Posts Tagged ‘Citizens Property Insurance Corporation’

Florida Home Insurance Rate Increases – Can You Avoid Them?

January 3, 2010

Recent Florida Legislation signed into law by Governor Charlie Crist was a necessary step required to strengthen the stability of the Florida Property Insurance system.  Citizens Property Insurance will be allowed to raise Florida home insurance rates as 10% per year until the premiums they charge more closely reflect the risks the company is taking.  Private Florida home insurance companies will also be allowed to raise rates to cover the additional reinsurance they are expected to buy in the private market instead of from the Florida Hurricane Catastrophe Fund.

The bright spot is that the Florida insurance system will be on a much stronger financial footing in the coming years if the state can continue the limited hurricane activity it has enjoyed during the past few years – something that has to happen to improve the chances that most Florida home insurance companies can make good on their promise to pay your hurricane claim quickly and fairly.

The bad news is the fact that all of us will be facing up to a 10% increase in Florida homeowner insurance rates.  A rate increase of 10% might not sound like much of an increase in other states but in Florida the situation is much different.  These increases will be based on higher premiums already in effect after the major rate increases approved after the 2004/2005 Florida hurricanes.  Even before the coming 10% increase, consumers in Florida were already paying the highest home insurance rates in the country.

The rate increases could not be coming at a worse time.  To begin with, Florida is in the middle of a financial crisis just like the rest of the country with depressed real estate, bankruptcies, foreclosure, and increases in unemployment.  These rate increases are going to start happening at the exact same time that State Farm Florida will start cancelling up to 30,000 policies per month as they start exiting the Florida property insurance market.  Our subscribers who presently have their insurance with State Farm are telling us that finding comparable coverage with another Florida home insurance company may cost them up to 200% more after they lose their coverage with State Farm.

So what is the bottom line for you as a Florida homeowner insurance consumer as we move through this challenging period?

To start with, you have to understand that even though there are only 40 companies still writing new business, you still have a good chance of locating 5-10 companies from this group that may still be willing to cover your home – even if it is an older home or has close proximity to the coast.

It is very important for you to shop your Florida home insurance policy with more than one independent agent – someone who represents multiple Florida homeowner insurance companies looking for your business.  Contacting multiple independent agent will ensure that you are able to get quotes from all the companies in your county who want to cover your home – not just the Florida home insurance companies carried by a single agent.

Also, you have to do due diligence and research on all of the Florida homeowners insurance companies that you are getting quotes from.  The 40 companies still willing to write new business vary greatly in terms of their size, financial resources, insurance industry experience, and customer service history.  It is important that you ask your agent how each of the companies you are considering is performing in each of these areas.

As you come up with a short list of companies, work with several independent Florida insurance agents and make sure that you have received quotes from all the companies in your county that are interested in covering your home.  As you evaluate the quotes, don’t buy the Florida insurance for your home simply on price.  Find the right balance of financial stability, outstanding customer service, and the price of the policy.  After all, paying a low price for Florida home insurance isn’t really a bargain if the company you pick pays slowly and won’t pay the full amount that you need to repair the damage to your home after a Florida hurricane?

There is little doubt that these recently approved increases in Florida home insurance will be very difficult to swallow and the timing is very bad.  However, if you take the time to find all of the Florida home insurance companies that are interested in covering your home, you might be able to fight off all of the 10% increase while everyone else has to pay up.  Your research can save you thousands!


Michael Letcher is a Fortune 500 executive and a licensed Certified Public Accountant.  His on-line guide can help you find low cost insurance Florida.  Learn the secrets to affordable Florida insurance in his free newsletter at =>


Florida Homeowners Insurance – Want to Pay Someone Else’s Bill?

January 3, 2010

Since Hurricane Andrew in 1992, Florida home insurance companies have continued to pull out of the state or seek significant rate increases.  Why?  Because the companies and state regulators can’t agree on the appropriate Florida homeowners insurance rates consumers should pay for the hurricane portion of their bill.

As a result, beginning in the 1990’s, Florida started to impose special assessments on every Florida homeowners insurance policy issued and created a state run insurance company of last resort that is called Citizens Property Insurance Corporation to ensure that everyone in Florida can get home insurance coverage for their home.

Florida also created The Florida Hurricane Catastrophe Fund which requires all licensed Florida homeowners insurance companies to buy reinsurance after the losses from a major hurricane reach a certain level.  This find serves as insurance for Florida home insurance companies and is designed to ensure that the companies don’t have to absorb all of the costs of a major hurricane event directly.

Finally, Florida created a legal entity called the Florida Insurance Guaranty Association (FIGA) that will pay your insurance claim if your Florida homeowners insurance company is declared insolvent.

Those special assessment line items on your Florida home insurance bill can cause you to pay line item charges for many years into the future.  You can be required to make up the difference when Citizens Property Insurance Florida and the Florida Hurricane Catastrophe Fund can’t meet their obligations.  Or you could be assessed for the difference if FIGA doesn’t have the cash to pay off the claims filed against a Florida homeowners insurance company that became insolvent.

So far, at high level, each of these various entities and the protections that they offer make sense.  And when they work properly they do help further diversify Florida’s hurricane risk and help make it attractive for Florida home insurance companies to continue to do business in the state.

However, the Florida Insurance Laws passed in 2007 and 2008 have altered and politicized the goals of each of these entities to a point where they no longer function as originally intended.  Why?  Because Florida legislators aren’t willing to tell voters the truth – that these entities are now seriously underfunded and not positioned to do what they are supposed to do.  Even worse, many Floridians don’t know that they are subsidizing the Florida home insurance premiums of someone else.

Presently, both the Florida Hurricane Catastrophe Fund and Citizens Insurance do not have enough money and are overly dependent on an unfriendly bond market to satisfy their responsibilities.  Both organizations have to borrow before Florida hurricanes happen with limited success to come up with the money they need – and they are coming up short in the bond markets as the country continues to work through the financial crisis.

Citizens Property Insurance Corporation is the one organization that causes each of us to subsidize the Florida insurance costs of someone else.  Every one of us will be required to pay annual special assessments for many years into the future to cover the cash shortfalls that Citizens Property Insurance had as a result of the 2004/2005 storms.  Cash shortfalls are just another way of saying that those who were insured with Citizens for the 2004/2005 storms, were simply not charged enough premium for that coverage.  Many of those homes are older homes that are located in areas of Florida that are the most susceptible to hurricanes.   After the Florida hurricanes of 2004/2005, Florida legislators decided to freeze the home insurance rates being charged by Citizens – a politically popular decision that also resulted in everyone in Florida subsidizing the homeowner insurance rates of others who live in the areas most vulnerable to hurricanes.

Last but not least, because the rates of Citizens have been frozen for the past few years, even when consumers can find Florida home insurance in the private market, they are still given the choice of being insured by Citizens and being undercharged for their insurance.

This subsidized insurance that many Citizen policyholders receive, comes at a price.  It is funded mainly through special assessments that all of us are required to pay on our Florida homeowners insurance bills each year.  These assessments have become so burdensome, that Florida home insurance policies are not enough to pay the total cost.  That’s why you’ll see many of them on your Florida auto and business insurance bills as well.

If you are fed up with paying the Florida homeowners insurance premiums of someone else, now is the time to have your voice heard during the current session of the Florida Legislature.  Tell the lawmakers that you’ve voted for and sent to Tallahassee that you want the Florida home insurance rates of Citizens Property Insurance Corporation raised to reflect the true cost of the homes they are covering.


Michael Letcher is a Fortune 500 executive and a licensed CPA.  His on-line buyers guide can help you find low cost Florida insurance.  Get the secrets to affordable Florida home insurance in his free newsletter at =>

Florida Homeowners Insurance Companies – Don’t Hate Them All

January 3, 2010

Being mad at Florida home insurance companies has become commonplace after many large companies started exiting the state after Hurricane Andrew – something that has continued thru today.  After Florida’s 2004/2005 hurricanes, companies raised their rates and continued to cancel policies.

But there are now two distinct groups of home insurance companies in Florida.  The first group of companies consists of well known national names such as State Farm Florida, Allstate Floridian, and Nationwide Insurance Company of Florida among others.  The second group consists of recently formed Florida based companies that have commenced operations in the past 15 years – many since the end of 2005.

In this brave new world of big companies leaving and new companies entering the Florida property insurance market, it is the second group of recently formed companies that we should be giving a break.  Here’s why:

After the 2007 legislation, it was the recently formed companies that actually reduced homeowners insurance rates in Florida as a response to this legislation while many of the national companies stubbornly pursued rate increases.

It is the newer companies that are continuing to write new business in Florida while the long established national companies continue to drop and cancel Florida home insurance policies.

The Florida based start-ups are more willing to consider insuring older Florida homes and properties near the coast – risks that the national companies abandoned years ago and continue to shed.

Finally, these newer start up companies deserve a chance to build up their capital reserves and to expand responsibly.  They are our future if there is any hope of Florida taxpayers and policyholders avoiding massive special assessments that we could face if Citizens Property Insurance Corporation or the Florida Hurricane Catastrophe Fund ever come up short.

Some of the more recently formed companies have begun to expand their risks across Florida and into other states as well.  This risk diversification is a good thing that will reduce the chances of one particular company going broke after a major hurricane.

Finally, from a policy perspective, the State of Florida needs to take a new look at how it considers request to increase rates.  At the present time the system is not working property – the larger companies bailing out on the state are still getting higher rates or smaller decreases than the newer companies that are taking more and more of Florida’s hurricane risk.

Companies that can demonstrate that they are growing their policy base and those that can show a track record of covering older and coastal homes should be permitted more pricing power and granted higher rate increases than the companies that are bailing out.

This is not to say that the newer companies are perfect.  They have opportunities to improve too – especially in the area of customer service as they try to operate with leaner staffs and to take advantage of pooled customer support centers.

However, the next time you are part of a discussion where hatred is being focused on all home insurance companies in Florida, be careful not to paint all of them with the same broad brush.  Many of the newer companies are covering your higher risk homes, taking steps to reduce costs and your premiums, and assuming risks that used to be part of Citizens Property Insurance.

Give these newer companies credit for assisting Florida during this challenging period.  The more of these companies that can be created and built up with a decent base of premiums and capital, the better it will be for all of Florida in the long run.


Michael Letcher is a former Bank of America and W.R. Grace executive and a licensed CPA.  His on-line buyers guide can help you find affordable homeowners insurance Tampa.  Find out the secrets to low cost Florida insurance in his free newsletter at =>

Florida Coastal Homes – How Smart Consumers Find Insurance Coverage

January 3, 2010

Let’s be honest about it.  Finding an affordable Florida home insurance policy is a challenge in most parts of the state.  Especially because most national companies no longer write homeowners insurance coverage here.  At the present time only 40 Florida home insurance companies out of over 400 companies licensed to write home insurance are still open for new business.

If your home is located in a Southern Florida coastal county, it is even harder for you to find Florida home insurance quotes.  Most southern coastal counties have about 25 companies on average that are actively writing new business – and the closer your home is to the water, the number of companies that are willing to cover your home drops off dramatically.

Many Florida coastal homes end up seeking coverage with Citizens Property Insurance Corporation where they are subject to higher premiums and special assessments.  However, just because your home is located in a Florida coastal area doesn’t always mean you have to pay more for insurance.  You can find other affordable options to cover your Florida coastal home if you know where to look.

While there are many factors that can affect your ability to find insurance for your Florida coastal home including its age and construction materials, the two main considerations are whether your home is located in the Citizens Wind Pool and the underwriting guidelines being used by private Florida home insurance companies for coastal homes.

The Citizens Wind Pool refers to the coastal areas across the State of Florida where homeowners are eligible to get a policy from Citizens Property Insurance Corporation (the state run insurance company) that specifically covers wind damage.  Homeowners that live in the Citizens Wind Pool have two policies covering their home:  one from Citizens Property Insurance for wind and another from a private home insurance company that covers losses from all other perils such as fire.  In general, the Citizen Wind Pool includes all barrier islands plus about 1000 feet from the Florida coast in most counties.  It is somewhat larger in Palm Beach, Broward, and Dade Counties since it extends from the coast all the way to Interstate 95.

Florida home insurance companies generally state their restrictions on how close a Florida home can be located to the coast based on the following:

Whether or not the home is located in the Citizens Wind Pool

A specific distance (stated in either feet or miles) that the home must be away from the coast

A limit on how old the home can be if coverage is being offered for homes close to the coast

At the present time, most Florida home insurance companies are not offering coverage with wind in the Citizens Wind Pool – however a very limited number will if the home is 20 years old or newer.

Homeowners insurance companies in Florida that are avoiding the coast are currently restricting coverage on homes that range from 1000 feet all the way to 2 miles or more from the coast.

Given the current availability of home insurance in Florida, it is still possible for many owners of Florida coastal homes to find private homeowners insurance in Florida – and at an affordable price.

Here are some things you can do to give your Florida coastal home the best chance at affordable home insurance:

Ensure that your home has hurricane shutters.  The small group of Florida insurance companies that cover coastal homes will require that your home has shutters.

When you are shopping for low Florida home insurance rates, it is essential that you work with more than one independent insurance agent – not just one.  Why?  Because at this time, out of the 40 Florida home insurance companies still writing new business, very few will write coverage in the Citizens Wind Pool or homes close to the coast.  Working with more than one agent will give you the best chance to get quotes from all of the Florida insurance companies that are still covering coastal homes.  If you miss even one of these companies you could end up paying thousands more for Florida home insurance.

If the policy on your Florida coastal home is cancelled by an insurance company that only works with captive agents that only represent that company, an independent agent will be able to present you with more options for covering your home.  You should expect the captive agent to discourage you from contacting an independent agent in order to get more quotes on your coastal home.  Don’t fall victim to this.  Seek out an independent Florida insurance agent and exhaust all of your options before allowing your home to be covered by Citizens.

If you follow the steps above, you will give yourself the most options for finding affordable insurance for your Florida coastal home.


Michael Letcher is a former Bank of America and W.R. Grace executive and a licensed CPA.  His on-line database can help you find home owners insurance Florida for coastal homes.  Get the secrets to affordable Florida insurance for coastal homes in his free newsletter at =>

You Can Find Insurance Coverage for an Old Florida Home

January 3, 2010

If you own an older Florida homes you face a special challenge as the Florida insurance crisis continues.  Depending on the building codes in effect when your home was built, older homes can be subject to more damage in Florida hurricanes.  Your older home could have outdated electrical, plumbing, and heating systems that makes it more susceptible to fire, water damage, and other perils.  Finally, the age, condition, and construction materials of the roof can result in larger claims for these older homes after a Florida hurricane.

With all of that said, it is still possible for many owners of older Florida homes to find private homeowners insurance in Florida – and at an affordable price.

As Florida home insurance companies consider the age of a home, they generally group homes into the following categories:

Built 2004 and prior

Built 1994 and prior

20, 30, or 40 years old or newer

Up to 75 years old

The first two categories take into consideration the Florida Building Code modifications of the early 2000’s and the mid 1990’s.  Homes built after each of the building code updates are considered to be more resistant to damage, especially from hurricanes.

The third group above varies by insurance company, but the main theme is this:  As homes reach 20, 30, or 40 years old, a 4 point inspection is generally required by home insurance companies prior to issuing coverage.  These inspections look at the age and condition of the roof, plumbing, electrical, and HVAC systems.  Depending on the results of these inspections, you may be required to update one or more of these areas.

Finally, 75 years of age is the cutoff beyond which Florida home insurance companies rarely agree to offer coverage – regardless of the outcome of the inspections and home upgrades that are present.

Before taking into consideration how close your Florida home is to the coast, the following statements are generally accurate regarding how insurance companies look at the age of your home:

Homes built 1995 and later will be the easiest to find insurance coverage for and you will have more company options to consider.

As your home reaches 20, 30, and 40 year old, there will be fewer insurance company options for you to consider as each of these levels is achieved.

If you home is over 75 years old, it is very unlikely that your home will be covered by a private Florida home insurance company.

Here are some actions you can take to have the best chance at obtaining low cost Florida insurance on your older Florida home:

Get a Florida wind mitigation inspection on your home at your own expense.

Immediately address the deficiencies identified in the wind inspection report.  There might be certain improvements that can be made to things like wall to roof connectors that don’t require a new roof or there might be other low coast mitigation steps that you can take.

Find out the age of your roof, plumbing, electrical, and HVAC systems.  Find out how much it will cost to address each of these items and make the improvements that you can afford to make now.

Some of the upgrades that you need might qualify for Federal energy tax credits of utility company credits for improved efficiency.  Find out if either of these sources are willing to give you some financial assistance.

Let your local Florida legislators know about your situation and encourage them to extend the My Safe Florida Home program – and to increase the number of homes that are eligible for matching grants to harden Florida homes.

Finally, when it comes to shopping for Florida home insurance, it is essential that you work with more than one independent insurance agent – not just one.  Why?  Because at this point in time, there are about 40 Florida home insurance companies still writing new business.  However, as the age of your home increases, many of these companies won’t cover your home.  Working with more than one agent will give you the best chance to get quotes from all of the Florida insurance companies that are still covering older homes.  If you are unaware of even one of these companies, you could overpay for Florida home insurance by thousands of dollars.

Don’t rely on misinformation or word of mouth when it comes to finding affordable Florida home insurance on an older home.  Follow these steps to give you the most options for insuring your older Florida home.


Michael Letcher is a former Fortune 500 executive and a licensed Certified Public Accountant.  His on-line guide can help you find low cost insurance Florida for your older home.  Learn the secrets to affordable Florida insurance in his free newsletter at =>

Florida Take Out Home Insurance Companies – Can You Trust Them?

January 2, 2010

Citizens Property Insurance Corporation is Florida’s state run insurance company.  It was formed as a home insurance company of last resort to help consumers who are unable to find coverage in the Florida private home insurance market.  Floridians look to Citizens Property Insurance because their home has certain characteristics that make it undesirable to private companies.  These factors can be the age of the home, its distance from the coast, the type of construction materials, and the roof type.

It’s a known fact that Citizens Property Insurance doesn’t charge enough in premiums for the risk that it takes.  Instead it relies on a mixture of borrowing prior to major hurricane events and imposing surcharges on many types of Florida insurance policies after a storm if it doesn’t have the money it needs to pay claims.

This potentially lethal mix of high risk homes along with being under funded is one of the reasons that it’s always been a good idea to try to reduce the number of policies in Citizens Property Insurance.  The fewer number of policies the company has, the less risk there is of policyholders across the state being hit with massive special assessments for many years after a major hurricane.

One of the ways that is done is by encouraging private home insurance companies to assume or “take out” policies currently covered by Citizens Property Insurance – hence the name “take out companies”.  The take out process is also referred to as depopulation.

For a lot of reasons, encouraging companies to take policies out of Citizens Insurance is good public policy.

Besides transferring more of Florida’s hurricane risk to the private sector, policyholders may also get better customer and claims service from a private sector company that doesn’t have anywhere near 1 million plus policyholders in Citizens.  They also get an annual insurance premium that is usually less than what they were paying to Citizens.  Finally, policyholders with private insurance companies are subject to smaller special assessments after major hurricanes.

Florida take out insurance companies get an immediate base of new insurance policyholders without the usual marketing and advertising expenses it takes to build a customer base.  When these companies are formed, they have an easier time attracting capital because investors know that the take out companies will start earning premiums immediately after they start removing policies from Citizens.

Despite all the good that comes from reducing the number of Florida home insurance policies in Citizens Property Insurance, the take out program is not without its problems.

Policyholders are often concerned about the financial stability of the take out insurance companies.  Many are start up companies and have a small surplus available to pay claims of $20 million or less.  With Florida hurricane claims averaging $30,000 or more, even after a company’s reinsurance kicks in, there might not be enough money to pay all of the claims.

A significant number of take out companies were created after Florida’s 2004/2005 hurricane seasons.  Policyholders are concerned that if their home has a hurricane claim in 2009, that their home will be “on-the job” training for the customer service staff at these newly formed companies – inexperience that might result in evaluating and paying claims in a timely fashion.

The take out companies are very selective about the policies they take from Citizens – leaving the oldest, most poorly constructed coastal homes sitting right in the middle of hurricane alley still on the books of Citizens.  This makes the Citizens Property Insurance book of business even more under funded than it was before the take outs.

Many of these take out companies milk the policy base they assume and never go on to write any new business beyond the policies they take out of Citizens.  Companies that don’t diversify beyond the takeout policies in their initial portfolio are more susceptible to financial collapse after a major hurricane.

Last but not least, Florida insurance agents who originally wrote the policies that are being removed from Citizens might not want to become an agent with the new take out companies – even if it means they will lose the business.  They simply might not want to add a new company to the mix of companies they already represent.  Or they could have legitimate issues with the financial liquidity of the new take out company.  The agent can’t stop consumers who want to benefit from a take out offer.  However, an agent’s unwillingness to represent a particular company should at least cause a consumer to proceed with caution.

If you are a policyholder with Citizens Property Insurance and you receive a take out offer, here are the questions you should be asking your existing insurance agent – before you decide whether to move your Florida home insurance from Citizens to the new take out company:

How long has it been in business?  Has it ever handled Florida hurricane claims before?  If so, how many complaints have been filed against that company for poor customer service.

How strong is the take out company financially?  What are its financial ratings?  How diversified is the company’s policy base across both Florida and other states?  Are the policies being assumed by the take out company in North Central Florida, or in hurricane ground zero along the South Florida coast?

If your agent is not willing to become a new agent of one of the take out companies, that alone should be a warning sign to you.  Your agent is risking the loss of your commission by taking a position like this.  See if your agent will tell you why their agency does not want to represent the new company.  Your agent’s answer might tell you all that you need to know to help you make a decision about whether to go with the new company.

Last but not least, ask your agent if there are any other Florida home insurance companies who might want to cover your home.  The private home insurance market in Florida is always changing and there might be other companies now covering homes like yours that are a lot more stable.

Don’t forget, if you don’t bother to investigate these take out insurance companies, you will be the one living with an unpaid claim after the next Florida hurricane.


Michael Letcher is a former Fortune 500 executive with Bank of America and W.R. Grace.  Mr. Letcher is a licensed CPA.  His on line guide helps consumers find affordable home insurance in Florida.  Get his free newsletter and the secrets of the Florida home insurance market by visiting =>

Will the State of Florida Collapse?

January 2, 2010

The State of Florida is facing the most serious crisis in its history.

With an estimated budget shortfall of $2.3 billion, the State of Florida is one of eight states where a deficit of over $1 billion is expected.  The budget shortfall is being blamed on everything from lower collections on documentary stamp taxes from a slumping real estate market to reduced sales taxes on the sale of automobiles.  Massive declines in tourism, consumer spending, and corporate earnings have all resulted in lower sales and corporate taxes.  And in particular, for the first time in decades there are fewer newcomers entering the state.

Florida property taxes are still very high.  Voters have seen little relief from Amendment 1 passed earlier this year.  While taxable home values have come down due to the collapse of the Florida real estate market, this has been more than offset by higher tax rates and an increase in taxes that are not based on the value of the home.  The net result is that Floridians still face staggering Florida Property tax bills – even in a depressed real estate market.

Florida homeowners insurance is still expensive and hard to find.  Legislation passed in 2007 put much of the risk of a major Florida hurricane on the backs of Florida taxpayers.  The Florida Hurricane Catastrophe Fund offered low cost reinsurance to insurance companies and assumed an additional $12 billion in risk.  Now the Cat fund says that it doesn’t have the borrowing capacity to meet its obligations – estimating a possible shortfall of up to $15 billion.

The State of Florida was so concerned about the inability of the Cat fund to raise money to cover a major hurricane earlier this year that it paid Warren Buffett’s Berkshire Hathaway Company $224 million.  In return, Buffett’s company guaranteed that the state would be able to raise $4 billion in bond debt if a major hurricane produced enough damage to trigger the Cat fund.

The situation at the state run insurance company in Florida – Citizens Property Insurance Corporation isn’t much better.  Citizens Property Insurance has some of the highest risk homes in Florida and doesn’t collect enough in premiums for the risk that it takes.  It has $433 billion of property exposure on its books with a $4 billion surplus on hand to pay claims.

Policyholders of Citizens face two issues.  First there is the risk that Citizens Property Insurance can’t meet its primary claim obligations for lower level storms because of its own trouble raising cash in the bond market.  Second, once losses reach a certain level, Citizens Insurance will look to the Cat fund for reimbursement after a series of major Florida storms – a fund that just might not have the cash needed by Citizens.

While all of these developments in Florida are serious, there is really nothing new about a government that doesn’t live within its means and takes on obligations that it doesn’t have the cash on hand to meet.

What is new and should send shockwaves across Florida is the fact that the state cannot borrow in today’s bond markets the way it has been able to in the past.  In effect, the State of Florida has maxed out its credit card.

Why is it so hard for states like Florida to borrow in the current bond markets?

Issuing bonds used to be easy for state and local governments.  It was a simple process and no one thought twice about it.  That’s changed since the failure of the subprime mortgage market.

Despite a very low bond default rate, it is very difficult to attract bond investors these days.  Companies that used to insure new bond issues have had their ratings downgraded.  That’s caused bonds to be less liquid and not attractive to investors.  And it makes states like Florida have to offer higher payments for interest and principal in order to sell out a bond issue.

With severe revenue shortages and a frozen bond market all Floridians should be demanding that the state keep tightening its belt.  That process has already started.  But you should anticipate strong opposition to spending cuts from those who think big government is good.

These groups will demand that Florida lawmakers increase taxes rather than making additional cuts in spending.  Don’t underestimate where this could lead.  Many items that are currently exempt from Florida sales tax could suddenly be taxable in this crisis environment.  Expanding the sales tax could lead to new taxes on everything from Internet sales to various types of consulting services.  All of which would dramatically increase our own cost of living and make it that much harder for Florida to emerge from this recession.

And never underestimate the risk of Florida legislators dealing the final death blow to the state – instituting a state income tax.

It is up to all of us to make sure that never happens!

If there is one lesson that all governments need to learn during the current financial crisis it is this – there is nothing wrong with the “pay as you go” system.  It will always stand the test of time no matter how shaky the bond markets are.


Michael Letcher is a former Bank of America and W.R. Grace executive and is a licensed CPA.  Floridians use his on line database to find other options to Citizens Property Insurance Corporation for their homeowners insurance in Florida.  Subscribe to his free newsletter and get the truth about Citizens Property Insurance Corporation by visiting =>

Citizens Insurance Customers Outraged When Moved to Low Rated Florida Homeowners Insurance Companies

November 9, 2008

A series of recent articles run by the St. Petersburg Times have highlighted concerns raised by customers of Citizens Insurance about offers they have received to move their Florida homeowners insurance policies from Citizens to private Florida homeowners insurance companies with very low ratings.

Legislation passed in 2007 and 2008 encouraged the growth of Citizens Property Insurance by allowing the state insurer of last resort to charge artificially low Florida home insurance rates to compete with the private sector.

Despite these new lower prices, Citizens is continuously giving birth to new start-up take out companies that offer Florida homeowners a chance to get out of Citizens and move their coverage to a private Florida home insurance company.  The Florida homeowner receives an offer to have their policy removed from Citizens Insurance and into the private market at a favorable price.

When the process for using take out Florida home insurance companies to reduce the size of Citizens Insurance is successful, it offers many benefits including:

  • Moving the hurricane risk to the private market which relieves Citizens Insurance and ultimately Florida taxpayers and policyholders of this burden.
  • The policyholder usually ends up with a private Florida homeowners insurance company that has a much smaller policy base than Citizens insurance which may result in better claims service after the next Florida hurricane.
  • New Florida home insurance companies get an immediate customer base and seed capital so that hopefully they can grow into a much larger Florida home insurance company with strong financial ability to pay claims.

Based on the most recent news coverage, the process for moving Florida home insurance policies from Citizens Insurance to the Florida Take Out Insurance Companies is not going as smoothly as planned:

The most recent article written by Ivan Penn of the St. Petersburg Times on 11/7/08: “Consumers cry foul over Citizens’ shift to low-rated firms” highlights the following concerns:

Many Floridians are concerned about the financial ratings of these Florida takeout home insurance companies.

Some Florida homeowners don’t like the fact that they are automatically transferred to these companies unless they opt out of the process.  Some consumers are angry because they feel the take out letters look like junk mail – not a major change of Florida homeowners insurance companies.

But the number one concern raised by Citizen Insurance Customers is the poor financial ratings that many of these Florida homeowners insurance take out companies have received from various rating services.  Many of the major services that rate Florida home insurance companies are concerned about the financial stability of these take out companies.  But beyond that, many rating services are pointing out that these Citizen Take Out Companies are so new that their procedures for processing claims have not been tested in the aftermath of a Florida hurricane.

If you are currently a customer of Citizens Insurance, here are some things you should do to protect yourself:

First, get the truth about Citizens Insurance.  If you can find an acceptable Florida home insurance company, you might be pleasantly surprised after the next Florida hurricane.

Second, use several of the financial rating services to get all of the ratings currently being assigned to the Florida Take Out Homeowners Insurance Company you are considering.

Third and most important – if you are looking to get out of Citizens Insurance, you are not limited to just the Florida Take Out Home Insurance company that is sending you the take out offer.  Do some research and find other Florida insurance companies interested in getting your business.  There is a lot more competition out there than you think and you might be able to find homeowners insurance in Florida that costs less than Citizens Insurance and is with a more stable Florida home insurance company than the take out company being presented to you.

There are a lot more options out there for finding affordable Florida homeowners insurance than you think!

Thousands Still Waiting For Citizens Insurance Florida to Pay

September 21, 2008

On September 19, 2008 Julie Patel of the South Florida Sun Sentinel wrote an article entitled:  Thousands Still Waiting for Citizens Insurance to pay.

The article covers the painfully slow payment process that some Citizens Insurance Florida Policyholders have had to endure while they still wait for Citizens Property Insurance Corporation Florida to pay their claims from the 2004-2005 Florida hurricane seasons.

There is really nothing new in this article about Citizens Property Insurance Corp Florida that we didn’t already know.  It is a known fact that Citizens Property Insurance Florida is a government bureaucracy that never will be able to achieve the claims paying satisfaction that a private Florida home insurance company will be able to attain.

Here are some great articles about Citizens Insurance Florida:

Find Private Florida Homeowners Insurance – Avoid Citizens Insurance Florida


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The Truth About Citizens Property Insurance Corp Florida

Poor Customer Service Despite Low Citizens Property Insurance Rates Florida

What You Need to Know About Citizens Property Insurance Florida

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