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Date of Issue: October 12, 2006

Insurance: Baptists lose wind coverage

island baptist
The Island Baptist Church, 8605 Gulf Drive, was not entitled to the wind insurance policy that its agent obtained from Citizens Property Insurance Corporation, and its Citizens policy has been canceled. Islander Photo: Molly McCartney

The Island Baptist Church, which thought it had insurance against hurricane winds through the state's Citizens Property Insurance Corporation, has lost its policy and faces the prospect of spending thousands of dollars for new coverage, if coverage is available.

The church's insurance agent had assured officials at Citizens and at the church that it was inside the state-designated "wind pool," and that it was entitled to Citizens' coverage.

But last week the church was found to be outside the "wind pool" coverage area and the policy was withdrawn.

"They are not eligible for Citizens and they never should have been [insured]," according to Christine Turner, a spokesperson for Citizens, the state's insurer of last resort.

Nearly all of the churches on Anna Maria Island are located outside the "wind pool." As a result, they are either going without wind insurance or they are paying substantially higher rates for coverage.

The churches are not alone in their struggle with the growing insurance crisis. Hundreds of residents and dozens of small businesses on the island have been hard hit by the insurance crunch.

The Island Baptist Church complex, located at 8605 Gulf Drive, is valued at about $2.5 million. Its main sanctuary is the setting for the popular concerts staged by the Anna Maria Island Community Chorus and Orchestra.

Church treasurer Jim Husbands said he had not received any notification from Citizens about the cancellation as of Saturday. He said he isn't sure what will happen now. "The wind insurance is really difficult, and if we can't get Citizens, I don't know what we will do," he told TheIslander.

The church's application for Citizens insurance — which claimed that the church was inside the wind zone and eligible for Citizens — was submitted by Ralph Warfel, an agent in the Holmes Beach office of Oswald Trippe & Co. and a member of the church.

Warfel did not return messages from TheIslander by presstime.

At issue is the boundary line for the "wind pool," which was established by the state in 1986 as the areas of Anna Maria Island "which lie 1,000 feet from the Gulf of Mexico." The effect of that decision was to include all of Bradenton Beach in the "wind pool," but only certain coastal portions of Holmes Beach and Anna Maria City.

According to Citizens, the Island Baptist Church buildings are more than 1,000 feet from the Gulf shoreline, which puts the church outside the wind pool.

In a recent examination of this question, "Citizens verified the church's distance from the Gulf with Manatee County," said Turner, Citizens spokesperson.

She said that Citizens will return the insurance premium paid by the church earlier this year. She declined to say the premium amount.

Turner said the wind-pool boundary line, based on the 1,000-foot rule, is erratic and hard to define. "We don't know if the agent was just confused or what, but it will be examined to determine if there was anything inappropriate," she said.

The Web site listing areas that qualify for wind coverage from Citizens shows that the church address at 8605 Gulf Drive is not eligible. That directory can be found at

When it comes to obtaining wind insurance, owners of commercial and non-residential property located outside the wind pool are at a serious disadvantage. And it is a disadvantage that can amount to thousands of dollars in higher premiums.

Consider Roser Memorial Community Church, which learned in May that its wind insurance with Landmark Insurance was being canceled. In its search for a new insurer, the church found only one company willing to provide wind coverage. It was an unregulated surplus lines carrier with an annual premium of $225,000, compared to $19,000 paid by the church last year.

If Roser had qualified for Citizens, the price would have been substantially less, according to insurance experts. But the church, located at 512 Pine Ave., Anna Maria, is not eligible for Citizens, because it is located about three blocks outside the wind pool.

The church decided to go without wind insurance rather than try to scrape up a quarter million dollars for one year of coverage.

"Thankfully, we've had a season of quietness," said Sherry Oehler, chair of the Roser congregation. She said the church may try again this winter to see what insurance options are available.


State officials seek solutions

Efforts are under way at the state level to find answers to the insurance crisis.

An insurance reform commission appointed by Gov. Jeb Bush is scheduled to issue its report in mid-November. Rep. Bill Galvano, who represents the 68th District that includes Anna Maria Island, says he expects a special legislative session to be called for early December to tackle the insurance problem.

Legislative action this year could have a positive effect on the rates that insurers set next year, according to Bradenton insurance agent John C. Laurie, one of the technical advisors to the reform commission.

Laurie, a principal with Wyman, Green & Blalock Inc., believes that changing the structure of the Florida Hurricane Catastrophe Fund could expand the re-insurance market and make insurance more affordable and more available within the next one to two years.

He also believes there should be a serious review of the wind-pool boundaries. "They are antiquated and arbitrary," he said. "They need to be based on science and need."

Laurie is among the insurance specialists who say that the rates charged by Citizens typically are lower than the rates charged by unregulated surplus carriers.

The Citizens rates also tend to be less than the rates of the recently established Property and Casualty Joint Underwriting Association (PCJUA), the experts said.

They say that is because the PCJUA rates have been set close to actual market rates. As Laurie puts it, "The JUA is pretty competitive, based on what we see in the market."

Rates charged by Citizens are supposed to be equal to or higher than the rates charged by standard-licensed companies. But, according to Laurie and others, the Citizens rates are often lower than the state intended and do not reflect the reality of the market at this time.

In other words, property owners with access to Citizens often get a significant break on their insurance costs, at least for now.


The other side of Citizens

But there can be a downside to a Citizens policy.

"They can sell your policy to a ‘takeout' company," says Island insurance agent Mark Mixon, "and you can end up paying a higher rate."

He said he's had a number of clients ask him how they can get back into Citizens. "And guess what — you can't go back," he said, as long as your new company is in good financial health and wants to keep you.

Mixon said that he and other agents often lose money as a result of this program because the "takeout" company can take business away that he may have had for 20 to 30 years.

The "takeout" practice has also caused headaches for Citizens. Some "takeout" companies get hit with more claims than they can pay. When they collapse, their policyholders have to scramble to find new coverage.

Those who can't locate a new insurer then go back into Citizens.

Mixon pointed to the Poe Financial Group as an example of this problem.

Poe took thousands of policyholders from Citizens but was unable to pay claims that arose from the 2004-05 hurricane season. Now that Poe has been liquidated, many of its 320,000 policyholders have been moved back into Citizens.

"It's a ping-pong game," said Mixon.