Manufactured Home Claims, Lack of Policies Motivate Fla. Association to Consider Writing Coverage

November 22, 2005

The unavailability of policies to cover manufactured homes, caused by an increased number of claims during the 2005 hurricane season, has motivated the Florida Manufactured Housing Association to study the feasibility of starting its own insurance company to provide coverage for manufactured home owners.

According to Frank Williams, FMHA executive director, if the feasibility study has a positive outcome, the group could begin offering coverage for manufactured home owners during the first quarter of 2006.

Williams told the Miami Herald investors are willing to put capital in an insurer that will cover only manufactured homes because newer homes, those constructed after Hurricane Andrew hit South Dade in 1992, are more structurally sound.

He said another insurer would be welcome in the market because many believe the need for manufactured-home coverage won’t lessen any time soon.

According to FMHA statistics, there are about 850,000 manufactured homes throughout the Florida and their number is growing steadily. FMHA estimates about 25,000 new manufactured homes are sold in this state each year.

Williams contends that affordability is a big issue.

With the median price for single-family homes in Broward and Miami-Dade being well more than $300,000, manufactured homes “are one of the last vestiges of affordable housing left in this state,” Williams said.

Insurance to cover manufactured homes was hard to find before the 2005 hurricane season and is now it is almost impossible to find any carrier to write this coverage, particularly in South Florida, where Hurricane Wilma damaged numerous mobile home parks.

Manufactured home insurance coverage was almost impossible to find, even prior to 2005, and was one of the key types of policies being referred to Citizens Property Insurance Company, Florida’s insurer of last resort.

In a market in which rates have risen rapidly in recent years, manufactuerd home owners with Citizens policies will be hit with a 33.7 percent rate increase in both Broward and Miami-Dade in February if a new rate hike requested by the carrier, is approved by the Florida Insurance Commission. Citizens’ premiums on manufactured homes, including windstorm coverage, range from $800 to $1,300. Premiums vary, based on size and insured value of the home.

Gainesville, Fla.-based Safeway Property Insurance had been willing to write coverage for manufactured homes when other insurers shied away. In the 11 months before the storms, Safeway wrote 24,000 new policies, and many of those policies were written with windstorm coverage.

“‘I could have written more policies if we had the capacity,” said Frank Lake, Safeway’s senior vice president told the Herald.
The company wrote only as many policies as it could cover with reinsurance and reserves, a careful, deliberate underwriting strategy that allowed it to thrive in the market. But Wilma put a hold on writing new business, even for Safeway.

Most carriers in Florida don’t want manufactured-home business. This segment was among the policies dropped by Nationwide Insurance of Florida earlier this year when it pared down its business in the state in order to reduce its risk.

State Farm, the state’s largest home insurer, hasn’t written any new policies in South Florida, including manufactured-home coverage, since 1995.

“After last year’s hurricane season, there were a number of companies that had offered mobile-home coverage that decided the money to be made in this business wasn’t enough to cover the regulator and political costs that were building” in the Florida market, William Stander, a government affairs representative for the Property Casualty Insurers Association of America told the Herald.

Stander said several of the trade group’s members that had sold mobile-home coverage in Florida have left the state entirely.

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