, one of several companies that operates under the Vesta Insurance Group umbrella, Hagins said. Vesta is based in Birmingham, Ala. Jerry Hagins, a spokesman for the Texas Department of Insurance said Texas Select “actually had a good year last year.” But Vesta suffered heavy losses due to claims related to Hurricane Katrina.

Read more: After insurance company folds, many homeowners stuck looking for new coverage

USAA Cuts Premiums

USAA, the fifth-largest homeowners’ insurance provider in the state of California and the sixth-biggest in the country, is doing its customers a huge favor and reducing premiums by as much as 22 percent in the state. This move is expected to save its policy holders $55 million in 2007, at an annual average savings of $381.

USAA, which has 182,000 customers in California, is following the trend set by Hartford Insurance which lowered premiums by 18 percent in June. The state’s Insurance Commissioner John Garamendi is thrilled with this development, coming as it does on the heels of four other major insurance companies’ reluctance to decrease premiums.

The Commissioner has been hounding State Farm Fire & Casualty, Allstate Corp., Farmers Insurance Group and Safeco Corp. to lower their insurance rates. But these agencies dismiss the Commissioner’s demands, claiming it is just a ruse to gain political mileage in the elections for lieutenant governor. Garamendi is the Democrat candidate.

Insurer Revived With State Loan

This insurance agency can now hold its head above the flood and windstorm waters with a $20 million loan from the state’s coffers. The State Board of Administration and the Florida Office of Insurance Regulation will administer the loan to the St. Johns Insurance Company, which will use the money to issue more than 100,000 policies over the next year.

To qualify for this loan which is issued under the provision of an insurance bill passed by the Legislature earlier this year:

• An insurer must meet a list of creditworthiness standards.
• It should be capable of repaying the loan within 20 years.
• It should match the state’s loan with capital investment from outside investors.
• All investments and loans should total at least $50 million in capital and policy holders’ surplus.
• The loan should be used to write a minimum pre-determined number of policies.

St Johns, which is based in Orlando, lost $6.5 million to the 2005 hurricanes, but managed to finish the year with $10.2 million in capital and surplus. It is the first insurance company to be approved for this loan.

Insurer Enters Florida Fray

Coming in the wake of several insurers closing shop or moving out of Florida, the entry of a new insurance agency into the State is certainly newsworthy. Coldwell Banker Residential Real Estate is all set to offer home and automobile insurance in Florida through NRT Insurance Agency, a subsidiary of Coldwell Banker’s parent company. NRT Insurance, which is licensed to operate across all the 50 states, provides insurance through Chubb, American Strategic Insurance, ASI-Lloyds of London, Fireman’s Fund and Liberty Mutual. Biz Journals reports:

Initially, the company will offer residential property and casualty insurance as well as automobile and watercraft policies. The agency will have six employees in Florida who will be supported by marketing and telephone representatives based at the company's headquarters in Waltham, Mass., executives said.

Don’t Let the Burglars Know You’re Away

An empty house is an open invitation for burglars to strike. What gives away the fact that your house is not presently occupied? Your mail accumulating in your mailbox is a sure sign that you’re away.

For those who are on good terms with the neighbors, this is a simple problem. But for the rest, there’s good news if you buy home insurance from Hibernian General Insurance.

The insurance company is offering all its home insurance customers free mail holding service for a period of four weeks every year. Hibernian has tied up with An Post in order to offer its nationwide customers this service. 

Cape Cod Insurance Set to Rise?

A computer forecast that predicts a hurricane over the Cape Cod area is proving to be costly for the people who live there. The Massachusetts Fair Access to Insurance Requirements Plan (FAIR Plan), the insurance consortium who covers nearly 175,000 high-risk homes in the Bay State area, has submitted a bid to the State Insurance Commissioner’s office seeking approval for a 25 percent hike in insurance premiums.

The group had a similar proposal turned down last month by State Insurance Commissioner Julianne Bowler. She gave FAIR Plan a 30-day deadline to either reduce the hike amount or provide more proof that substantiates the need for a hike.

John Golembeski of FAIR Plan argues in favor of the hike; he adds that the insurer is doing the people a favor by increasing premiums only by 25 percent, when analysis models show that the $1,036 average annual premium is 64 percent too low.

According to Deputy Commissioner Joseph Murphy, FAIR Plan’s revised filing “is still under review.”

Windstorm Hits Condos, Apartments Too

Homeowners in Harris County in the Houston can take comfort in the fact that they’re not the only ones affected adversely by the lack of insurance options and the rise in insurance rates. People who live in condos, town houses, and apartments are also being subject to rising prices, limited coverage, and higher fees and rents. The increases are attributed to the windstorms and the rising costs of insurance that insurers purchase for themselves. The Texas Department of Insurance is monitoring the market and considering other surplus lines insurers as alternatives. Chron reports:

Historically, property owners who couldn't find windstorm coverage in counties along the coast, including a small sliver of Harris County, have turned to the Texas Windstorm Insurance Association (TWIA). But inland counties aren't eligible for coverage in the association. Jerry Johns, a spokesman for the association, said adding Harris County to TWIA at current rates isn't something the already-struggling industry would support.

Title Insurer Reports Q2 Losses

The Houston-based title insurance company, Stewart Information Services Corp., announced that it registered a comparative loss in revenue during the second quarter this year. The company’s revenue fell to $645 million in Q2, 2006 from $651.1 million during the same period last year. Reasons cited for the decrease are the slowdown in the sales of homes and refinancing in a few parts of the country, increased expenses incurred for employees, operations and new office buildings, and a drop in the share value of the firm. Chron reports:

California's home sales, which represent 16 percent of Stewart's market, dropped 15 percent from this time last year, according to Ted Jones, director of investor relations at Stewart. He said that the number is indicative of the kind of drop that important states like Florida and New York are seeing as well. Jones said the company hopes to streamline its operation as it moves further into a Web-based system.

Reprieve for Texan Homeowners

State Farm Insurance’s plans to raise its insurance rates for homeowners in Texas have bitten the dust as the Texas Department of Insurance (TDI) turned down its proposal. To add insult to injury, the insurer has been ordered by TDI Commissioner Mike Geeslin to procure TDI’s approval before it considers another rate hike. Geeslin termed the rate increases as “unreasonable and meant to produce unjustified profits.” State Farm had intended to increase insurance rates by 21 percent all over the state, and by more than 50 percent in the counties of Harris and Galveston. Chron reports:

Alex Winslow, executive director of the Austin-based consumer group Texas Watch, praised Geeslin for his latest action but cautioned that homeowners will benefit "only if TDI follows through and forces the company to pay back everything they owe their policyholders and reduce their rates."

Political Windstorm Insurance Soundbytes

It’s virtually impossible to procure commercial windstorm insurance at nominal rates in Florida after private insurers found themselves canceling policies that came up for reinsurance.

As a solution to this problem, Governor Jeb Bush suggests a state-run fund that will step in to offer business hurricane coverage, but the Republican candidate for the post of Florida’s chief financial officer, Randy Johnson, begs to differ. Johnson says it’s bad public policy to involve the state in the hurricane insurance business; he suggests that incentives should be created to encourage competition in the windstorm market.

Present chief financial officer Tom Gallagher proposes a commercial Joint Underwriting Association (JUA) that would allow insurance agencies to draw from the state’s hurricane fund when they incur losses greater than $3 billion. The current threshold is $5.2 billion.

Attorney General Charlie Crist also supports the creation of a catastrophe fund, but suggests that the loss threshold should be lowered to between $2 and $3 billion.

All proposals and options are subject to the approval of the Florida Cabinet, which meets next week to discuss the issues presented by Insurance Commissioner Kevin McCarty.

Democrats slam 'insurer friendly' insurance package

In a recent meeting at Palm Beach, Florida, Democratic lawmakers slammed their Republican counterparts for passing an insurance package in this year's state legislative session they say is far too friendly to insurers. Robert Hunter, the insurance director at the Consumer Federation of America and a former insurance commissioner in Texas, actually said that the Republican legislators had "given away the store" in the legislative session. Palmbeachpost.com reports:

Hunter said the nation's property insurers have reaped record profits in the past three years in spite of record claims. He blamed insurance companies for jacking up rates after vowing that post-Hurricane Andrew reforms would bring stability to homeowners.

Read more: Homeowners rip insurance package

Over 150,000 Texan policyholders to lose their homeowners insurance

Over 150,000 Texas homeowners must now find a new insurance carrier. This is thanks to the decision of regulators to shut down Texas Select Lloyds, the state's sixth-largest home insurer. Ksat.com reports:

Texas Select did not have the ability to protect its policyholders and so their policies will be canceled by Aug. 23, according to the Texas Department of Insurance.

Read more: Homeowners Insurance For 154,000 Texas Policyholders To Be Canceled

Insurance rates to go up for Encompass clients

Some not so good news: Around 15,000 customers of Encompass Insurance, a division of Allstate, will see rate increases on their homeowners insurance starting in September. The 8,586 customers of Encompass Insurance Co. of America and Encompass Property and Casualty Co. will see statewide average rate increases of 18.7 percent. The 5,410 customers of Encompass Indemnity Co. will see a statewide average rate increase of 11.8 percent.

This hike is not uniform. Customers in Northern Louisiana could actually see a decrease. However, customers in the New Orleans area are not so lucky and will see increases of 16 percent to 40 percent. In addition to this, Encompass also plans to pass on to customers a one-time 15 percent assessment. This one is to bail out the Louisiana Citizens Property Insurance Corp. Nola.com reports:

Kevin Conlee, senior actuary for Encompass, an Allstate brand that is sold through independent insurance agents rather than through Allstate agents, noted that the bulk of those increases are to cover the cost of buying reinsurance.

Read more: Encompass raising insurance rates

Florida couple find a unique insurance fix

What would you do when your homeowners insurance bill triples? Well, you could pay up your mortgage instead! At least that's what a Florida couple did.

Rather than paying $12,000 for coverage that cost only $4,000 as recently as 2004, Baxter and her husband decided to pay off their mortgage. The Loxahatchee Groves couple tried to buy insurance to cover fire and theft but not hurricane damage, but they couldn't find a carrier that offered such a bare bones policy.

In west Palm Beach, Florida, homeowners are feeling cheated by the insurance industry. Robert Hunter, the insurance director at the Consumer Federation of America said the nation's property insurers have reaped record profits in the past three years in spite of record claims. He blamed insurance companies for jacking up rates after vowing that post-Hurricane Andrew reforms would bring stability to homeowners.

Did you know that for the past three decades, you have also been sending tax money, both indirectly and directly, to property insurance companies? And that too, not so that that these companies can keep their own premiums low, but to ensure those companies' profits.

This Palm Beach Post article brought out this angle to the insurance story.

1. As a taxpayer, you or the state has been offering tax-subsidized reinsurance to insurance companies at a lower cost than they can get it elsewhere.

2. The state also pays some private companies incentives to take over high-risk policies in addition to the premiums they receive from those policies.

3. The state assists private insurance companies by providing windstorm insurance for those properties most at risk, allowing the private insurance companies to pick the low-risk, high-profit policies.

4. These subsidies are part of the reason why, despite record hurricane damage last year, the nation's major insurance companies even so posted record profits.

I don’t know about you, but doesn’t the whole property insurance scene seem a little fishy looking at all these points. The hurricane season has not peaked yet and forecasts are grim, but totally understandable what this couple did, don’t you think?

Insurer Faces Public Hearing

Following the request of the First Floridian Auto and Home Insurance Company to be allowed to increase insurance rates by 24 percent, the company will be subject to a public hearing on August 3. The hearing will feature questions thrown at the insurer by the Office of Insurance Regulation (OIR), consumer advocates, and consumer group representatives. OIR’s website will show streaming videos of the hearings throughout the day besides televising the proceedings for stake and policy holders, with the help of statewide cable network Florida Channel. Biz Journals reports:

The hearing is scheduled in Tallahassee, which offers convenience for the Florida Consumer Advocate, whose actuary has not always been present for the hearings in other locations around the state, along with OIR staff whose assistance is needed at the Capitol during hurricane season. The public will be able to comment on the hearings by phone, mail, e-mail or in person, according to OIR.

Commissioner Proposes Rate Reduction

California’s Insurance Commissioner John Garamendi is continuing with his line of attack against the insurance industry. The latest salvo comes in the form of a proposal to reduce title insurance rates for home purchases by as much as 23 percent, cut back on the cost of title insurance for home refinancing by 16 percent, and slash the cost of escrow services from escrow companies that are run by title insurers by 27 percent.

The Commissioner said that the price of title insurance had shot through the roof over the past years because of the lack of competition and the rise in the price of houses. Over 80 percent of the title insurance market in California is controlled by only three companies – First American, Fidelity, and Land America.

Garamendi has already hit the headlines for his investigations into high homeowner insurance rates and his subsequent imposition of a 16 percent reduction in workers’ compensation rates. He has also proposed new regulations that will allow the Insurance Department fix a ceiling on future title insurance rates.

The insurance industry is up in arms against the Commissioner’s tactics. It argues that if this crackdown continues, more insurers will be forced to down shutters being unable to stay competitive.

Citizens Hikes Premiums for Florida’s Citizens

Residents of Florida are being tossed from the frying pan into the fire. It’s not enough that they were battered by hurricanes last year, losing home and hearth, now they are at the mercy of insurance companies.

Following the closure of many private insurers owning to high losses, Florida’s citizens were forced to knock the doors of the state-owned insurance firm, Citizens Property Insurance Inc. As is that was not bad enough, they are now being subject to premium increases, and worse, also face the possibility of being left without insurance as the company looks to consolidate losses by dropping policies that are up for renewal.

Citizens was formed in 2002 when the government combined the Florida Residential Property and Casualty Joint Underwriting Association with the Florida Windstorm Underwriting Association to form one state-run unit. The second-largest property insurer in Florida, it caters to the insurance needs of 3,176 commercial property owners and 510,825 residential policyholders all over the State.

Premiums are expected to rise by 15 percent to an annual average of $1,610, with a minimum of $240 during the time of renewal. The insurer has stopped covering buildings under construction as of July 15, and will issue no new High-Risk Account Wind-Only Commercial builder’s risk insurance policies. Existing policies will also be valid only till November 1, after which they will not be renewed.
Even though Citizens was granted $715 million this May and $3 billion in June by the State to cope with its losses incurred during the hurricane season of 2005 and to tide over for future storms respectively, the amount is expected to cover costs over two hurricane-filled years only.

Did your agent mislead you? Katrina Insurance Trial Update!

Like I pointed out in an earlier post about the Katrina insurance trial, the things that the insurance agent tells you while you buy your homeowners policy, is being raised. The case leans heavily on the agent who allegedly told the Leonards that they do not require a separate flood policy.

Insurance agent Jay Fletcher is feeling the heat as several other Nationwide policyholders testified that he either told them they didn't need flood insurance or convinced them that their policies covered all forms of hurricane damage.

Trial highlights:

1. Paul Leonard testified that, after Hurricane Georges hit the Gulf Coast in 1998, he asked Fletcher if he needed flood insurance and the agent allegedly told him that he does not need flood cover.

2. Pascagoula chiropractor, Munson Hinman, said he walked into Fletcher's office with a check to purchase flood insurance months before Katrina, but the agent talked him out of it. 

3. After Katrina, Nationwide paid Hinman more than $136,000 for the damage to his home, including damage from storm surge, even though he didn't have flood insurance.

4. The agent has denied saying anything like that to Leonard or others.

5.  Nationwide said that the flood exclusion in its policies extends to "storm surge" even though that term wasn't written into the Leonards' policy until after Katrina's wind-driven water inundated thousands of homes far from flood zones.

6. Leonard’s attorney, Scruggs argued that Fletcher's alleged assurances about the scope of coverage make Nationwide liable for all the damage, be it wind or water.

A clear case of misleading the insured is what it looks like to me and the case also calls for insurance companies to have better monitoring of their agents doings. Looks like if the Fletcher part is proved, Nationwide could end up paying the Leonards and many more.

However, if this case actually looks into the “Wind vs. Water” issue and makes a ruling – then it will be a landmark ruling for homeowners affected by hurricane Katrina. The case is approaching closing arguments.

Wealthy beach home/condo owners feel the premium pinch

What do you do when you are wealthy homeowner with some hurricane damage to your home?  You would probably do the repairs and expect an increase in premiums from your insurer, right? But, what do you do if what happens next is a shocking zoom in premium rate?

Alabama’s wealthy beach house/condo owners are realizing that homeowners insurance premium have skyrocketed! The hurricanes last year have given most of the boost to the rates here but there are other factors too…

After the hurricanes wealthier homeowners promptly repaired their homes and condos and expected an increase in premium. But, no one expected the rates being demanded now. Reason - some properties have more than doubled in value after repairs from Hurricane Ivan. With home values doubled there’s more premium to be paid!

Therefore, here hurricanes alone did not contribute in the zooming premium rates and this is now making even the wealthy feel the insurance pinch.

One condo property in Orange Beach saw it's annual insurance premium soar from $40,000 to more than $1.1-million. When the Gulf-front complex renewed its casualty insurance policy, which covers wind damage from hurricanes, owners were stunned to see their annual premium soar from about $40,000 to nearly $1.1 million. The increase means additional expenses of nearly $15,000 a year for owners of each of the 71 condos.

Another reason: Heavily in debts, traditional insurers are leaving the area and only re-insurers and state-backed insurers remain. Re-insurers and state-backed ones are in a hurry to re-fill their reserves and are demanding higher premiums to get there. Did you know that re-insurers do not answer to Insurance Regulators unlike the traditional insurers?

Conclusion: When the re-insurers’ coffers will be re-filled, hopefully lower premiums will be back. What we probably need is some healthy competition and let the laws of economics do the rest. However, till then wealthy beach condos/home owners will have to dish out huge sums as premiums.

Don't you think, in some parts the insurance-hurricane seems to be unleashing more havoc than any hurricane with a human name? 

Federal Hurricane Relief for Louisiana

There’s good news for the hurricane-battered residents of Louisiana, Mississippi, Texas, Alabama, and Florida. While the federal government has announced a $4.2 billion fund that will help citizens of Louisiana rebuild or sell houses that were shattered by the Hurricanes Rita and Katrina, the Department of Housing and Urban Development is setting aside $1 billion for hurricane-related housing needs in Texas, Mississippi, Alabama, and Florida.

The $4.2 billion will go to the $9 billion “Road Home” federal program for hurricane recovery that is already being implemented in the state. Road Home was set up to help the 123,000 who were affected by the hurricanes to rebuild or sell their battered homes.

Each eligible person was allocated up to $150,000 in the form of grants to cover repair expenses that went beyond insurance amounts and FEMA grants. If a resident sells his property and also proves that he/she will continue to permanently reside in the state, the grant will provide an amount equal to the difference between the home’s market value before the storm hit and the post-storm insurance claim amounts and FEMA grants. If he/she sells and chooses to move out of the state, then 60 percent of the house’s pre-storm value is granted.

The Louisiana Recovery Authority is in charge of the program for which over 90,000 have already sent in applications. The checks will start going out later this year.   

Road Home is a blessing for the residents of Louisiana who are reeling from numerous problems such as high insurance premiums, shortage of housing, and rising rents following the hurricane catastrophe.

Being between policies in thunderstorms...

Being between insurance policies for your home is the worst thing that can happen to a homeowner and that’s what a Florida couple discovered.

This story is a reminder of what lightning can do! The Downs were vacationing out of state 10th of July when a bolt of lightning ripped into the roof of their Lansing Island home. What ensued was lightning sparked fires, which lead to their multi-million-dollar home to total destruction.

There are 2 important points to this story: Lightning and being between home policies. This only means that the couple will have to pay for the reconstruction of their home at least in part. The loss of the home $2 million and added to this the cost of their belonging a total of $4 million!

Did you know? Lightning is second only to flooding as a deadly natural disaster. The National Oceanic and Atmospheric Administration puts the number of lightning strikes each year at 40 million. The United States alone receives up to 20 million cloud-to-ground lightning strikes per year from as many as 100,000 thunderstorms.

A basic homeowners policy covers you for damage from storms, lightning, fire and smoke. It is estimated that electrical storms ignite about $100 million dollars in losses each year. In fact, lightning, fire and debris removal accounted for more than 35 percent of all homeowner’s claims in 2000 and cost insurers more than $8,500 per claim

To reduce your premiums make sure to take the following steps:

1. Install sprinklers systems
2. Install smoke detectors
3. Burglar alarm that ring an outside service
4. Stock up fire extinguishers
5. Use fire resistant material to construct homes

Understand the magnitude of a lightining spark: A spark of lightning can reach more than five miles, reach temperatures of about 50,000 degrees Fahrenheit, and contain 100 million electrical volts! Sizzling right?

During a thunderstorm unplug phones and electrical equipments; draw blinds to prevent windowpanes from shattering inside your homes! By the way, are you between policies for your home?

Katrina insurance trial - Questions to ask yourself

Don’t you think that homeowners insurance providers have a unilateral decision on the wind vs. water question on insurance coverage for homes?

The agents selling home insurance policies however sometimes sing a different tune till an application for a claim crops up. Then it is an about-turn on their earlier stance of -“you are covered for hurricanes and that will be all you need!” Did this happen to you?

We now have a trailblazing trial on to decide on just this question and hopefully the decision will help the home insurance crisis to make some important decisions on the following.

1. Should insurance agents be allowed a free reign to interpret the policies for their customers.
2. Clear-cut criterion for the “wind vs. water” question

The trial is on to discuss the case of Lt. Paul Leonard of Mississippi, who says - he was promised before the storm by his insurance agent that his homeowner’s policy would cover everything. However, his insurance provider, Nationwide Mutual concluded that flooding caused most of the damage, USA Today reports.

Leonard did not have a separate flood insurance policy, as his agent seems to have reassured him that he is covered for everything. Then Katrina happened. The insurer denied most of his claim for the ground floor of his home that was damaged by water. He has paid $30,000 from his own pocket to fix it.

Time to jog your memory on your policy and what the agent said while you bought it.

1. Did your agent tell you that you are covered for hurricanes and that is all the insurance you will need?

2. Did your agent warn you that you need separate flood cover?

Watch out for the Leonard case proceedings here, I'll keep you posted.

Leonard’s attorney, Zach Scruggs in his opening statements said that the agent in this case did not want to write a flood policy “because he didn’t make much money off of it.” This case could be it for thousands of hapless homeowners who were denied claims by providers stating, “flooding” the reason for damage.  What is your verdict on this trial?

South Korean Insurers to Offer Mortgage Insurance Products

The Financial Supervisory Service of South Korea announced that insurance companies will soon be adding mortgage insurance products to their offerings. This move will permit those who hold policies to borrow housing loans larger than currently allowed as per regulations. The present mortgage ceiling is fixed at 60 percent of the value of homes in speculative zones. According to the new rules coming into effect, policyholders can mortgage their homes up to 80 percent of their values. There is a catch though – only those with houses in restricted, non-speculative zones, with floor spaces less than or equal to 84.81 square meters are eligible foe these mortgage insurance products. The products are expected to catch the interest of those who are looking to buy homes but are unable to do so because of the government’s stringent housing loan regulations that were designed to prevent speculative real estate purchases. Hankooki Times reports:

Genworth Financial, a U.S. financial services group, is planning to start a mortgage insurance business in Korea and is preparing to submit an application for a business license to the nation’s financial regulator. Domestic non-life insurers are also considering selling the products.

State Takes Over Ailing Insurer

Another insurance company has been taken over by the state insurance commissioner following its parent company’s inability to handle its financial woes. The Hawaiian Insurance & Guaranty Co. Ltd. (HIG), which has the insurance accounts of 26,000 homeowners in Hawaii, has gone the state’s way after Vesta Fire Insurance Corp. in Alabama found it difficult to hold its head above water. Home and auto insurance provider HIG is the fourth largest home insurer in the island, and is based in Honolulu. Biz Journals reports:

Commissioner J.P. Schmidt said he took the action to protect policyholders and that he expected the takeover to be temporary. He said he and insurance regulators in other states are looking at options to shore up Vesta, which may include selling some subsidiaries like HIG. HIG will continue with day-to-day operations and said it has enough money to cover claims.

Mobile Worries for Homeowners

Mobile or manufactured homeowners in Florida have nowhere to go, literally. They are the objects of a three-pronged attack from which they have no recourse. For starters, they are more susceptible to being left homeless when hurricanes hit. Following the recent spate of destruction by hurricanes, they have to pay higher insurance rates after most agencies pulled down shutters. And last but certainly not the least, they are forced to move to new locations when the owners of the parks they live in decide to sell out to real estate developers in the pursuit of higher profits.

The problem is compounded by the fact that most mobile home residents are poor, disabled, veterans or elderly people who either have no steady income or are dependent on a fixed pension for their livelihood. While the exact numbers are not known, it is estimated that between 532,000 and 1.2 million people live in manufactured homes. A 2000 census puts the figure at 10 percent of the population of Florida, which would amount to around 1 million.

Following Hurricane Andrew in 2004, more stringent guidelines were formulated to force mobile homes to built so that they can withstand gales of up to 100 mph. But more than 83 percent of the homes in existence were built before 2004. Hit in all directions with eviction notices, sky-rocketing insurance rates, and the threat of hurricanes looming large, is there any silver lining on the cloud for Florida’s mobile home owners? Only time will tell.

Swindlers Take Advantage of Foreclosure Fears

The knights in shining armor are proving to have tarnished coats of armor. Homeowners in Southern Florida who are beset by high insurance premiums, heavy interest rates and large mortgages, are being cheated out of their homes by unscrupulous agents who arrive on the scene promising to rescue their houses from foreclosures. But they only end up digging them a deeper hole by taking advantage of their gullibility.

The modus operandi of these fraudsters is to bombard those who are in danger of foreclosure due to mortgage debt with emails, phone calls and notices that promise to bail them out of their financial troubles. Once the bait is taken, they are asked to sign an agreement which runs into a stack of papers with legalese. Hidden in the voluminous paperwork is a clause that effectively transfers control and ownership of the property to the agent or organization in question. Some documents include signing over the power of attorney or a trust agreement.

The conmen promise homeowners that they will either refinance or reinstate their mortgage, and then take over the property on a lease basis. People generally agree as they do not want to lose their homes or end up with the bad credit rating that comes in tandem with a foreclosure. They are then bound to pay an equal or higher rent for the entire lease period, at the end of which they will have to buy back the property, usually at exorbitant sums. If they are unable to do so, they end up losing the roof over their heads.

Typical targets include the elderly, women living alone, and members of minority communities. Only time will tell if the law passed earlier this year by the Florida Legislature, illegitimating the use of unfair or deceptive trade practices to victimize homeowners in foreclosure, will clamp down on the underhand tactics used to cheat people out of home and hearth.