Florida may gut discounts for hurricane shutters

Kurt Bressner spent more than $16,000 installing storm shutters, a reinforced garage door and an impact-resistant front door on his Boynton Beach home. In return, he got more than peace of mind.

Effective this year, he got a $5,362 break on his annual insurance premiums.

Now, Bressner -- and more than 700,000 other Florida consumers who spent big money to fortify their homes -- could see their ``wind mitigation'' discounts dramatically reduced.

Insurers, led by State Farm Florida, are complaining that the discounts for installing shutters and other protections have become so popular that they are undercutting the industry's bottom line.

Last year, citing the cost of the discounts, State Farm asked for a 47.1 percent rate increase. The state said no, but the Legislature agreed to review how the discounts are tallied. The first public hearing is Wednesday in Tallahassee.

Bressner thinks it is ``counter-intuitive'' for insurers to want to strip away incentives that encourage policyholders to make their homes better able to withstand a windstorm.

State Sen. Mike Fasano, R-New Port Richey, who serves on the Senate's banking and insurance committee, recalled State Farm's president testifying on behalf of the discounts.

``This is what they wanted and this is what they got,'' Fasano said. ``Now they want to take away [the discounts] from homeowners. That's a promise they've broken.''

Still, lawmakers are willing to listen to the industry.

``We want to be sure that the discounts we're offering are right,'' said State Rep. Bryan Nelson, the Apopka Republican who sponsored the law mandating the review.

``We're reducing premiums every year,'' said Carol Everhart, a member of the governing board with Citizens Property Insurance, the state's largest insurer. ``But what we're doing isn't based on a valid study.''

State Farm did not respond to requests for comment.

Wind mitigation discounts have been around since 2003, but they became wildly popular four years ago, when insurance rates exploded after a series of hurricanes in 2004 and 2005. In late 2006, with rates rising rapidly, Insurance Commissioner Ken McCarty ordered the discounts doubled.

Trouble was, so many applied for the discounts -- including 260,000 of State Farm's Florida policyholders -- that the insurers saw revenues shrink.

Insurers aren't arguing that the discounts be eliminated, only that they ought to be recalibrated.

This means tackling some complex calculations: Are hurricane shutters worth a 30 percent discount on a premium? Is impact-resistant glass just as effective and deserving of the same discount?

Another question that has been raised: Should people who do nothing to protect their homes -- no shutters, no roof straps, no reinforced doors -- be slapped with a surcharge?

Gary Harger, president of Cypress Property & Casualty Insurance, believes a mixture of discounts and surcharges is the answer.

State Farm, which has led the charge for reexamining the discounts, is a lame duck player in the Florida insurance business. It has announced its intention to stop writing property insurance in Florida in the next two years. The company's Florida subsidiary could be insolvent within three years if the current setup isn't adjusted, State Farm says. link.....