Marco Tarafa was stunned to find that his homeowners' policy is increasing by nearly $1,000 a year — all because inspectors couldn't get into his attic, where there was no crawl space and about 24 inches of insulation.
Tarafa was a customer of state-backed Citizens Property Insurance Corp. for eight years, and his rates had been stable over much of that time — until now. Tarafa pays $2,200 for his policy on his 1,800-square-foot, ranch-style home in Miami Gardens. Unless something changes between now and when the policy renews in May, he's looking at a $980 increase, a hike of nearly 45 percent.
"Just because of that, they can't get into my roof!" Tarafa said.
He is among thousands of Florida homeowners forced to take coverage offered by Citizens and a target for being moved to another company in Citizens' attempts to downsize.
For Tarafa and millions of other Florida businesses and homeowners, property insurance rates keep soaring even though a hurricane hasn't made a direct hit over the state in seven years.
The average Florida homeowner is paying twice as much for insurance than just six years ago, according to industry statistics. In some areas, the increases are much higher.
Data from the New York-based Insurance Information Institute shows homeowners' claims are up by an average of more than 17 percent over the past decade. They are virtually all due to non-catastrophe claims involving water. In many instances, they are claims for issues ranging from leaky toilets to burst water heaters. Florida's rates have also been hurt by soaring claims on losses from sinkholes.
A more industry-friendly Office of Insurance Regulation pressured by Gov. Rick Scott and a Republican-led Legislature means consumers pay more.
"It's a dangerous day in Florida when the Office of Insurance Regulation turns into the office of blind trust because they lack the resources to independently verify form filings from insurance companies," said Sean Shaw, a Tampa attorney and self-styled consumer advocate associated with a firm that frequently litigates on behalf of policyholders.
There is little competition in the Florida property insurance market because many consumers can buy from only one company — usually Citizens. Founded by the Legislature in 2002 for homeowners who could not get private policies, it has become the state's largest property insurance company with more than 1.3 million customers after shedding some 160,000 policies in recent weeks to private companies.
Scott and the Legislature are anxious for Citizens' to reduce its overall liability, which would exceed its ability to pay off in the aftermath of a catastrophe.
"Gov. Scott, of course, wants premiums to go up and he wants Citizens to be depopulated at any cost to the policyholder," said state Rep. Mike Fasano, whose west Florida district encompasses the highest concentration of Citizens' policy owners in the state. "Citizens is only there because, unfortunately, so many couldn't find insurance anywhere else."
And while its premiums have risen by an average of 8.1 percent statewide over the last four years, some, including new president Barry Gilway, say the company still doesn't charge market rates and needs to raise them to a point comparable to what a private company would charge. That puts Gilway, who has 40 years of experience in private insurance, right into the crosshairs of politicians who generally abhor any rate increases being passed along to their constituents.
Citizens' says it would need a 16.4 percent premium increase on all products in 2013 to be actuarially sound.
John Rollins, an actuary and member of Citizens' governing board, said Citizens is "a competitive drag" on private insurance and calls on the Legislature to return it to a safety net insurer with a comprehensive reform bill.
But it seems the more lawmakers try to make Citizens smaller, the bigger it gets.
Lisa Miller, a former deputy insurance commissioner who now is an industry consultant, said more private companies would sell policies in Florida if Citizens were made smaller or dissolved.
"Competing with government is impossible, and private companies know that — whether companies sell insurance or hamburgers," Miller said. "Florida's policymakers are working to find a way to reduce Citizens and the government's competitive edge in the insurance business, and we must make that happen — soon."
But that's proving to be easier said than done.
Many Citizens' customers aren't enamored with the idea of moving to a private insurer. Jason Carpenter, a 30-year-old field manager for a Brooksville company, is one. He refused to give up his Citizens' coverage to become a customer of Florida Peninsula because he felt it would be only a matter of time before his rates would increase and coverage decrease with the new carrier.
"I know exactly what's going to happen," Carpenter said. "They'd basically create their own terms."
But Carpenter couldn't afford to add sinkhole coverage with Citizens either and instead opted for a cheaper catastrophic ground collapse policy.
Regardless, he was more comfortable with Citizens.
"If you have a claim, you have better odds of the funds being there with Citizens, whether you settle or come to an understanding on repairs," he said.
But that's not always the case, as one Miami Gardens retiree found out in recent years.
Frank Gomez, 67, battled Citizens for nearly two years before getting some satisfaction on a claims settlement.
Gomez said a sewage line burst beneath the kitchen floor in his 40-year-old, four-bedroom ranch home, and he needed a public adjuster and attorney before finally receiving a $40,000 settlement. After paying the public adjuster his 20 percent — $8,000 — Gomez said he had enough money to pay for approximately half of his loss.
"Believe me, it was terrible," Gomez said.