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Florida Insurance Agent Windfall

Florida Insurance Brokers profit from the homeowner insurance crisis

From the St Petersburg Times of 06/27 came an article which stated:

As the state-run insurer's policies have skyrocketed, private agents writing them are reaping big gains

Insurance agents in Florida get 6.9% or higher commission on the premiums that Citizens Insurance charges. With wind insurance premiums climbing, the insurance agents are currently enjoying a bit of a windfall.

The term "windfall" means an unexpected profit from a business or other source. The term implies gaining huge profits without working for them. Is this what Florida insurance brokers are currently enjoying? It originally meant something, such as a ripened fruit, that has been blown down by the wind. In the case of hurricane insurance anyone profiting would literally be having a "wind fall".

The St Pete Times stated that "The average annual fee per agent is up to about $27,400". Not bad for not much extra work. Maybe it is less work as the typical Florida insurance broker now doesn't have to do much work shopping around.

In the article, even Citizens recognizes that it is a cost and a problem for Florida policyholders that will have to be addressed.

Of course, the insurance brokers of Florida aren't the only ones profiting from the crisis, with the take-out companies getting a bonus from Citizens for taking away their policies.

The Insurance Broker's Defense

If I were to put words in a broker's mouth, they may defend themselves with, "but lots of people are dropping their coverage all together! We don't get paid any commission for someone with no policy.".

When I spoke to one of my brokers about the issue of them profiting from the premium increases that Citizens is forcing on to its policyholders, his defense was that Citizens has capped the commission that they pay on homeowner's insurance policies, and especially on the increases on the hurricane component of the premium.

The insurance broker's explanation is that when the insurance company, Citizens, raises its rates on a premium say from $1400 to $2000, the insurance agent is not paid the commission on the additional $600 so that in actuality there is no windfall.

If any brokers of homeowner's insurance want to comment on this then please contact us.

See what one Florida insurance agent said when she took advantage of this feedback opportunity.

Insurance Broker's Path To Cheaper Homeowner Insurance

My insurance broker confessed that for the building insurance on his office, he was going to go with a company called Appalachian Underwriters, who would do Homeowner's Insurance but with no component for wind.

He does have a mortgage on the property which specifies that he has to have insurance, but doesn't specifically say wind insurance. He is hoping to escape scrutiny by his mortgage company, and that may change when the promissory note comes due. He is also able to escape commercial building insurance rates because his building is zoned residential-commercial so he is fully entitled to call it a residence.

You may want to try Appalachian Underwriters for house insurance if you can wriggle through a similar hole in your loan contract and get by with coverage for just liability, fire and theft.

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