Citizens raising rates
 for high-value condos

PALM BEACH, Fla. -- June 19, 2006 -- If you own a condo in  Trump Plaza in downtown West Palm Beach, you might have thought the $433,000 windstorm premium your association paid to the state's insurer of last resort in May was it for a while.

Guess again.

Under a new rating system for high-value condos being implemented by Citizens Property Insurance Corp., your association owes an additional $296,000.

Trump Plaza of the Palm Beaches, as the luxury condo on the Intracoastal is more formally known, is one of the first to get hit with a hike, said Ken Zwirz, the association's agent.

"The residents are just finding out now," said Dean Goodman, the condo association president. "The ones that know are in a state between dismayed and resigned. It's not like you have an option at this point."

Goodman said Trump Plaza will probably have to levy an average assessment of $1,000 on each of its more than 200 units. That brings the average annual windstorm bill per unit to about $3,600.

Rate hikes certainly aren't unique to condominiums. Property owners statewide have been feeling the pressure of rising insurance rates after eight hurricanes hit Florida in two years.

And it isn't just Trump Plaza that's feeling this latest crunch. Citizens is demanding higher rates for covering high-value condos across the state, including some of those that were insured by the now-defunct Poe Financial Group. More than half of those condos are in Palm Beach County.

In April, Citizens' board voted to set rates on an individual basis for condo buildings worth $10 million or more. It began assessing the "features" of most condos -- such as shutters, impact- resistant glass and roof types -- last month to set new premiums, a process called "A-rating." That system, which evaluates each building individually, is new to Citizens and has led to significantly higher premiums.

Citizens also decided to apply the same rating system to condos worth $25 million or more that Poe used to insure. It informed agents of its decision June 5.

Both groups are starting to feel the pain now.

"They're going up $200,000 to $400,000," said Jeff Grady, president of the Florida Association of Independent Agents. The rating system makes the premiums "enormously different."

"I have been dealing with it extensively," he said, estimating it had taken 10 of his latest 15 workdays. He added that insurance agents across the state have called him with concerns about the rising premiums.

Justin Glover, spokesman for Citizens, said the rating system was created because expensive condos often have unique features and aren't designed to be covered by standardized rates. And they represent a greater risk to the company. Citizens insures 850 condo associations worth $10 million or more. They have a total insured value of $16.7 billion.

"You're talking about a building of a significant size and a structure that may have been (specially) designed by an architect," he said. "The larger the exposure, the larger the potential for a big payout for Citizens."

As for Trump Plaza, Glover said he did not think the additional premiums had been charged yet. However, he could not find specific information about the policy to verify that the new rating system had not been applied.

The additional individual rate hikes are on top of increases on all Citizens condo policies. Under state law, Citizens' rates must be the highest. An average 20 percent rate hike was approved in April for all condos outside Citizens' high-risk pool, which is roughly the area east of Interstate 95 in Palm Beach County.

Still pending is a request for an average 125 percent hike for all condos in the high-risk pool.

Also feeling the pain this month are unit owners of 145 higher-end condos in the state that Poe used to cover. Coverage of those condos, each worth $25 million or more, will not roll into Citizens at the end of the month with Poe's other policies. Instead, their policies will be canceled on July 1 and new Citizens policies will be written using the individual rating system.

Palm Beach County has 76 of those condos, worth a total of $2.77 billion. That's more than any other county in the state. In Martin County, four condos worth a combined $149 million will be affected.

Lee Stone said his group of condo associations in the Greenacres' neighborhood of Park Pointe don't know what to expect. Together, the 14 condos, which are covered by a single policy, are worth $35 million and used to be insured by Poe's Southern Family Insurance Co.

Stone said they are still waiting on the estimate from Citizens but expect it could be more than $1 million, much more than the $338,000 they paid Poe for coverage. There's little chance they could borrow the money by the end of the month to pay their premium.

"We're in danger of being without coverage," he said of the neighborhood, which is an over-55 community. "This whole business of whacking everybody at the kneecaps at hurricane season is ludicrous."

Pricey condos, pricey premiums

Condo buildings worth $25 million or more that were insured by Poe Financial Group will not roll into Citizens at the end of the month. Instead they'll get new policies with Citizens' prices. Across the state, 145 condos in 12 counties will be affected. Here are the top four counties:

Palm Beach: 76 condos worth $2.77 billion

Broward: 45 condos worth $1.82 billion

Dade: 9 condos worth $383 million

Martin: 4 condos worth $149 million

Source: Citizens Property Insurance Corp.

© 2006 The Palm Beach Post. Stephanie Horvath, via ProQuest Information and Learning Company; All Rights Reserved