High-rise insurance shakeup coming after Surfside, CEO says
Florida’s insurer of last resort is bracing for changes in the commercial market regarding high-rise towers following the deadly condominium building collapse last month in Surfside.
Citizens Property Insurance
Corp., President and CEO Barry Gilway said Wednesday that the June 24 partial collapse of the 12-story Champlain Towers South is expected to result in an increase in safety inspections throughout the state. The heightened scrutiny will affect the highly competitive and “dirt cheap” commercial property insurance marketplace and force condominium associations to look for new carriers, he warned.
“We can expect companies to be far more stringent in their underwriting requirements and this will send more business our way,” Gilway said during a Citizens Board of Governors meeting in Lake
Mary on Wednesday.
Following the tragedy in Surfside, Miami-Dade
County Mayor Daniella Levine Cava called for an audit of all buildings five stories or taller and at least four decades old. At least four buildings in Florida have been evacuated subsequent to the audit.
Citizens Chairman Carlos Beruff said he anticipates private insurers will
be able to handle most of the commercial marketplace changes.
“I think the market will protect the citizens because when you go to buy a condo now, unless you’ve had your head in the sand, you’re going to find out whether or not it’s got structurally significant reports before you buy that condo,” Beruff said. “And if your Realtor isn’t telling you that, then you probably need another Realtor.”
Gilway cautioned that Citizens needs to maintain its standards for accepting new policies, as the state-backed insurer already is experiencing a rapid growth of homeowners seeking coverage for residential properties.
Since March, Citizens has seen an influx of new policies go from 3,000 a week to 6,000, due to profitability issues within the private market in Florida.
The agency currently is forecasting a policy count of 766,000 by the end of the year, Gilway said. Citizens lists on its website having 609,805 policies as of May 31. A year earlier, Citizens was handling 463,247 policies.
The Citizens board is expected to look further into commercial market impacts from the Surfside collapse at a September meeting planned to be held in Miami.
“We’re still really evaluating the overall situation,” Gilway said. “We don’t want to jump at it. In the meantime, you can be sure that if it’s an unsafe building, if it’s been identified as unsafe, we can’t write it. I mean, that’s common sense. And the question basically is going to be working with the board in terms of how aggressive we are in terms of our overall requirements of what we would demand from condominium owners and associations relative to underwriting these risks.”
Gilway said Citizens also should have additional guidance from a task force established by The Florida Bar that is performing a top-to-bottom review of Florida condominium laws.
Citizens’ chief of communications, legislative and external affairs Christine Ashburn said impacts from the Surfside tower collapse, along with redistricting, are expected to be among the major issues lawmakers will consider during the legislative session that begins in January.
State Rep. Paul Renner, a
Palm Coast Republican set to take over as House speaker following the 2022 elections, on Monday pointed to the inability of the Champlain Towers South condo association to quickly address safety and structural repairs.
“It will be something I assure you that we’re going to look at and address and determine whether the solutions are legislative or whether they’re an issue of basically a breach of fiduciary duty on the part of the [condo association] board members,” Renner said during a video conference with reporters.
Analysis of the partial collapse of the Champlain Towers South has focused in part on degradation of reinforced concrete support in the building’s underground parking garage and corrosion of steel.
“In the case that occurred in Surfside, where there was known these issues that were looming, and the decision — it appears from initial reports — not to move forward with an assessment to fix it. Obviously, every board member of every entity has a fiduciary duty. And so we’ll take a look at that. If we need to strengthen that and make that clear, we can certainly do that,” Renner said Monday.