Wednesday, September 3, 2014

Citizens Property and Casualty is the largest property Insuror in Florida

Initially conceived as the insuror of last resort, Citizens property and Casualty has become the largest insuror by far of homes in Florida.

The facts:

As of 9/30/2010, Citizens Insures 1,185,513 Personal lines policies (Home Insurance and wind Insurance combined for residential occupancy)

The next largest Insuror, State Farm Florida Insurance Company, is actively non-renewing policies to reduce their exposure to about 1/2 that of Citizens  and has been currently downgraded to a B- rating.

In spite of a Mandate to reduce policies in Florida, Citizens continues to grow.

Allstate, Nationwide, Hartford, Geico, Travelers, and other major insurance companies have reduced their exposures to a fraction of what Citizens has.

"Take out Companies", Usually small newer companies with small histories and Assetts, are the only Companies that are growing their number of homeowner policies in Florida.

Take out company bankruptcys are on the rise, and serious questions about their ability to respond to claims.

The news is even worse for the policyholders in "sinkhole alley", Pasco, Hernando, Pinellas and Hillsborough.  These counties have virtually seen the Property Insurance marketplace be turned over in total to Citizens.

What happened?

This question is complex, but started with Insurance companies not properly modeling the risk of hurricaine in Florida and by violating a principle of Insurance called "spreading the Risk", often concentrating their policies in certain areas and/or overselling homeowner Insurance with the desire to cross sell other lines of Insurance.  Prior to Hurricaine Andrew, The Insurance Companies also reserved inadequately, grossly underestimating their worse case exposure. As an example, State Farm lost every dime they ever made in Florida in this one storm AND exposed the Mutual Company to possible liquidation if the Hurricaine had only hit 10 miles north and damaged the more populous areas of Dade and Broward County. Another example is Michigan Millers Mutual Insurance Company. While largely left untouched by Andrew, The multi-billion dollar loss forced the Company to face facts. The vast majority of their business was written in the Tampa Bay area, and if Andrew would have come up through the Bay and landed in Pinellas or Hillsborough County, this A+ rated company founded in 1881 would be foreced to  expose their Mid west clients and their entire company to the possibility of bankrupty.

These scenarios caused the major companies to form Florida Only Insurance Companies and the regional Carriers to Leave the State entirely.

Enter Citizens Property and Casualty Company.  This quasi governmental company was founded to fill the void.

2014 hurricane season

The weather is getting bearable, and we are halfway through hurricane season with no storms. Go Florida! 

According to The Weather Channel, this season predicted 11 named storms, 5 hurricanes, and 2 major hurricanes. We have been fortunate here in Hurricane alley to miss pretty much any of this activity in any meaningful way. Stay tuned.

Bauknight Insurance operates two Counties in Florida, Bauknight Insurance, 13041 US Hwy 19, Hudson, FL 34667 (727) 863-5641 and Bauknight Insurance of Hernando 10488 Spring Hill Drive, Spring Hill, Fl 34607 (352-686-0612

Wednesday, June 18, 2014

Heritage Insurance Company to "Transition" 35,000 policies out of another take out company.

Troubled Florida based Insurance company, Sunshine State Insurance Company, a fledging Florida based Insurance Company that has struck deals with Citizen's Insurance Company to "take out" thousands of policies, is in serious trouble.

What kind of trouble?  Well, there is more here...

In February, the Florida FLOIR (Florida's Insurance regulatory Agency) took This action, effectively banging the doors shut on Sunshine State.

Insurance companies are organizations that rely on strict accounting of funds.  Things like missing or inadequate financial statements, suspended Ceo's, and so forth are a BIG DEAL.

So what does this mean to the 35,000 or so Florida Sunshine State policyholders?  Well in rides the Calvary in the form of another Florida Based Insurance Company, Heritage Insurance Company.  Below is a blurb that briefly explains what is going on...

CLEARWATER, Fla., June 16, 2014 /PRNewswire/ -- Heritage Insurance Holdings, Inc. HRTG +2.26%announced that on June 13, 2014, it received a court order to  transition approximately 35,000 policies of Sunshine State Property & Casualty Insurance Company ("SSIC") which is in liquidation.

If you are insured now with Sunshine State, very soon you will be receiving paperwork from Heritage Insurance Company 'transitioning" your policy over to them.

Welcome to Florida, home of the most convulted homeowner insurance market in the Country.

about the author:  Greg Bauknight is president of Bauknight Agencies, with office in both pasco (Bauknight Insurance (727) 863-5641 and Hernando (352)-686-06. For more information you can call their office at either location or visit their website at

Wednesday, June 4, 2014

Citizen's property & casualty Insurance Company current homeowner and Dwelling fire sinkhole guidelines.

Florida residents with Citizens Homeowner Insurance or those that wish to purchase homeowner Insurance throught Citizens may wish to familiarize themselves with Citizens current stance on sinkhole coverage and cataststrophic ground collapse.

From Citizen's website as of 6/3/2014:

"Sinkhole Coverage and Claims
Citizens offers Sinkhole Loss coverage as an optional endorsement for Homeowners 3 - Special Form (CIT HO-3), Homeowners 8 - Modified Coverage Form (CIT HO-8) policies, and Dwelling Property 1 - Basic Form (CIT DP-1) and Dwelling Property 3 - Special Form (CIT DP-3) policies with Building coverage. Tenant contents, condominium and mobile home policies automatically include Sinkhole Loss coverage.

Sinkhole Loss coverage protects homeowners from structural damage to their home resulting from confirmed sinkhole activity. Sinkhole Loss coverage is different from Catastrophic Ground Cover Collapse coverage, which automatically is included in most Citizens policies. Catastrophic Ground Cover Collapse coverage applies only when geological activity results in all of the following conditions:

Abrupt collapse of ground cover
A depression in the ground cover that is clearly visible to the naked eye
Structural damage to the building, including the foundation
Condemnation of the structure and order by government authorities that it be vacated

Since 2006, more than 15,000 sinkhole-related claims have been reported to Citizens. To protect our policyholders from the rising costs of Sinkhole Loss coverage, Citizens requires sinkhole inspections when policyholders add Sinkhole Loss coverage to their policy if the covered building is located in one of 16 sinkhole-prone counties or if the coverage application indicates that there have been prior sinkhole claims or activity on the property.

The cost of sinkhole inspections is split evenly between Citizens and the policyholder. Upon completion of the inspection, Citizens' underwriting team will review the results and issue a decision on eligibility for Sinkhole Loss coverage. Policies that do not qualify for Sinkhole Loss coverage still may be eligible for regular Citizens coverage, which includes coverage for catastrophic ground cover collapse.

For more information, call Bauknight Insurance in hudson at 727-863-5641 or Bauknight Insurance of Hernando in Spring Hill, FL at 352-686-0612 or visit our website at

 For more information see our facebook page here

 call us in Hudson at 727-863-5641, Spring Hill, Florida at 352-686-0612.

Visit our google+page here...

Or, visit our website at

Monday, May 19, 2014

Basic Auto Insurance Terms

Bauknight Insurance of Hernando, operates independent agencies in both Pasco and Hernando county.  They can be reached at 352-686-0612 or 727-863.5641. Bauknight Insurance is a multi-line full service insurance agency offering many companies and all types of property and Casualty coverage.


Bodily Injury Liability
Bodily injury liability covers you in the event that you cause an accident in which another person (or people) is injured.
Property Damage Liability
Coverage in case your car damages someone else's property - usually this means someone else's car, but it could be a fence, light post or other piece of property.
Medical Payments
Medical Payments covers certain medical expenses if any vehicle occupants are injured in an accident.
Collision Coverage
Collision coverage is an optional coverage that covers damage to your car caused by impact with another car or object.
Comprehensive Coverage
Comprehensive car insurance coverage is also an optional coverage that covers damages to your car caused by something other than a collision - like theft, fire, etc.

Other coverage can be added to your policy, depending on the company offering the policy. many companys offer towing and labor and/or rental reimbursement.  Other companys offer things like guaranteed replacement cost of the car, gap coverage and more.
An independent agent is better suited to advise you what coverage are available for your situation and to provide you the rates of many companies at once.

Thursday, May 8, 2014

How bad is the Sinkhole problem in Central Florida?

Sinkholes have become the de facto "problem child" for insurance companies in this area resulting in tens of millions of dollars in losses.  this news is not new.  I have blogged about this issue before, but just how serious is the problem?

Actual sinkholes occur due to the topography of our area.  Hernando and Pasco counties are full of springs that are fed directly from the Florida aquifer.  the Florida aquifer is characterized by porous limestone where water flows through, most often with various layers above it, including clay and sand.  This system is normally under  pressure as the water pressure is greater than its ability to escape, and when it finally does escape it does so in a dramatic fashion, bublling up to the surface in various springs in the region.

Two major issues have contributed significantly to the problem.  the first is continued construction and overpopulation over the aquifer.  the local community then uses water for watering, washing, drinking and other uses. which reduces the  available water. the second issue is overpumping and sending the water to other areas.  Wells are strategically placed over the aquifer, millions of gallons are removed and shipped to Pinellas County.  For more on this see This link.

When the inevitable drought comes, the water level drops in the aquifer and no longer supports the limestone and failures occur.  Sometimes the failure causes something termed "downward dipping" and damage is caused to the structure when no sinkhole opens.  Other times dramatic sinkholes open up and swallow all or a portion of the home.

The problem has broached crises levels over the years.  On May 7, 2013 Hernando county felt the urgency to appeal to FEMA for relief due to the fact that as of  6106 sinkholes had been reported since 2000.  Of those only 2726 had been repaired.  this negatively affected the tax base which has caused loss of revenue to not only the County tax collector, but has affected real estate sales, house prices, Insurance availabilty, and even has had an affect on property pride of ownership.

About the author.

Greg Bauknight is the president of Bauknight Insurance of Hernando which has had offices in both Pasco and Hernando Counties for over 30 years.  they know first hand the problems associated with the sinkhole epidemic and can help those affected obtain coverage through multiple channels.  They can be reached at 352-686-0612 or 727-863-5641.

Friday, January 10, 2014

Citizen's Clearing house causes confusion for Florida Homeowner Insurance Consumers.

Florida's volatile property and Casualty market continues to cause confusion for Florida Homeowner Consumers.

The introduction of Citizen's "clearinghouse" program is a case in point.  Citizen's claims that the new program will benefit policyholders.  in the following ways:  Increase coverage by removing restrictions, increase coverage options for consumers, reduce exposure in the event of catastrophes, create expanded access to the private market for all policyholders, and create a benefit to all Floridians who do not purchase their insurance through Citizens by decreasing Citizen's overall exposure thereby limiting  thereby reducing assessment exposure.

Sound confusing?  It is.  First assessment exposure is generally not understood by Insurance consumers.  Briefly, Citizens is unlike regular companies.  If they incur losses, they can and will access (surcharge)  all policyholders in Florida for their losses.  Reducing Citizen's total number of policyholders will indeed reduce this risk to Florida's homeowner Insurance consumer.

Secondly, Citizens has the ability to further surcharge their own policyholders for additional amounts over what they are permitted to surcharge the consumer who purchases his or her insurance through the private marketplace.  Another plus.

So what are the negatives?   In my opinion there are two very big negatives:  Pricing and stability of the insurers in the clearinghouse program.

First the premium.   Florida's homeowner premiums have skyrocketed in recent years, for good reason. I won't go into those reasons right now, but briefly hurricane exposure, sinkhole exposure, cost of construction goods, and cost of reinsurance are the main reasons for the big increases.  So when someone is not able to purchase coverage through  Citizens, they save money, right?  Not so fast.  Many of the companies writing policies voluntarily in Florida have rates that are higher.  So people who are offered coverage outside of Citizens often pay more for the same coverage, or reduce their coverage options to save money.  Better coverage?  Only if you can afford it.  With many policies costing thousands of dollars these days, many consumers opt for less coverage, not more.

Second is the Elephant in the room. Who are the these companies offering takeout coverage and why haven't I heard of them before?.  You may ask yourself why isn't Allstate, State Farm, Geico, Hartford, Progressive, Aetna, and the other big name companies participating in the clearinghouse and/or the takeout programs?  Because they have decided the exposure isn't worth it?

So by and large the companies writing policies in Florida now are small, new, Florida based carriers without AM best ratings. Instead they carry a "Demotech" rating of A which is controversial. For more on this see this link,, and then this article about a Demotech  A rated Florida Based Homeowner  Insurer who went bankrupt,, and finally this article about Florida Homeowner Insurance Companies and Demotech ratings,

With the new clearinghouse program, Insurance consumers will be steered towards these companies aggressively.  How they service their policyholders long term and whether or not they maintain themselves financially after a major hurricane or storm is unproven and an unknown.  If we judge their future performance by the past, it won't be all roses.  Time will tell. The following link is Citizen's clearinghouse "faq" for your consideration.