Florida Citizens Shocked by Shifting Insurance Market

As the hurricane season starts, many homeowners along the Gulf and Atlantic Coasts are being rocked by soaring insurance rates. In Florida, more than two dozen insurers have left the state. From member station WGCU in Fort Myers, Fla., Russell Lewis reports.

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STEVE INSKEEP, host:

The business news starts with the trouble in home insurance.

The Atlantic hurricane season officially begins today, and according to experts at Colorado State University, there is an above-average chance of a major hurricane hitting the east coast. For people living in areas prone to hurricanes, finding affordable homeowners insurance is virtually impossible now.

Russell Lewis of member station WGCU reports from Fort Myers, Florida.

Mr. RUSSELL LEWIS (Reporter, WGCU Radio): Brad Carlock(ph) is proud of his home in Cape Coral, Florida. Carlock moved here from Illinois in 2004, the week Hurricane Charlie struck just to the north. He bought the home because it's right on the lake. The beauty is offset by an insurance bill that has shot up 60 percent. He now pays $1,500 for his three-bedroom home.

Mr. BRAD CARLOCK (Homeowner and Insurance Agent, Cape Coral, Florida): Insurance is something that I have to have, and, you know, especially with the storm season coming up. It's one of those necessities. I have to pay for the luxury of living on the water and living in an area that is prone to storms and different things.

Mr. LEWIS: Carlock has no choice but to pay the higher premium, and Carlock should know - he co-owns an insurance company and has spent the last few months explaining the market to frustrated customers.

It's a market some say is collapsing. In the past year, more than two-dozen insurers have left the state. Allstate stopped writing policies in Florida. State Farm just asked regulators for a 58 percent premium hike. And almost 900,000 Floridians now get their insurance from the state-run insurer of last resort, called Citizens. Because it is the insurer of last resort, it charges the highest rates in the state. Yet, it's Florida's second largest insurer, adding 1,000 new customers every day. It's already asked for another 45 percent premium increase.

Florida lawmakers just provided $700 million to Citizens to offset a $2 billion deficit. Governor Jeb Bush says it was a tough bill to sign.

Governor JEB BUSH (Republican, Florida): I feel horrible for people on fixed income, particularly - lower income, working families that own their home - that will have to pay that higher premium. But there's really no other option, right now.

Mr. LEWIS: It's not just Florida experiencing a coastal insurance retreat. Residents in parts of Louisiana, Texas, Mississippi, and even New York - face higher premiums. And like people in Florida, they're often paying more for less coverage.

Senator BURT SAUNDERS (Republican, Florida): The best word I could come up with is, it's a mess.

Mr. LEWIS: Burt Saunders is a Republican State Senator from Naples, a region hit hard by Hurricane Wilma last year. He's running for state attorney general, and says Florida's insurance problems are a wake-up call.

Senator SAUNDERS: There are no silver bullet solutions. And there's going to have to be some significant political will to come up with the right solutions. This is a national problem that has to be solved as a national problem - not just on a state-by-state basis.

Mr. LEWIS: Several Florida officials, a coalition of insurance executives, regulators, and academics, want national hurricane insurance similar to the federal flood program. But the idea hasn't received much support.

Robert Hartwig is chief economist of the trade group Insurance Information Institute. He says soaring land values and rampant growth aren't helping; especially in Florida, which adds about 500 new residents each day.

Mr. ROBERT HARTWIG (Senior Vice President and Chief Economist, Insurance Information Institute): That kind of development, which is perhaps unsustainable in the long run, continues to be approved. Yet, nevertheless, people look for it to be insured, even when insurers feel that such properties are very, very vulnerable indeed.

Mr. LEWIS: Hartwig says, overall, insurance companies have never made a dime in Florida, if you add up all the premiums and subtract the losses. It leaves residents in hurricane-prone areas feeling shell-shocked.

Cape Coral insurance agent Brad Carlock knows of people who take out long-term loans to pay their annual insurance bills.

Mr. CARLOC: We have finance companies that will finance peoples' insurance payment. And you're going to see more and more people having to do.

Mr. LEWIS: Carlock says his customers understand they live in an area that faces risks from hurricanes. They also, now realize, the increased threat of storms means they have to pay more for insurance to enjoy the sunny days they cherish.

For NPR News, I'm Russell Lewis, in Fort Myers, Florida.

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