Florida Realtors, Others Press For National Disaster Insurance Program

Finding affordable housing in South Florida has become a problem.

So has finding affordable property insurance. That challenge, however, is faced head-on by nearly every segment of the market, from rich to poor, homeowners to lenders, and from renters to landlords. No one comes away unscathed.

“Citizens is no longer the insurer of last resort,” said Mike Dooley, president of the Florida Association of Realtors, referring to the much-maligned, state-backed insurance organization. “Citizens is becoming the insurer of only resort. This issue affects the tenant up to the CEO.”

After a period of devastating storms, subsequent soaring increases by Citizens, a background of local homeowners getting hit with gigantic rate hikes, and some people discovering that their insurer has dropped them completely, the Florida Realtors are calling for national catastrophe insurance, reports today’s Palm Beach Post.

“Allstate just pulled out of four boroughs in New York because of hurricane exposure. The story is being repeated in Louisiana, Alabama, Mississippi and the Carolinas. It’s no longer just a Florida issue,” Dooley said.

A Realtor with Illustrated Properties in Hobe Sound, Dooley spoke to about 75 Realtors from Palm Beach and Broward counties as part of the HomeBanc Mortgage Realtor Summit, an ongoing series of lectures about housing issues. The call for a nationwide solution to natural disasters has been building since Hurricane Katrina battered the region last year, causing billions in damage and displacing hundreds of thousands.

“There comes a time when the free market can’t protect us. We don’t have a free-market military. We pay taxes and ask the government to protect us,” Dooley said.

A model for a national catastrophe insurance program already exists, he said, and that is the National Flood Insurance Program. The Realtors have passed a motion to make the issue “a national talking point,” according to Dooley, while other associations, such as the National Association of Insurance Commissioners, also are asking Congress to formulate a plan.

Kevin McCarty, the Florida Insurance Commissioner, is at the forefront of a push to create a national catastrophe fund to help states suffering major disasters.

“This is not just a Florida problem, it’s not just a California problem or a Hawaii problem,” McCarty said in April. “Eventually, there will be a disaster that will break the backs of the insurance industry… I continue to believe that catastrophic losses are not an insurance problem, but an economic security problem.”

With hurricane season already underway, Dooley noted that finding insurance also can extend to renters, adding that he knows of one who was turned down for disaster insurance on the contents of her apartment. He also pointed out that most Florida home loan providers insist the homes they finance carry disaster insurance.

“If you can’t get insurance, they’ll go out and get it for you on the international market and you’ll have to pay whatever it costs,” Dooley said. “It’s a condition of your mortgage. And if you can’t make payments, then that’s another problem because banks don’t want a whole lot of houses on their hands, especially in a market like this.”

As for the current state of the South Florida housing market, Dooley urged that real estate is still an effective long-term investment, and to remain patient.

“There is no real estate bubble. A house is not a stock certificate. It doesn’t go away. If the price falls, you still have your house,” he said.

Jim Flood, the aptly-named regional president of HomeBanc Mortgage and the host of the seminar, echoed that statement.

“Be patient. The last two years have been the best years in the industry. We need to be grateful for that,” he said.