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Date of Issue: May 03, 2007

Insurance: Islanders to benefit from Citizens expansion

The outlook for June 1 is mixed.

It is the first day of hurricane season. But it is also the start date for state-run Citizens Insurance Property Corp. to expand its wind coverage to small businesses and churches.

Rates have not been announced, so it is impossible to know the cost or benefit.

But at least there will be a new option for hard-hit Island commercial property owners to consider, including Roser Memorial Community Church, which has been without wind insurance for nearly a year.

Roser, the Island's oldest church and one of its most cherished institutions, lost its wind coverage in May 2006. The only insurer that Roser could find to write a replacement policy for its multi-million dollar complex wanted a premium of $225,000 with a deductible of $100,000, according to congregation chair Sherry Oehler.

 "We didn't feel like we were financially able to do that," she said.

Until recently, Roser has not been eligible for Citizens insurance because the church was outside the state-designated wind zone.

A law passed in January by a special session of the Florida Legislature eliminated the wind-zone and authorized Citizens to begin offering insurance on June 1 to commercial non-residential property owners, regardless of location. Most churches fall into that category.

"If that is the situation, we will look into it and make some kind of decision," said Dick Rowse, who chairs the Roser board of trustees.

State Rep. Bill Galvano (R-68), who represents Anna Maria Island and other parts of western Manatee County, expects the expansion in Citizens coverage to "help a lot of citizens and businesses around the state."

According to Galvano, it was the effort by "our Island community that helped bring about the change" in the law. He said it was important for Anna Maria Islanders to know "they worked hard for this and made it happen."

The expansion of Citizens is the latest step in the legislative process that began last year when Galvano introduced an amendment to expand the county-by-county state-designated wind zones and make more commercial property owners eligible for Citizens. The Galvano amendment failed by one vote but his quest set the stage for the insurance reforms approved in January.

"This is an example of pursuing an issue, and I am pleased to see it happening," Galvano said, "but the work continues."

The board of Citizens voted April 26 to approve a plan, based on the new state law, to offer up to $1 million in wind-only coverage for small commercial, non-residential customers with no more than $10 million of total insured value.

"Our goal is to make coverage available as quickly as possible to the Florida small business community which is in dire need of commercial coverage," said Bruce Douglas, the Citizens board chairman.

He said it was important to get the coverage in place by the start of hurricane season on June 1.

Citizens has estimated that it has about 65,000 commercial policies in the areas formerly designated as wind zones. It is not clear how many commercial properties outside those zones will be eligible for Citizens coverage as a result of the new state law.

In addition to broadening its wind-only program on June 1, Citizens will begin on Sept. 1 to offer a commercial multi-peril policy that includes wind. The multi-peril policy, according to Citizens, will provide the first $2.5 million of building coverage for structures with a value of $20 million or less.

The expansion of Citizens is the latest development in the ongoing state insurance crisis over soaring premiums and shrinking coverage.

Anna Maria Island and its small commercial owners have been especially hard hit by the insurance crunch because of the restrictions until now on access to Citizens, the state's insurer of last resort.

Last summer, after the Galvano amendment failed, state officials issued an emergency order to establish the Property and Casualty Joint Underwriting Association (PCJUA) to provide insurance to small commercial property owners who were not eligible for Citizens and who couldn't find private market coverage.

But the PCJUA issued only about 850 policies because of its high rates as well as its restriction that the value of the commercial property have a value of no more than $1 million.

On June 1, Citizens will absorb the PCJUA policies as part of its expansion program.

Stay tuned as more information becomes available on the rates that Citizens will charge for its expanded wind and multi-peril coverage.

Note: If you have an insurance story to share with others about your experience with rate hikes, rate reductions, rate refunds or other insurance issues, please send a note to The Islander by emailing msmccartney@sprintmail.com or news@islander.org.