Law School Discussion

The Florida thread - for those who live, study, or plan to work in Florida

I love Florida so much.  Let everyone freak out about global warming  but I feel pretty confident that in 50 years Maimi will still be a city and I will be living there.


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It sounded like a good idea at the time.

Require property insurance companies to lower rates an average 24 percent statewide and make them double the discounts they give to homeowners who do things such as buy storm shutters or reinforce their roofs.

"Today we have a message for the people of Florida: 'Help is on the way!' " Gov. Charlie Crist beamed that day in January when he signed the insurance overhaul bill into law.

Crist even added a poke at the industry, which claimed the new law might make some companies stop writing policies in Florida.

"They shouldn't fearmonger that way," Crist said. "That's wrong for them to do, and that day is over in Florida now."

The harsh reality is that nearly two months after the legislation was signed, the prospect for higher rates and more cancellations later this year and in 2008 looms as large as ever. Maybe even larger because of the higher discounts that insurers will have to give those who hurricane-proof their homes.

Homeowners say they aren't seeing anything close to significant rate reductions, the insurance industry says it's being forced to place itself at even greater risk, and, in a rare moment of agreement, both sides claim the stage is being set for a return to full crisis mode next year, even if no hurricanes hit the state this season.

Savings disappear

The new law allows insurance companies to buy cheaper back-up insurance, or reinsurance, from the state-backed Florida Hurricane Catastrophe Fund, or from a private company at CAT Fund level rates, and pass the savings on to policyholders.

At a news conference March 1, regulators placed the average savings at 24 percent. For the first time in three years, homeowners could breathe a littler easier.

But insurance companies aren't falling over themselves to take the CAT Fund bait. For at least three-quarters of the Florida property insurance market, as the state learned last week, the proposed cuts are a fraction of that 24 percent.

What's worse, those small reductions come on top of sometimes substantial rate increases that were approved last year. State Farm, for example, says its average savings for reinsurance is 7 percent, and Nationwide says its savings is 4.5 percent.

But last year, State Farm and Nationwide won average rate increases of 52 percent and 71 percent, respectively, for policies that come up for renewal this year.

So for a Nationwide policyholder in western Pasco County whose rate was scheduled to go up 80 percent this year, if the savings mandated by the Legislature are factored in, the actual increase will be more like 75 percent.

"That's relief?" asked Ginny Stevans, president of New Port Richey-based Having Affordable Coverage, the state's largest grassroots advocacy group.

"Decreasing an increase is not giving relief to people who have to put their insurance bill on their credit card or take out a home equity loan to pay for it."

State regulators are miffed, too.

"I'm shocked at 4 percent," said Bob Hunter, a director of the Consumer Federation of America who was enlisted by the state to help determine what the average savings should be.

"And I don't believe 7 percent works," Hunter said of the State Farm number. "We'll have to wait and see what the Florida Office of Insurance Regulation does with those."

While we wait, here's how the insurance industry is responding:

Less than two weeks after Crist's remarks, Michigan-based Auto-Owners Insurance sent letters to its Florida agents telling them the company would no longer write new policies in the state and acknowledged that it would drop 40 percent of its Florida policyholders.

"We cannot rely on purchasing hurricane reinsurance from any organization that is financially unreliable," the letter reads. "The new law also requires companies to reduce rates, as if additional reinsurance was purchased from the (CAT Fund). This is simply a rate roll back."

And a license to drop policyholders. Since the rate reduction filings began this month, Nationwide Florida has notified 25,000 policyholders that they will be dropped in the next year, Allstate Floridian resumed its program of dropping about 250,000 policies, and other companies such as Liberty Mutual did the same on a smaller scale.

The new law also prompted rating agencies such as Standard & Poor's, A.M. Best and Moody's to cast serious doubts on Florida's ability to pay its obligation in the event of catastrophic storms.

Ratings worries

"The ratings agencies are telling the carriers that if they have large exposure in Florida, they're going to see their ratings go down," said Jeff Grady, president of the Florida Association of Insurance Agents.

And if the ratings go down, the companies are less likely to attract new capital.

"At some point investors start to doubt the viability of being repaid in a state that is having to issue large amounts of debt with the possibility of more of the same," Grady said.

"If we're storm-free ... we'll be okay," he said. "But if we get storms, we'll probably be in this posture for some time.

"Just lowering the (reinsurance) price doesn't solve the problem."

And then there is the issue of the discounts for hardening homes - the shutters and the roofs - known as mitigation discounts.

"Our biggest issue is mitigation discounts," said Kelly King, chief financial officer of St. Petersburg-based Edison Insurance, a small homeowner insurer that started last year. "You can't force a company to give back more than half of a premium and expect them to stay in business.

"If you give discounts to homes that deserve it," King added, "somebody else has to make up the difference - the homes that don't have it."

"If (the policy) is implemented as required, the $20-million we took in premium is reduced to less than $10-million. I can't stay in business."

Florida Insurance Commissioner Kevin McCarty counters that mitigation discounts shouldn't account for large deficits for most companies. He notes that all companies are required to make secondary rate filings before Sept. 30.

"And we will thoroughly review and vet those filings," McCarty said. "This is just the first round."

As for the rating services, McCarty said A.M. Best "has been wrong for the last 12 years, and I'm very concerned about that."

Citizens' losses

The wild card in what happens next, besides the weather, is the largest property insurer in Florida - state-backed Citizens Property Insurance.

The rate rollbacks mandated by the Legislature will cost Citizens about $350-million this year, and the doubling of the discounts will cost $270-million, making the total in lost revenue for 2007 about $620-million.

Citizens' last rate hike was in 2006 and was based on a 2005 filing. It will make a new rate filing at the end of August.

"It won't be a huge jump," said Citizens spokesman Rocky Scott. "But it will be an increase."

Citizens is taking in about $200-million a month in gross revenues, but its exposure to risk, the total value of everything it insures, has doubled in a year and is now at a staggering $432-billion.

"This is something that's going to have to be addressed as a matter of public policy, and therein lies the rub," Scott said. "It's a long-term project."

That's something many Floridans are just beginning to find out.

When Don Shimp opened a letter from Liberty Mutual last week to find that the insurance on his Lithia home had jumped from $2,869 to $5,284, he called his agent, thinking it was a mistake.

"She told me, 'Oh, no. Those decreases don't apply to our company,' " said Shimp, 62, a retired Verizon manager. "It's not that I can't come up with the money. It's just so absurd.

"The whole purpose of insurance is to spread the risk. I would say to the governor that if we can't spread the risk, we should just take over the insurance industry and have Citizens provide everything.

"Because either way, the state pays for it."

and Floriduh comes a tumblin down....


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Broward losing residents to other regions due to high cost of living, hurricanes

By Ruth Morris and Alva James-Johnson
South Florida Sun-Sentinel
Posted March 22 2007
Bella Zaritsky came for the warm weather and the soft sand beaches. But after watching a rising tide of property taxes and insurance rates, she's ready to bail out.

"It's been a big disappointment," said Zaritsky, 27, an office manager who moved to Plantation four years ago from the Northeast. "The housing market is becoming ridiculous. Property taxes are out of control. Insurance is out of control. It's not a fair system."

Now Zaritsky and her husband are selling their townhouse and moving to Georgia, where a dollar goes further and the job market is friendlier, she said.

A new battery of Census Bureau figures shows Zaritsky is not alone. For the first time in decades, there are more people leaving Broward County for other parts of Florida or the country than people moving into Broward from the rest of the country. A similar trend emerged in Palm Beach Country.

From 2005 to 2006, Broward lost 18,459 people to other counties and states, the data showed. But because 15,227 people came to Broward from outside the United States, and because of gains from births, the county still grew by 5,620 people.

The result is a sea change in Broward's makeup. A new neighbor is much more likely to be a newly arrived immigrant than a U.S. retiree from New York, or a young couple from the Midwest. Between 2000 and 2006, the census data show, five new immigrants came to Broward for every person arriving from inside the United States. That's a complete reversal from the 1990s, when one immigrant arrived for about every two newcomers from within the country.

Experts say various factors contributed to the change. Stunning increases in home insurance and property taxes are near the top of the list. They also cite a crush of new buildings and roads, and the stress and havoc of hurricane season. Movers and real estate agents say those moving tend to relocate to Tennessee, the Carolinas and Georgia.

"It's so crowded. You pull into restaurant after restaurant and there's an hour wait. And the traffic ... I guess I've had enough," said Diane Prete, 48, who is leaving Lake Worth after 26 years and moving with her husband to an acre lot in a mountainside community in Georgia. When she bought her Lake Worth home it was surrounded by vacant lots, she said.

Now it sits amid a tangle of development. Another tipping point was homeowner insurance. Her payments tripled over the past five years.

At her new home in Georgia, Prete said she expected to find work fairly quickly, managing a hair salon.

"The pay seems to be pretty equal and the price of living is less," she said.

Sociology professor Arthur Evans at Florida Atlantic University said the new data reflect a gradual exodus of elderly residents -- people 75 or older who might be returning to an earlier stomping ground after a spouse dies, or moving in with their children.

"We still have people coming here," he said. "They are people with disposable income."

Evans said South Florida continues to attract blacks, but many of those coming were "black professionals, educated blacks from the Caribbean, who are members of the middle class and upper class."

By far the largest group of new arrivals are immigrants -- a relatively steady inflow that has rippled through businesses, entertainment venues and real estate offices.

Linda Mortensen, a real estate agent in Miramar and Pembroke Pines, said six of the eight properties she sold in recent weeks were to investors who planned to sell the homes to buyers in Venezuela and other countries. People planning to move here from within the United States are thinking twice after they review exorbitant property prices, and the taxes that come with them.

"It's quite apparent that South Florida has become a place where the average person cannot afford to live anymore," she said. "People who live here have to have a lot of money."

But for many newly arrived immigrants, South Florida still has a bright appeal. For those from Latin America, it offers ethnic supermarkets and restaurants that cook up their favorite comfort foods from home: a Colombian three-potato soup, a Brazilian feijao. For others, the tropical climate continues to be a magnet.

Errol and Cynthia Thompson moved to Davie from Jamaica a year ago, opting for the area's summery breezes over the bitter cold of their daughter's home in New York.

"One of the reasons we came here is because the weather is similar to Jamaica," said Errol Thompson. The cost of living is high, he added, but he's not complaining. "If you have a reasonably good paying job, you can live," he said. "Taxes are high and growing, but I've experienced the same thing back home."

There is some evidence, though, that even for the immigrants holding up population figures, South Florida is becoming a kind of way station. Doug Ogburn of the South Florida Regional Planning Council said the census calculations of immigrants leaving Florida include many foreign nationals who landed in Broward, got their bearings, found it too expensive and moved on.

"A lot of people flow through South Florida," Ogburn said. "They don't come here because the job market is so wonderful. They come because they have an uncle with a place where they can stop a while. Then maybe they end up in Omaha."

With the slip in domestic migration numbers, Broward's population increase of 5,620 people between 2005 and 2006 puts it in 21st place among Florida's 67 counties. While Broward remains a top-tier destination in the state, it has fallen dramatically from the first-place growth ranking it had held for the 2000-2005 period.

The Census Bureau tracks domestic migration based on where people file their tax returns from one year to the next.


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anyone else think that floriduh is making some big mistakes?

by offering to do the re-insurance, a few bad hurricanes will bankrupt the state, possibly for years/decades.

getting rid of the property tax and just adding to the sales tax?  thats going to screw the renters big time.


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TALLAHASSEE - A new statewide poll of Floridians on property tax issues offers a mixed bag of guidance for legislators looking to make tax reform both meaningful and popular.

The poll affirms strong support for a rollback of local government tax rates, but also shows no clear consensus that taxes are too high in Florida - the central premise of legislators and a governor seeking to lower property taxes.

Asked about the level of "all state and local taxes taken together," 52 percent said taxes are too high, 43 percent said they are what they should be, and 3 percent said taxes are too low.

The poll by Quinnipiac University of Connecticut surveyed 1,061 voters by phone from March 21-27. The poll has a margin of error of plus or minus 3 percentage points.

Among the other findings in the poll:

- By a 3-1 majority (69-23 percent), voters favor rolling back local government spending to 2001 levels.

-By a much narrower majority (49-40 percent), they are willing to accept fewer government services if it means lower property taxes.

- They narrowly oppose (by 48-44 percent) House Speaker Marco Rubio's plan to eliminate property taxes on owner-occupied homes and replace the revenue with a 2.5-percent sales tax hike.

- A different wording of the same question produced a different result. By a 51-34 percent majority, voters said they oppose eliminating local property taxes in exchange for higher sales tax.

- A clear majority (63-28 percent) says the sales tax is fairer than the property tax, as Rubio has argued in pushing for his tax plan.

- They are evenly divided on whether to eliminate the Save Our Homes tax cap that is widely blamed for the current inequities in the property tax system (46 said yes, 44 said no).

- An overwhelming majority (74 percent) said it is better to wait until 2008 to put tax changes before voters than to hold a special election this year at a cost of about $19-million.

In a memo to 78 Republican House members after the poll results were released, Todd Reid, director of the House Republican Office, said: "House Republicans must do a better job of explaining the plan as a comprehensive tax cut proposal that has the potential to provide more tax relief and greater prosperity than any other single measure in our state's history."

"If you can't get people to overwhelmingly support a proposal that wipes out their taxes, then you ought to start looking at new incarnations of the plan, and obviously I think they are," said House Democratic Leader Dan Gelber, D-Miami Beach.

[Last modified March 30, 2007, 00:02:16]

can u imagine the screaming that would take place if they did that?

oh blue dear when are you moving again?  :D


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oh blue dear when are you moving again?  :D

one more yr.

ill save a space for you when you follow.  ;)

ohhh a year! so one more hurricane season for you.

lol great!


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ohhh a year! so one more hurricane season for you.

lol great!


i just know this is the yr its going to hit too