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Small firms get property insurance option

The state will begin issuing policies for qualified businesses with properties valued at $1-million or less.

Published September 16, 2006

Small business owners desperately seeking commercial property insurance got a boost Friday when state regulators allowed the Florida Property and Casualty Joint Underwriting Association to begin writing policies.

The Florida Cabinet activated the JUA on Aug. 1 to help ease the commercial property insurance crisis.

This isn't something for everybody. Policies are limited to properties valued at $1-million or less and will cover only the wind portion, but they could be written in less than two weeks.

To get coverage, commercial property owners must ask their insurance agent to try to obtain coverage from at least three licensed private insurers and one surplus lines insurer.

If rejected by all four, the agent then submits an application to the Florida Market Assistance Program, the state-run insurance clearinghouse, to exhaust the possibility of finding private coverage.

Officials say most property owners have already taken both steps.

Any agent who applies with the JUA can service the policies. So far, regulators said at least 60 agents have been appointed.

The base rate for premiums is $1.49 per $100 of coverage, with deductions for mitigation. Like Citizens Property Insurance, the rates are designed to be actuarially sound, but will not be competitive with the private market.

The base deductible is 5 percent, although policyholders can increase that to 15 percent.

Funding will come from premiums. But if a hurricane strikes and causes widespread losses, the JUA can assess the written premiums of all commercial property insurers in the state up to 10 percent a year. Typically, those assessments are passed on to the policyholders.

Assessments would continue until the deficit is gone.

Regulators said surveys indicate the greatest need for coverage for commercial structures was at the lower end - under $1-million. Coverage for structures valued over that amount is being considered, but officials say they want to limit the JUA's exposure.

Newly formed ICAT Specialty Insurance Co. of Tampa, a subsidiary of Boulder, Colo.-based ICAT Insurance Managers, was selected as the servicing carrier.

Regulators said ICAT, which will be paid on a sliding scale from zero to 15 percent of written premiums, was the only insurer of several that applied that could meet the state's deadline. The contract with ICAT is not exclusive, regulators said, and the JUA can retain as many servicing carriers as necessary.

Tom Zucco can be reached at or 727 893-8247.

[Last modified September 15, 2006, 22:46:02]

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