Nineteen named storms swirled all over the Atlantic in 2010 -- 12 of them big enough to become hurricanes -- but none seriously threatened Florida. Nevertheless, homeowners needn't think their good fortune will translate into windstorm insurance savings.
According to the National Oceanic and Atmospheric Administration, the season just ended was one of the busiest ever recorded. The 19 named storms tie 1887 and 1995 for the third-highest-ever total; the 12 storms tie 1969 as the second-highest total.
As NOAA forecasters predicted, the Atlantic hurricane season was one of the most active on record, though fortunately most storms avoided the U.S. For that reason, you could say the season was a gentle giant, said Dr. Jack Hayes, director of NOAAs National Weather Service.
Despite the fifth straight year of little or no impact from major hurricanes or tropical storms, however, the rates for some policies of Citizens Property Insurance, the state-run insurer with the largest number of residential policies inFlorida, will rise next year.
Homeowners with personal-line accounts with Citizens will see their rates increase an average of 10.3 percent throughout the state beginning Jan. 1, 2011. For those with high-risk accounts, the hike will be effective Feb. 1, 2011. Mobile home policyholders rates will rise 9.2 percent.
The Office of Insurance Regulation announced the changes in September. Citizens Insurance had asked for rate hikes of 9.7 percent for homeowners and 7.4 percent for mobile homes.
The rate increase is the second straight year Citizens' rates have risen 10 percent or more, following a three-year rate freeze that ended in 2009.
Citizens officials say that rates in place prior to 2010 were based on 2005 cost projections, and that losses unrelated to hurricanes or storms are increasing. Sinkhole claims, for instance, are up to 200 per month this year at Citizens, double last years rate, when it paid $97 million in claims.
It is important to understand that rate-making for property insurance is prospective. That means that previous years hurricanes and related losses are not included in future insurance rates, Christine Turner Ashburn, Citizens director of legislative and external affairs, said in an e-mail.
Through the first nine months of 2010, Citizens net income was $505.5 million, 64 percent better than the company's budget expectations, thanks largely to an increase of 230,000 policies over budget projections.
The latest rate increase is expected to raise $180 million for Citizens and reduce its exposure in the event of a catastrophe. Although damages from smaller storms could be covered by Citizens surplus and Florida Hurricane Catastrophe Fund reimbursements, the insurer would need to rely on emergency assessments in the aftermath of larger storms.
In the event of a 100-year storm (a storm with a 1 percent chance of occurring in a given year) costing $22.48 billion, the insurers surplus and the FHCF could provide $10.4 billion. Citizens Insurance would rely on $6.9 billion in emergency assessments, with regular assessments and surcharges making up the difference.
Meanwhile, some hurricane season observers are already looking ahead cautiously to next year, with the 2011 storm names already released.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
