March 2008 FIRM Townhall Meetings

1. March 2008 FIRM Townhall Meetings Prepared by the Grassroots Organization FIRM Fair Insurance Rates in Monroe March 2, 2008

2. Agenda • Welcome • Background • Accomplishments • Work in Progress • 2008 Challenges • Task Force on Citizens Claims Handling and Resolution • Statewide Windstorm Mitigation Advisory Committee • 2009 Changes in Windstorm Eligibility • Questions & Answers • Conclusion

3. Background – What’s FIRM? • Grassroots group founded in February 2006 • Grown from 32 neighbors in Key West to 5,000 members Keys-wide • Run by volunteers and funded by donations • 501(c)(6) organization • Not-for-profit, but donations are not tax-deductible • Allows us to lobby OUR MISSION: “To advocate for, promote and encourage the promulgation of fair, impartial and actuarially sound windstorm insurance rates for owners of commercial and residential properties within the geographic boundaries of Monroe County, Florida.”

4. Accomplishments • Brought attention to statewide windstorm insurance crisis • Successfully challenged Citizens Property Insurance Corporation (CPIC) 2006 rate filings which would have produced rates in excess of $30/$1,000 of coverage for Keys property owners. • Convinced Office of Insurance Regulation to roll-back Monroe County rates by 32% (effective rate = $13.58/$1,000 of coverage. (expires 1/1/09) • Worked with a coalition of consumer groups around the state for insurance reform

5. Accomplishments(continued) • Influenced pro-consumer legislation of January 2007 which: • Froze windstorm rates state-wide (expires 1/1/09) • Repealed “use and file” statutes (expires 1/1/09) • Strengthened the Florida Building Code and elimination of exemptions • Mandated CPIC claims resolution within 90 days of filing • Provided for quarterly and bi-annual premium payment options • Created strong working relationships with the Office of Insurance Regulation and key legislators in Tallahassee

6. Current Projects • Address increasing premiums for condominium associations • Completed comparative data analysis regarding • Rates • Actual damages • Delivered analysis to the office of the state Consumer Advocate on Insurance Issues and requested an actuarial analysis • Beginning to collect and analyze data on commercial-commercial properties

7. 2008 Challenges - Rates • Insurance Commissioner McCarty’s order to roll-back Monroe County windstorm rates expires at midnight on New Year’s Eve. • CPIC has filed a preliminary rate analysis suggesting that, once again, Monroe County will be faced with an increase in our rates of between 91% and 123%.

8. Notes on CPIC Rate Analysis • The rate range varies based on whether reinsurance is acquired primarily through the Florida Catastrophe Fund or through private reinsurance sources. • It is unclear to what base rate CPIC will apply these percentage increases. • This is a preliminary analysis, not a rate filing.

9. Possible 2009 Rate Changes per CPIC Analysis +3% to +31% +21% to +79% +10% to +88% +7% to 31% +17% to +55% +54% to +97% +12% to +105% -7% to +75% -9% to +28% -9% to +95% +91% to +123% From CPIC Personal Lines Rate Analysis of December 2007

10. Household Impact of Indicated CPIC Rate Changes in Monroe From CPIC Personal Lines Rate Analysis of December 2007

11. Economic Impact of Indicated CPIC Rate Changes in Monroe • These increases would equate to a considerable loss of disposable income for Monroe property owners annually: • At 91%, we’d lose $77,720,000 • At 123%, we’d lose $102,542,000 From CPIC Personal Lines Rate Analysis of December 2007

12. Potential Average Premiums in Comparable HRA Counties From CPIC Personal Lines Rate Analysis of December 2007

13. FIRM Analysis of CPIC Rate Analysis • Again, Monroe County would pay the highest rate in the state for windstorm insurance. • The same rationale for disapproving the last rate increase stands today: • Monroe has had the toughest building code in the state for the longest period of time. • Key West in particular has a history of sturdy construction and buildings that have withstood storms for over a hundred years. • Unlike other HRA areas, our diminishing population and tough development regulations limit the growth of exposure for CPIC. • Actual CPIC experience confirms that losses per claim in Monroe County are less than in other high risk areas of the state.

14. Insurance Claims Per Policy in Force in Selected HRA Counties Property damage per insured property from the same storms is lower in Monroe than elsewhere in Florida. Wilma and Katrina are prime examples. TO READ: In Katrina, wind strengths were lower in St. Lucie County than Monroe County, and Citizens windstorm claims paid were higher. SOURCE: Citizens Property Insurance and the National Weather Service

15. FIRM Action Plan on Monroe County Rates • Prepare an analysis of the CPIC rate analysis and share with OIR, the Consumer Advocate and key legislators (DONE). • Continue to build our database of information regarding rates, meteorological predictions and Monroe building conventions. • Monitor all filings from CPIC. • Mobilize residents in letter-writing and petition-gathering campaigns when the time is right. • Lobby the County and municipalities to again retain the services of an actuary and an attorney to represent Monroe in a challenge to the rate filing if necessary.

16. 2008 Challenges (continued) • Permanently sustaining the repeal of “use and file” • Encouraging greater transparency from CPIC, the quasi-governmental agency, in: • Rate-setting • Underwriting • Billing • Building the Florida Catastrophe Fund, possibly through earmarking a portion of the post-storm windfall sales tax revenues for the purpose • Abolishing “PUP” companies • Creating a consistent source of funding for hardening our homes • Ensuring accurate assessment of building strengths and proper allocation of mitigation credits.

17. Analyzed outstanding claims from 2004/2005 season • Encouraged by these actions from CPIC: • Tremendous expansion of adjusting staff • Implementation of mobile disaster response units • Electronic document handling • Redundancy in call service centers • Improved customer website • Outside adjuster training programs already in place • Insurance agent training programs to launch this quarter • Direct communication between agents and underwriters • Drafted legislation to train and license public adjusters and umpires • Investigating the wind-driven rain exclusion

18. Windstorm Mitigation Advisory Committee • Newly formed statewide committee to: • Analyze results of a mitigation credit survey prepared by modeler ARA • Provide recommendations about building conventions, construction and wind mitigation techniques, and the appropriate allocation of mitigation credits • FIRM Board Member and Key West City Engineer Annalise Mannix appointed to the committee

19. Changes in Eligibility Requirements from CPIC • Mandated by the legislature in the 2007 special session • As of January 1, 2009, you may not be eligible for windstorm insurance from CPIC if you: • Have a home with an insured value of over $1,000,000 • Have a home with an insured value of over $750,000 and DO NOT have shutters • CPIC is clarifying whether this applies to Class A, B or C shutters, impact-resistant windows and plywood • Build a home within 2,500 feet of the coastline that does not meet FBC code-plus standards

20. FIRM Activity • Be prepared for CPIC rate filing for 2009 • Stay abreast of proposed legislation in this session • Lobby for permanent repeal of “use and file” • Maintain a presence in Tallahassee during the session to counter insurance industry lobbying efforts • Build letter-writing campaigns in support of legislation that will benefit consumers

21. Wait – there’s more! • Condominium and Commercial Rates • Federal Catastrophe Insurance • Mitigation Education • Continued Improvement in Citizens

22. What you can do for FIRM • Make sure all your friends are FIRM members. • Donate money. • Remind your representatives that voters elect them, not insurance companies. • Volunteer – we need more bodies! • Come to our Happy Hour on April 11 from 4 to 8pm at the Southernmost Beach Café in Key West.

23. What you can do for FIRM (continued) • Stay informed. • Watch, read, listen to the media. • Visit our website regularly: www.FIRMkeys.org. • Read your e-mails. • Find out where the candidates stand on insurance issues before you vote for them. • Vote in our upcoming FIRM Board elections.

24. FIRM Board Slate • Michele Beach,Owner of The UPS Store and Tropical Arts & Crafts Supplies, Key Largo • Heather Carruthers,Co-owner of Pearl’s Rainbow Resort, Key West • Nat Cassel,Assistant Monroe County Attorney, Ramrod Key • Cindy DeRocher,FIRM Co-founder and General Manager of the Gardens Hotel, Key West • Robbie Hopcraft,Mortgage Broker and Owner of Best Rate Lending Services, Key West • Teri Johnston,Co-owner of Affiliated Design & Construction and City Commissioner, Key West • Kim Mack,Financial Consultant, Key West • Annalise Mannix, P.E.,City of Key West Environmental Programs Manager, Key West • Mel Montagne,Commercial A.E. and Branch Manager, Keys Insurance Services, Marathon • Donna Moody,FIRM Co-founder and Retired Landscaper, Key West • Colleen Repetto,Treasurer, Coldwell Banker Schmitt Charitable Foundation, Marathon • Al Sachs,Retired Aeronautical Engineer, Key West • Gary Sechen,Chief Financial Officer, Key West Bank, Key West

25. What YOU can do for You- MITIGATION Mitigation factors all work together to save you money. There are four significant factors that can reduce your premium: • Shutters. Class A, B or C shutters can save you up to 33%. • If your home is compliant with the current Florida Building Code, either through new construction or renovation, you may be able to save up to 45%.

26. What YOU can do– MITIGATION(continued) • Roof Discounts. • How your roof is connected to your walls can save you money. Hurricane straps are a big help.

27. What YOU can do– MITIGATION(continued) • Roof Discounts. • How your roof is covered can also save you money. A small mitigation credit is available for metal roofs. • However, there is no pre-designated space on insurance applications to account for these discounts. Ask your agent to make a special note if you have a sheet metal roof to qualify for a discount. • FIRM continues to advocate for greater discounts for metal roofs due to their superior performance.

28. What YOU can do– MITIGATION(continued) • Construction. A hip roof may save you up to 23%. SIMPLE HIP ROOFA gable roof with the ends brought together at the same pitch as the rest of the roof. PYRAMID HIP ROOFA hip roof built on a square base with eaves of the same length.

29. Send Information to: FIRM PO Box 5882 Key West, Florida 33045-5882

30. E-Mail/Fax Information to: • terijohnston@comcast.net • Fax: 305-296-4867

31. Get Information at: www.FIRMkeys.org

32. Closing Remarks • We have proven that we do have a voice and can make an impact. • Stay active, educated and involved. • This fight is FAR from over. • Thanks for taking the time to join FIRM this evening.