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Date of Issue: March 15, 2007

Insurance: Crisis, ripple effect continues on AMI

insurance pic
Glenn Compton, chairman of ManaSota-88
insurance pic
Ginny Dutton, left, and sister Jane E. Joyce will continue to operate their popular store, Ginny's and Jane E's at the Old IGA on Gulf Drive at Magnolia Avenue in Anna Maria, but Dutton is closing her Marina Drive store in Holmes Beach, Ginny's Antiques and Art, on May 15 due to higher insurance premiums, taxes, hurricane threats and red tide. Islander Photo: Molly McCartney

Anna Maria Islanders are still hurting from the ripple effect of the state insurance crisis.

One of the latest victims is Ginny's Antiques and Art at 5602 Marina Drive, Holmes Beach. Owner Ginny Dutton said she will close that store May 15 because business is so bad from the combined impact of soaring property insurance, higher property taxes, hurricane threats, past years' red tide and the slow-down in the real estate market.

"You can't have 900 homes on the Island for sale and not have it have an effect," she said. "We price our things to sell and we are not selling. There are too many houses for sale and too little occupancy in hotels and rentals. We used to sell volumes of furniture for people buying condos and furnishing their homes, and that is not happening anymore."

Dutton said there has been a downward trend in the local rental and real estate market since 2004 "when we were hit with storms and red tide" along with higher insurance and property taxes.

Closing the Marina Drive store is a "very emotional" experience, Dutton said. "I had customers crying yesterday, and that makes it very hard," she said.

A second store that Dutton operates with her sister Jane E. Joyce at 9807 Gulf Drive in Anna Maria City will remain open. It isn't that the Gulf Drive store is doing so well, she said. "It is that it is profitable and the one (on Marina Drive) is not."

The difference is the inventory, she said.

Dutton said the Marina Drive store, which opened in 1998, specializes in furniture and home furnishings. The Gulf Drive store, which the sisters named Ginny's and Jane E's At the Old IGA, opened in July 2004, "meets many needs" and features a bakery with a wide assortment of treats made from scratch, coffee bar, gourmet grocery section, Internet cafe, flowers, antiques, art and various other products and services, including some furniture.

"We also cater private parties," she said.

"If I was selling furniture only [at the Holmes Beach location], it wouldn't be enough to keep it open," she said.

 

No coverage for Pine store

Another island business that continues to suffer from the insurance crunch is the Pine Avenue General Store in the city of Anna Maria.

Owner Sandy Mattick lost her wind insurance coverage last year and has been unable to find a replacement policy.

Mattick said she wasn't able to get Citizens Property Insurance Corp. coverage in 2006 because the store was located outside the state-designated wind zone. She said the store didn't qualify for the Florida Property and Casualty Joint Underwriting Association coverage because that excludes residential and she lives there.

She is hopeful that the state's new insurance regulations will allow her to obtain wind insurance from Citizens, but it isn't clear yet if she will qualify or if she will be able to afford the premium if she is eligible.

"I'm hoping this is going to work out," Mattick said. But she admits being nervous about the cost of the premium if she does qualify.

 

Manion insurance lesson

Island homeowner Mary Manion told state Rep. Bill Galvano at the Kiwanis Club meeting in February that her USF&G insurance premium had tripled in price since last year and she wanted to know if she would get any relief from the new state law.

Galvano, who represents Anna Maria Island and western Manatee County, said she should get some relief but the amount would depend on the company and the policy.

Since then, Manion has learned from her insurance agent that USF&G operates as an unregulated surplus-lines carrier in Florida and is not subject to the state's new law.

Manion said she also learned that the $3,700 premium for her USF&G coverage included an estimated $1,100 in unrefundable fees.

"My agent said the only place I could go other than USF&G was Citizens, but I don't want to go to Citizens, because it is the last resort, and I don't want to get into something like that," she said.

Manion thought she was stuck with USF&G. And as of February she had paid $2,100 of the $3,700 due on the policy. Then a repairman doing some work at her home referred her to an agent who was able to place her with Universal, which is based in Fort Lauderdale.

The premium for the Universal policy is about $1,300, Manion said.

The Manions dropped the USF&G policy and switched their coverage to Universal.

 

ManaSota-88 warning

The chairman of ManaSota-88 says that it shouldn't surprise anyone that Florida has been hit with an insurance crisis.

"For decades, state and local governments have permitted inappropriate development in hurricane-prone areas and continue to do so today," Glenn Compton stated in the group's February newsletter.

ManaSota-88 is a not-for-profit public health and environmental organization founded in 1968. It has 1,500 members in Manatee and Sarasota counties.

Compton, a member of the group for 22 years and chairman for four years, said he has received "quite a few e-mails and phone calls" in response to his article in the newsletter. "People are concerned about insurance rates and most agree we have overdeveloped the coast," he said.

Recent examples of development approvals in risky coastal areas, he said, include high-rise condominiums on Perico Island in Bradenton and in the city of Venice, as well as waterfront developments along the Manatee River.

"There appears to be little consideration given to the overall problems associated with land-falling hurricanes when approving developments in this area," he said.

Compton said there is one obvious solution to the insurance crisis — stop density increases in the Coastal High Hazard Zone, which must be evacuated in the event of a Category 1 hurricane, and reduce density in flood-prone areas.

State leaders, including Gov. Charlie Crist, have called for a national commission on catastrophic disaster risk to address the Florida insurance crisis, but Compton argued that "it is almost laughable that Florida's political leaders expect the rest of the nation to bail us out of problems we have created for ourselves as a result of decades of improper coastal development."

Compton said that risk assessments show that Florida has nearly $2 trillion in insured coastal exposure, with nearly 80 percent of Florida's total insured exposure on the coast.

"The Insurance Information Institute states that a repeat of the Great Miami Hurricane of 1926 could cause $500 billion in damage by 2020, given current demographic trends," he said.

Compton said that there is an increased threat of extensive loss of life and property damage as additional people move into Southwest Florida.

"It is critical that residents understand the dangers of living in a hurricane-prone area," he said.

"Currently there are no hurricane evacuation clearance-time standards for new or existing development. Legislation needs to be passed that would require the disclosure of hurricane evacuation times when potential buyers are purchasing residential property. Prospective buyers and renters have the right to know, and should be informed, whether they can or cannot safely evacuate from property they are considering purchasing or renting."

In the meantime, what should coastal property owners on Anna Maria Island and elsewhere do to protect themselves against storm damage?

Compton's advice: "Keep your fingers crossed and hope we don't get a storm."

 

Citizens and the Cat Fund

Contrary to what was reported here last week, Citizens Property Insurance Corp. does buy reinsurance from the Florida Hurricane Catastrophe Fund.

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