Business owners want some relief, too

For a better Florida: Issues facing the 2007 Legislature

By Tom Zucco
Published February 18, 2007

Whenever the issue of property insurance came up in the last year - and it happened at a record pace - the assumption was that the reference was to residential, or homeowners, insurance.

And usually, it was.

But left largely out of the discussion was the ballooning crisis in the commercial insurance market, where business owners are finding insurance either unavailable or unaffordable.

If they can't find coverage through a regulated insurance company, business owners have two choices: buy insurance through a surplus lines company at what is often a far higher rate, or go without it.

Many business choose the latter because higher insurance costs usually have to be passed on to customers in the form of higher prices. The business saves money but also puts itself at greater risk.

Lawmakers attempted to address the issue during the recent special legislative session by doing something that also may help the residential market.

Expand state-run Citizens Property Insurance.

Before the new law, the insurer of last resort could write windstorm policies for businesses only in the state's designated wind pool, which is generally a ribbon of land along the coast. Coverage was also capped at $1-million, a small fraction of what most businesses need.

But the cap has been lifted, and Citizens will be allowed to write wind and other policies across the state. Citizens rates will also be competitive with the private market.

The likely result is that Citizens, which now has about 10,000 commercial policies, will see an explosion of new policies.

But the company says it's ready.

"We are going to build a first-rate commercial division," Bruce Douglas, Citizens' board chairman, said recently. "We think we can do a very good job."

And they might do it nearby.

Douglas said Citizens may establish a separate division in Tampa to handle the commercial business, and add 250 to 500 employees in the coming months to handle the new workload.