The board of Citizens Property Insurance on Friday unanimously approved what it called "an emergency plan" to inspect for cases of fraud among 400,000 policyholders who have received wind mitigation credits.
The credits have cut premiums by $700 million for Citizens' policyholders.
Under state law, insurers have to give homeowners a discount if they install features such as storm shutters, impact-resistant windows and doors or reinforced garage doors to protect a home against violent weather.
The mitigation credit program, however, has been a growing source of angst in the insurance industry.
Advocates point to it as a worthy program to give discounts to property owners who shore up their homes against hurricanes. But detractors say the program is ripe for abuse and difficult to monitor. Insurers have also blamed the credits for lowering premiums enough to justify hefty rate increases.
Other insurers have been examining whether adjusters are properly inspecting homes and filing out the mitigation forms, according to the Florida Office of Insurance Regulation.
Tom Zutell, a spokesman for the state office, said companies should refer instances of alleged fraud to the state's division of insurance fraud at the Department of Financial Services.
Citizens plans to physically inspect a cross-section of personal and commercial residential policies. The insurer intends to inspect about 500 homes at the cost of $150 per inspection.
After results are analyzed, it will determine whether the program should be expanded to include inspection of all policyholders who get mitigation credits.
"This is one of the most important initiatives that Citizens has ever undertaken," Citizens senior vice president of underwriting Paul Palumbo said. "Citizens will benefit by ensuring that it has accurate information on the risk it covers. Policyholders will benefit because they will receive validated information on the storm worthiness of their home."
The company may also opt to focus the program on a particular trend that emerges, spokesman John Kuczwanski said.
State-run Citizens, which covers those who cannot find property coverage on the open market, is by far the largest property insurer in Florida with a million homeowners policies.
Effective Jan. 1, Citizens plans to end a three-year rate freeze with a 10 percent increase for most policyholders, the first step in a multiyear effort to build reserves through higher rates.
Source: St. Petersburg Times
Monday, October 26, 2009
Insurer gets approval for homeowners rate increase
Universal Property and Casualty Insurance has received approval from Florida regulators to raise its average homeowners insurance rates about 14.6 percent statewide.
Parent company Universal Insurance Holdings said rates were effective Thursday for new business and Dec. 11 for renewal business. Universal is the second-largest private insurer in Florida after State Farm.
Officials said that as of the beginning of this year Universal had 461,000 policies, or about 7.5 percent of the market.
The company is among a flurry of insurers that have sought to raise rates.
Florida Insurance Commissioner Kevin McCarty has said that each request is being considered on its own merits, but in general he sympathized with the rationale for seeking higher rates.
Information from: St. Petersburg Times, http://www.sptimes.com
Copyright 2009 The Associated Press
Parent company Universal Insurance Holdings said rates were effective Thursday for new business and Dec. 11 for renewal business. Universal is the second-largest private insurer in Florida after State Farm.
Officials said that as of the beginning of this year Universal had 461,000 policies, or about 7.5 percent of the market.
The company is among a flurry of insurers that have sought to raise rates.
Florida Insurance Commissioner Kevin McCarty has said that each request is being considered on its own merits, but in general he sympathized with the rationale for seeking higher rates.
Information from: St. Petersburg Times, http://www.sptimes.com
Copyright 2009 The Associated Press
Fla. insurer renews policy despite Chinese drywall
Florida’s public insurance company reversed course this week and said it will cover a couple’s Gulf Coast retirement home, after previously telling the homeowners their policy wouldn’t be renewed because of the home’s tainted Chinese drywall.
Citizens Property Insurance Corp., a state-backed insurer of last resort, told The Associated Press for an Oct. 15 story that it generally couldn’t continue to cover homes with such defective materials because of a “pollution” exclusion in policies.
“Without walking into a courtroom, this is one of my most proudest victories,” said David Durkee, the couple’s attorney.
Citizens previously said it considered the drywall a pre-existing condition, leading to pollution that could cause future damage, something not covered under most policies nationwide. That’s why the insurer said it had earlier issued a notice of non-renewal to James and Maria Ivory.
Following reports by media groups including AP, the company asked to perform a second home inspection last week. It told the couple on Thursday it reversed its decision and would continue the policy at least into 2011.
“We’re just elated,” said James Ivory, who has sued his builder to replace the wallboard. “I mean, you never hear of an insurance company changing their mind.”
Citizens spokesman John Kuczwanski said “this is all just so new” that insurers are only now beginning to determine how to address it. He added, however, “If someone has Chinese drywall, they can still get a policy with us.”
U.S. Sen. Bill Nelson of Florida had sent letters to 11 insurance companies requesting policy guidelines on Chinese drywall and expressing outrage at cancellations.
“The Associated Press raised serious questions in its recent coverage of insurance companies and homeowners’ drywall claims,” Nelson said Friday. “Some of these companies need to be shamed into doing the right thing.”
Thousands of homeowners nationwide who bought houses built with the defective materials are finding their lives in limbo as hundreds of lawsuits like the Ivorys’ work through the courts.
Experts warn that cases like the Ivorys’, in which insurers drop policies or send notices of non-renewal based on the presence of defective drywall, will become rampant as companies process hundreds of claims.
At least two private insurers have already canceled or refused to renew policies after homeowners sought their help replacing defective drywall. No law prevents the cancellations.
On Friday, top U.S. safety officials met with Chinese counterparts in Shanghai to discuss American complaints about the drywall.
Construction companies imported the wallboard at the height of the U.S. housing boom. Many of the homes are concentrated in the Southeast, especially Florida, Louisiana and Mississippi.
Regulators say the defective materials emit fumes and contain traces of a chemical that can produce a rotten-egg odor that appears to grow worse with heat and humidity.
Homeowners complain the fumes are corroding copper pipes, destroying TVs and air conditioners and blackening silverware. Some believe it is also making them ill.
Insurers are in a quandary. Some say they can’t continue providing insurance until the problem is fixed, something some say could cost homeowners more than they paid for their homes.
Robert Hartwig, president of the Insurance Information Institute, has said homeowners policies were never meant to cover “faulty, inadequate or defective” construction or materials. He said it’s too soon to say whether private insurers will make the same move as Citizens.
“It’s hard to get a ripple when there’s such a tiny number of these cases to begin with right now,” he said.
Citizens said there has been no policy change. The company still won’t pay to fix the problem, but after a “more detailed” inspection of the Ivorys’ home, it found “signs of corrosion on pipes and wiring, however not to the extent warranted for non-renewal,” a letter to the couple stated.
Copyright 2009 The Associated Press
Citizens Property Insurance Corp., a state-backed insurer of last resort, told The Associated Press for an Oct. 15 story that it generally couldn’t continue to cover homes with such defective materials because of a “pollution” exclusion in policies.
“Without walking into a courtroom, this is one of my most proudest victories,” said David Durkee, the couple’s attorney.
Citizens previously said it considered the drywall a pre-existing condition, leading to pollution that could cause future damage, something not covered under most policies nationwide. That’s why the insurer said it had earlier issued a notice of non-renewal to James and Maria Ivory.
Following reports by media groups including AP, the company asked to perform a second home inspection last week. It told the couple on Thursday it reversed its decision and would continue the policy at least into 2011.
“We’re just elated,” said James Ivory, who has sued his builder to replace the wallboard. “I mean, you never hear of an insurance company changing their mind.”
Citizens spokesman John Kuczwanski said “this is all just so new” that insurers are only now beginning to determine how to address it. He added, however, “If someone has Chinese drywall, they can still get a policy with us.”
U.S. Sen. Bill Nelson of Florida had sent letters to 11 insurance companies requesting policy guidelines on Chinese drywall and expressing outrage at cancellations.
“The Associated Press raised serious questions in its recent coverage of insurance companies and homeowners’ drywall claims,” Nelson said Friday. “Some of these companies need to be shamed into doing the right thing.”
Thousands of homeowners nationwide who bought houses built with the defective materials are finding their lives in limbo as hundreds of lawsuits like the Ivorys’ work through the courts.
Experts warn that cases like the Ivorys’, in which insurers drop policies or send notices of non-renewal based on the presence of defective drywall, will become rampant as companies process hundreds of claims.
At least two private insurers have already canceled or refused to renew policies after homeowners sought their help replacing defective drywall. No law prevents the cancellations.
On Friday, top U.S. safety officials met with Chinese counterparts in Shanghai to discuss American complaints about the drywall.
Construction companies imported the wallboard at the height of the U.S. housing boom. Many of the homes are concentrated in the Southeast, especially Florida, Louisiana and Mississippi.
Regulators say the defective materials emit fumes and contain traces of a chemical that can produce a rotten-egg odor that appears to grow worse with heat and humidity.
Homeowners complain the fumes are corroding copper pipes, destroying TVs and air conditioners and blackening silverware. Some believe it is also making them ill.
Insurers are in a quandary. Some say they can’t continue providing insurance until the problem is fixed, something some say could cost homeowners more than they paid for their homes.
Robert Hartwig, president of the Insurance Information Institute, has said homeowners policies were never meant to cover “faulty, inadequate or defective” construction or materials. He said it’s too soon to say whether private insurers will make the same move as Citizens.
“It’s hard to get a ripple when there’s such a tiny number of these cases to begin with right now,” he said.
Citizens said there has been no policy change. The company still won’t pay to fix the problem, but after a “more detailed” inspection of the Ivorys’ home, it found “signs of corrosion on pipes and wiring, however not to the extent warranted for non-renewal,” a letter to the couple stated.
Copyright 2009 The Associated Press
Friday, October 23, 2009
US safety chief seeks China’s help on drywall
Top U.S. safety officials are meeting with their Chinese counterparts to seek help for American homeowners complaining of damage from suspect drywall imported from China.
Consumer Products Safety Commission Chairman Inez Tenenbaum said Friday that apart from discussing compensation, her agency also is urging China to help set standards for drywall products to help prevent future problems.
“All we’re asking is for them to realize that in the global economy everyone has to be responsible to the end user, the consumer. We’re asking them to participate in this in ways that are just and fair,” Tenenbaum said in an interview with The Associated Press.
American construction companies imported the drywall, also known as wallboard or gypsum board, at the height of the housing boom, when building materials were in short supply. The drywall apparently causes a chemical reaction releasing fumes that reek like rotten eggs and grows worse with heat and humidity.
U.S. homeowners, mostly in the Southeast, say the drywall is making them sick and corroding wiring throughout their homes. Lawmakers from Florida, Louisiana and elsewhere are pressing Tenenbaum for answers about its safety.
The costs to homeowners could be in the billions of dollars, according to some estimates, and homeowners have struggled to get help from insurers or relief from mortgage payments on homes that are in some cases uninhabitable.
Builders have filed lawsuits against suppliers and manufacturers, claiming they unknowingly used the bad building materials. But progress will likely depend on the results of tests on affected homes and materials. Some of those results are due next week, with more due next month.
In the meantime, Tenenbaum, who was in China for annual seminars on product safety and regulations, said CPSC staff were meeting with officials from Beijing’s product safety watchdog, the Administration of Quality Supervision Inspection and Quarantine.
“We’ve been continuing our dialogue with them on what we’re finding and keeping them up-to-date on the situation,” she said.
The drywall problem is the latest in a slew of product safety troubles that have prompted a tightening of standards and enforcement both in China and overseas.
Tenenbaum said the Chinese side has helped with technical aspects of her agency’s investigation.
“They have been most cooperative in that regard,” she said.
The CPSC delegation was also updating the Chinese side on U.S. regulations. Among them, the Consumer Product Safety Improvement Act, or CPSIA, that took effect in August and imposes heavy fines for violation of rules meant to protect children from lead, which can cause irreversible brain damage.
Friday’s talks were mainly devoted to new mandatory safety standards for all-terrain vehicles, which the CPSC says are involved in 900 deaths and more than 150,000 injuries every year in the U.S., many of them children.
Tenenbaum, who took over the CPSC in June, said she expected the U.S. to end up with mandatory standards for drywall, in line with the shift toward such requirements for toys and some other products.
“In a global economy, with goods coming from all over the world, it’s important that we have clear standards that we can enforce on imports,” she said.
The CPSC, headquartered in Bethesda, Md., has about 500 employees and oversees about 15,000 products.
On the Net: Consumer Product Safety Commission: http://www.cpsc.gov
Copyright 2009 The Associated Press
Consumer Products Safety Commission Chairman Inez Tenenbaum said Friday that apart from discussing compensation, her agency also is urging China to help set standards for drywall products to help prevent future problems.
“All we’re asking is for them to realize that in the global economy everyone has to be responsible to the end user, the consumer. We’re asking them to participate in this in ways that are just and fair,” Tenenbaum said in an interview with The Associated Press.
American construction companies imported the drywall, also known as wallboard or gypsum board, at the height of the housing boom, when building materials were in short supply. The drywall apparently causes a chemical reaction releasing fumes that reek like rotten eggs and grows worse with heat and humidity.
U.S. homeowners, mostly in the Southeast, say the drywall is making them sick and corroding wiring throughout their homes. Lawmakers from Florida, Louisiana and elsewhere are pressing Tenenbaum for answers about its safety.
The costs to homeowners could be in the billions of dollars, according to some estimates, and homeowners have struggled to get help from insurers or relief from mortgage payments on homes that are in some cases uninhabitable.
Builders have filed lawsuits against suppliers and manufacturers, claiming they unknowingly used the bad building materials. But progress will likely depend on the results of tests on affected homes and materials. Some of those results are due next week, with more due next month.
In the meantime, Tenenbaum, who was in China for annual seminars on product safety and regulations, said CPSC staff were meeting with officials from Beijing’s product safety watchdog, the Administration of Quality Supervision Inspection and Quarantine.
“We’ve been continuing our dialogue with them on what we’re finding and keeping them up-to-date on the situation,” she said.
The drywall problem is the latest in a slew of product safety troubles that have prompted a tightening of standards and enforcement both in China and overseas.
Tenenbaum said the Chinese side has helped with technical aspects of her agency’s investigation.
“They have been most cooperative in that regard,” she said.
The CPSC delegation was also updating the Chinese side on U.S. regulations. Among them, the Consumer Product Safety Improvement Act, or CPSIA, that took effect in August and imposes heavy fines for violation of rules meant to protect children from lead, which can cause irreversible brain damage.
Friday’s talks were mainly devoted to new mandatory safety standards for all-terrain vehicles, which the CPSC says are involved in 900 deaths and more than 150,000 injuries every year in the U.S., many of them children.
Tenenbaum, who took over the CPSC in June, said she expected the U.S. to end up with mandatory standards for drywall, in line with the shift toward such requirements for toys and some other products.
“In a global economy, with goods coming from all over the world, it’s important that we have clear standards that we can enforce on imports,” she said.
The CPSC, headquartered in Bethesda, Md., has about 500 employees and oversees about 15,000 products.
On the Net: Consumer Product Safety Commission: http://www.cpsc.gov
Copyright 2009 The Associated Press
Monday, October 19, 2009
Use federal block grants for drywall
U.S. Sen. Bill Nelson is considering all options to ease Chinese drywall problems, including some that probably won’t work.
On Friday, Nelson sent a letter to Florida House and Senate leaders, suggesting that they investigate whether federal funds not yet used could be earmarked for homeowners facing problems with Chinese drywall. He wants Florida to consider a $5 million program that would divert Community Development Block Grants from the Department of Housing and Urban Development (HUD) to homeowners with the toxic drywall. The program was created in Louisiana, which also has a significant number of homes with Chinese drywall.
“Defective Chinese drywall is ruining the health and lives of countless Floridians,” Nelson says in the letter sent to Florida lawmakers. “I urge you to work with the Florida Governor’s office and relevant state agencies to determine, as soon as possible, if Florida has remaining disaster CDBG or other funds available to provide comparable help for our citizens.”
Nelson also reminded lawmakers that affected homeowners have been hit with a double whammy – their insurers are dropping coverage based on a fear of future claims caused by the drywall, which weakens a home’s plumbing and electrical wiring.
Louisiana legislators have already budgeted money for Chinese drywall problems. Louisiana’s program, however, has one major kink to work out: HUD must first approve the program because it oversees community development block grants. That approval is not assured.
In addition to grant funds, however, Nelson has pursued other federal funding. He says the U.S. Consumer Product Safety Commission is one option, and that agency is currently investigating the problem. He also wrote to the Federal Emergency Management Agency (FEMA) hoping that the drywall problem qualifies for federal disaster funds.
Florida Senate President Jeff Atwater’s (R-North Palm Beach) spokesman said he plans to review the letter; however, Senate Community Affairs Committee Chairman Sen. Mike Bennett doesn’t seem to think that the money would be available.
“I know that Nelson and everyone else is looking for an answer,” Bennett said. “(Help may) have to come from FEMA. I’m not sure that the block grant money is available.”
Source: The Miami Herald,
On Friday, Nelson sent a letter to Florida House and Senate leaders, suggesting that they investigate whether federal funds not yet used could be earmarked for homeowners facing problems with Chinese drywall. He wants Florida to consider a $5 million program that would divert Community Development Block Grants from the Department of Housing and Urban Development (HUD) to homeowners with the toxic drywall. The program was created in Louisiana, which also has a significant number of homes with Chinese drywall.
“Defective Chinese drywall is ruining the health and lives of countless Floridians,” Nelson says in the letter sent to Florida lawmakers. “I urge you to work with the Florida Governor’s office and relevant state agencies to determine, as soon as possible, if Florida has remaining disaster CDBG or other funds available to provide comparable help for our citizens.”
Nelson also reminded lawmakers that affected homeowners have been hit with a double whammy – their insurers are dropping coverage based on a fear of future claims caused by the drywall, which weakens a home’s plumbing and electrical wiring.
Louisiana legislators have already budgeted money for Chinese drywall problems. Louisiana’s program, however, has one major kink to work out: HUD must first approve the program because it oversees community development block grants. That approval is not assured.
In addition to grant funds, however, Nelson has pursued other federal funding. He says the U.S. Consumer Product Safety Commission is one option, and that agency is currently investigating the problem. He also wrote to the Federal Emergency Management Agency (FEMA) hoping that the drywall problem qualifies for federal disaster funds.
Florida Senate President Jeff Atwater’s (R-North Palm Beach) spokesman said he plans to review the letter; however, Senate Community Affairs Committee Chairman Sen. Mike Bennett doesn’t seem to think that the money would be available.
“I know that Nelson and everyone else is looking for an answer,” Bennett said. “(Help may) have to come from FEMA. I’m not sure that the block grant money is available.”
Source: The Miami Herald,
Thursday, October 15, 2009
2nd Florida insurer drops policy over Chinese drywall
A homeowner in Hallandale Beach lost his property insurance coverage because the house was built with suspect Chinese drywall, making Universal North America the second insurer in Florida to take action against residences that have the imported material.
In a letter last month, Universal said it would cancel the policy – not set to expire until next July – because the home had an “unacceptable condition.”
The homeowner, who didn’t want his name used, had filed a claim over the summer because of damage suspected to have been caused by drywall. In September, the owner got a letter that said “the dwelling was built with Chinese drywall, which has been shown to have adverse long-term effects on the plumbing and other dwelling components.”
Universal, a subsidiary of Universal Group Inc. in Puerto Rico, is the 12th-largest residential insurer in Florida, with about 105,000 policies. The company did not return phone calls Wednesday.
The townhome won’t have coverage from Universal after Monday, but the homeowner has a new policy from Citizens Property Insurance.
It might not do much good, said Coral Gables attorney David Durkee, who represents the homeowner. State-run Citizens, like other insurers, is denying claims because homeowners policies don’t cover contamination or building material defects. But once a claim is filed, Citizens is giving homeowners six months’ notice that their policies won’t be renewed if they don’t fix the problems.
If homeowners don’t report the problems, they could end up without coverage in the future anyway.
“If an insurance company can prove you had a condition in the home that changed the risk, you didn’t tell them about it and they can prove they would either have not continued to write that policy or they would have increased the premium, they can rescind your policy after the fact,” Durkee said. “There is no place for these folks to turn.”
Florida Department of Health tests show the imported drywall contains sulfur compounds that could cause an odor. But there is no direct link so far between drywall and health and corrosion problems homeowners are experiencing.
Last month, Citizens told a Punta Gorda homeowner with Chinese drywall that his policy would not be renewed when it expires next March because the company has no proof that damage attributed to the drywall has been repaired.
For homeowners who have filed claims related to imported wallboard, “it’s an unfortunate Catch-22,” Citizens spokesman John Kuczwanski said. The nonprofit insurer has received 24 claims for repairs from property owners with Chinese drywall.
There is no single proven method of fixing homes affected by Chinese-made drywall.
A few builders have taken on repairs, including Miami-based Lennar, and GL Homes, by stripping homes to their studs and rebuilding.
Homeowners should be going after builders and suppliers, Kuczwanski said, acknowledging that many have, so far to no avail.
“If you buy a new car and it has a faulty switch,” he said, “you’re going to go back to the manufacturer.”
Copyright © 2009 The Miami Herald,
In a letter last month, Universal said it would cancel the policy – not set to expire until next July – because the home had an “unacceptable condition.”
The homeowner, who didn’t want his name used, had filed a claim over the summer because of damage suspected to have been caused by drywall. In September, the owner got a letter that said “the dwelling was built with Chinese drywall, which has been shown to have adverse long-term effects on the plumbing and other dwelling components.”
Universal, a subsidiary of Universal Group Inc. in Puerto Rico, is the 12th-largest residential insurer in Florida, with about 105,000 policies. The company did not return phone calls Wednesday.
The townhome won’t have coverage from Universal after Monday, but the homeowner has a new policy from Citizens Property Insurance.
It might not do much good, said Coral Gables attorney David Durkee, who represents the homeowner. State-run Citizens, like other insurers, is denying claims because homeowners policies don’t cover contamination or building material defects. But once a claim is filed, Citizens is giving homeowners six months’ notice that their policies won’t be renewed if they don’t fix the problems.
If homeowners don’t report the problems, they could end up without coverage in the future anyway.
“If an insurance company can prove you had a condition in the home that changed the risk, you didn’t tell them about it and they can prove they would either have not continued to write that policy or they would have increased the premium, they can rescind your policy after the fact,” Durkee said. “There is no place for these folks to turn.”
Florida Department of Health tests show the imported drywall contains sulfur compounds that could cause an odor. But there is no direct link so far between drywall and health and corrosion problems homeowners are experiencing.
Last month, Citizens told a Punta Gorda homeowner with Chinese drywall that his policy would not be renewed when it expires next March because the company has no proof that damage attributed to the drywall has been repaired.
For homeowners who have filed claims related to imported wallboard, “it’s an unfortunate Catch-22,” Citizens spokesman John Kuczwanski said. The nonprofit insurer has received 24 claims for repairs from property owners with Chinese drywall.
There is no single proven method of fixing homes affected by Chinese-made drywall.
A few builders have taken on repairs, including Miami-based Lennar, and GL Homes, by stripping homes to their studs and rebuilding.
Homeowners should be going after builders and suppliers, Kuczwanski said, acknowledging that many have, so far to no avail.
“If you buy a new car and it has a faulty switch,” he said, “you’re going to go back to the manufacturer.”
Copyright © 2009 The Miami Herald,
Tuesday, October 13, 2009
Senators ask FEMA for Chinese drywall disaster assistance
U.S. Sen. Bill Nelson, D-Fla., has joined with three other senators to send a letter to the Federal Emergency Management Agency that asks the agency to review whether it has the power to provide aid to homeowners displaced by defective Chinese drywall.
The senators sent the letter to Administrator Craig Fugate on Wednesday, asking him to determine whether FEMA – upon request from a state governor who has declared a disaster or emergency – can offer rental or other emergency assistance to homeowners or businesses who have sustained uninsured losses because of the tainted drywall.
Some Chinese drywall, imported between 2000 and 2008, has been found to give off a sulfuric gas thought to corrode metal components in homes and blamed by a growing number of people on such health issues as trouble breathing, nosebleeds and headaches.
The Consumer Product Safety Commission has collected more than 1,500 complaints about the defective drywall in 27 states and the District of Columbia.
“Families in our states are ... watching their dream homes turn into nightmares,” the senators wrote. “We believe it is important to marshal all appropriate federal resources that may assist these families.”
Nelson worked with Sens. Mary Landrieu, D-La., Jim Webb, D-Va. and Mark Warner, D-Va., to write the letter, which asks that FEMA reply by Nov. 7.
In April, U.S. Rep. Robert Wexler, D-Boca Raton, sent a letter to Florida Governor Charlie Crist, asking him to declare a state of emergency “to make Florida citizens whose homes are affected by Chinese drywall eligible for immediate relief through the Federal Emergency Management Agency.”
At the time, Sterling Ivey, a spokesman for Crist, said he was not sure if it was even possible to declare a state of emergency for something of this nature.
Copyright © 2009 The Palm Beach Post, Fla.
The senators sent the letter to Administrator Craig Fugate on Wednesday, asking him to determine whether FEMA – upon request from a state governor who has declared a disaster or emergency – can offer rental or other emergency assistance to homeowners or businesses who have sustained uninsured losses because of the tainted drywall.
Some Chinese drywall, imported between 2000 and 2008, has been found to give off a sulfuric gas thought to corrode metal components in homes and blamed by a growing number of people on such health issues as trouble breathing, nosebleeds and headaches.
The Consumer Product Safety Commission has collected more than 1,500 complaints about the defective drywall in 27 states and the District of Columbia.
“Families in our states are ... watching their dream homes turn into nightmares,” the senators wrote. “We believe it is important to marshal all appropriate federal resources that may assist these families.”
Nelson worked with Sens. Mary Landrieu, D-La., Jim Webb, D-Va. and Mark Warner, D-Va., to write the letter, which asks that FEMA reply by Nov. 7.
In April, U.S. Rep. Robert Wexler, D-Boca Raton, sent a letter to Florida Governor Charlie Crist, asking him to declare a state of emergency “to make Florida citizens whose homes are affected by Chinese drywall eligible for immediate relief through the Federal Emergency Management Agency.”
At the time, Sterling Ivey, a spokesman for Crist, said he was not sure if it was even possible to declare a state of emergency for something of this nature.
Copyright © 2009 The Palm Beach Post, Fla.
Friday, October 9, 2009
Gassing the Chinese drywall problem
According to Sabre Technical Services, the Chlorine dioxide gas used to eliminate anthrax from government buildings also can be used to eliminate the sulfur gases and organisms in Chinese drywall. The gas can penetrate drywall, studs, insulation and other materials to oxidize sulfur compounds and deactivate them into inert sulfate.
The basic chemical reaction is not new. Chlorine dioxide has been used for 50 years to deactivate sulfur compounds. The question, however, was whether the gas could penetrate deep enough to fix the problem. Sabre says it conducted tests on houses in Fort Myers, however, and by using spore strips (biological indicators), it found that the gas did indeed penetrate deep enough to fix the problem.
While the gas dissipates without residue, it has bleaching effects, and residents are urged to remove their belongings from infected houses. Firms can charge between $10 and $15 per square foot for the procedure, but it takes as little as a few days compared to removing sections of drywall and replacing them.
However, the gas solution is still premature for homeowners. It will not become an effective method for resolving the Chinese drywall problem unless government officials approve its effectiveness and insurance companies are convinced that it’s viable.
Source: Builder (10/09) Burney, Teresa
© Copyright 2009 INFORMATION, INC.
The basic chemical reaction is not new. Chlorine dioxide has been used for 50 years to deactivate sulfur compounds. The question, however, was whether the gas could penetrate deep enough to fix the problem. Sabre says it conducted tests on houses in Fort Myers, however, and by using spore strips (biological indicators), it found that the gas did indeed penetrate deep enough to fix the problem.
While the gas dissipates without residue, it has bleaching effects, and residents are urged to remove their belongings from infected houses. Firms can charge between $10 and $15 per square foot for the procedure, but it takes as little as a few days compared to removing sections of drywall and replacing them.
However, the gas solution is still premature for homeowners. It will not become an effective method for resolving the Chinese drywall problem unless government officials approve its effectiveness and insurance companies are convinced that it’s viable.
Source: Builder (10/09) Burney, Teresa
© Copyright 2009 INFORMATION, INC.
Thursday, October 8, 2009
Chinese drywall problems may be spreading to home insurance policies
Homeowners living in houses with suspect Chinese drywall are already in a bind: Their air conditioners stop working, a rotten-egg smell permeates their homes, they suffer a litany of health problems including troubled breathing, nosebleeds and headaches.
Now, some of them could lose their property insurance coverage.
Many homeowners have filed claims with their home insurers to repair the drywall damage. That’s turning out to be a dead end: Most property insurers are denying the claims because homeowners policies don’t cover contamination or building material defects.
But once an insurer knows there is drywall damage in a home, the existing damage could be the trigger for not renewing a policy unless repairs are made.
That’s the dilemma for James and Maria Ivory. The couple retired to Punta Gorda from Colorado in February, buying a home for $109,000 that was built in 2006. The Ivorys had to have the air conditioner replaced right away and noticed metals were corroding shortly after moving into their home, which had never been lived in.
They filed a claim with their insurer, Citizens Property Insurance, to rehabilitate the home, asking for the drywall to be ripped out and corroded items be replaced, among other repairs.
The Ivorys’ claim didn’t specify a dollar amount, but some builders have estimated repair work generally can run at least one-third of the original construction costs.
The state-run insurer, the largest in Florida, denied the claim. Then last month, the couple received a notice from Citizens, saying their homeowners policy won’t be renewed in March because it has no proof the damage the Ivorys wanted their insurance money to pay for has been repaired.
‘Safety net’
“There’s nothing that’s ever happened to this home other than Chinese drywall,” said David Durkee, a Coral Gables attorney who is representing the couple. “He needed to go to Citizens because he couldn’t get insurance elsewhere. That was supposed to be the safety net for residents in Florida.”
Durkee, who is handling several lawsuits against builders and drywall suppliers, said this is the first time he has seen an insurer use drywall damage as a reason for dropping a policy.
Durkee has written to Gov. Charlie Crist, U.S. Sen. Bill Nelson and Congressman Robert Wexler of Boca Raton about Citizens.
“We cannot let that safety net have a hole in it, period,” Durkee said.
For its part, Citizens has received about 20 drywall claims so far, and each are handled on a case by case basis, said John Kuczwanski, Citizens’ spokesman. Not all the claims are resolved yet.
Thousands of homes in South Florida and tens of thousands nationwide are suspected of having the tainted imported drywall. Large amounts of drywall were imported into Florida to deal with demand from the home-building boom and reconstruction following hurricanes of 2004 and 2005.
So far, there is no scientific proof that the imports are causing the problems, but homeowners with the material have similar complaints of malfunctioning air conditioner metals, a chemical or rotten-egg smell, and breathing trouble and nosebleeds, among other health problems.
The Ivorys aren’t the only Florida residents who have had Chinese drywall claims denied by the homeowners insurance companies.
Many of Miami attorney Jeremy Alters clients have experienced the same thing.
‘A shame’
“It’s a shame because it’s an immediate solution for the homeowners,” Alters said. Instead, many are waiting on lawsuits to work their way through the legal system. But if insurers honored the claims, then they could go after the drywall manufacturers, instead of homeowners, he said.
Homeowners insurance policies are designed to cover “sudden accidental losses” such as the water damage caused by busted pipes or ripped out roof due to a hurricane, explained Dick Luedke, a spokesman for State Farm Insurance. However, homeowners policies generally exclude pollution or contamination damage or problems stemming from defects in building materials.
State Farm has had fewer than two dozen claims with drywall damage. Luedke says no policy so far has been canceled because of a drywall problem. But the company can reevaluate a policy if the risk of insuring a home has increased dramatically.
The giant international reinsurer Swiss Re said in report issued last month that most homeowners insurance companies are using those two exclusions to deny claims from damage stemming from imported drywall.
Durkee says none of the claims he has reviewed have been denied improperly. Homeowners are turning to builders, drywall suppliers and manufacturers to recover remediation costs. Some builders, including Lennar and GL Homes, have taken on the cost of gutting and rebuilding homes and providing temporary living quarters until the repairs are done.
Hearing held
Earlier this week, a state Senate committee held its first hearing in Tallahassee to discuss potential remedies to help affected homeowners. Requiring home insurers to cover drywall claims hasn’t been discussed.
Boca Raton attorney Allison Grant sued American Home Insurance Company in federal district court in March on behalf of Fort Myers residents Keith Baker and Linda Leri after the insurance company denied their insurance claim for damages related to Chinese drywall.
Although they said their 9,200-square-foot home was inspected after they filed their claim, it was denied because of a contamination exemption in their policy, the lawsuit says. American Home Insurance denies even inspecting the couple’s home, in court documents, but says contamination or pollution exemptions would apply anyway.
‘The same thing’
“Most of the companies are doing the same thing,” said Grant, who has a list of clients who have been denied help from their insurance companies. Grant said she’s waiting to see what happens with this lawsuit before going after other insurance companies.
“With Chinese drywall, what’s so unique about it, is that when these policies were written, they didn’t know what Chinese drywall was,” Grant said. “To exclude it, I think it’s wrong.”
Copyright © 2009 The Miami Herald
Now, some of them could lose their property insurance coverage.
Many homeowners have filed claims with their home insurers to repair the drywall damage. That’s turning out to be a dead end: Most property insurers are denying the claims because homeowners policies don’t cover contamination or building material defects.
But once an insurer knows there is drywall damage in a home, the existing damage could be the trigger for not renewing a policy unless repairs are made.
That’s the dilemma for James and Maria Ivory. The couple retired to Punta Gorda from Colorado in February, buying a home for $109,000 that was built in 2006. The Ivorys had to have the air conditioner replaced right away and noticed metals were corroding shortly after moving into their home, which had never been lived in.
They filed a claim with their insurer, Citizens Property Insurance, to rehabilitate the home, asking for the drywall to be ripped out and corroded items be replaced, among other repairs.
The Ivorys’ claim didn’t specify a dollar amount, but some builders have estimated repair work generally can run at least one-third of the original construction costs.
The state-run insurer, the largest in Florida, denied the claim. Then last month, the couple received a notice from Citizens, saying their homeowners policy won’t be renewed in March because it has no proof the damage the Ivorys wanted their insurance money to pay for has been repaired.
‘Safety net’
“There’s nothing that’s ever happened to this home other than Chinese drywall,” said David Durkee, a Coral Gables attorney who is representing the couple. “He needed to go to Citizens because he couldn’t get insurance elsewhere. That was supposed to be the safety net for residents in Florida.”
Durkee, who is handling several lawsuits against builders and drywall suppliers, said this is the first time he has seen an insurer use drywall damage as a reason for dropping a policy.
Durkee has written to Gov. Charlie Crist, U.S. Sen. Bill Nelson and Congressman Robert Wexler of Boca Raton about Citizens.
“We cannot let that safety net have a hole in it, period,” Durkee said.
For its part, Citizens has received about 20 drywall claims so far, and each are handled on a case by case basis, said John Kuczwanski, Citizens’ spokesman. Not all the claims are resolved yet.
Thousands of homes in South Florida and tens of thousands nationwide are suspected of having the tainted imported drywall. Large amounts of drywall were imported into Florida to deal with demand from the home-building boom and reconstruction following hurricanes of 2004 and 2005.
So far, there is no scientific proof that the imports are causing the problems, but homeowners with the material have similar complaints of malfunctioning air conditioner metals, a chemical or rotten-egg smell, and breathing trouble and nosebleeds, among other health problems.
The Ivorys aren’t the only Florida residents who have had Chinese drywall claims denied by the homeowners insurance companies.
Many of Miami attorney Jeremy Alters clients have experienced the same thing.
‘A shame’
“It’s a shame because it’s an immediate solution for the homeowners,” Alters said. Instead, many are waiting on lawsuits to work their way through the legal system. But if insurers honored the claims, then they could go after the drywall manufacturers, instead of homeowners, he said.
Homeowners insurance policies are designed to cover “sudden accidental losses” such as the water damage caused by busted pipes or ripped out roof due to a hurricane, explained Dick Luedke, a spokesman for State Farm Insurance. However, homeowners policies generally exclude pollution or contamination damage or problems stemming from defects in building materials.
State Farm has had fewer than two dozen claims with drywall damage. Luedke says no policy so far has been canceled because of a drywall problem. But the company can reevaluate a policy if the risk of insuring a home has increased dramatically.
The giant international reinsurer Swiss Re said in report issued last month that most homeowners insurance companies are using those two exclusions to deny claims from damage stemming from imported drywall.
Durkee says none of the claims he has reviewed have been denied improperly. Homeowners are turning to builders, drywall suppliers and manufacturers to recover remediation costs. Some builders, including Lennar and GL Homes, have taken on the cost of gutting and rebuilding homes and providing temporary living quarters until the repairs are done.
Hearing held
Earlier this week, a state Senate committee held its first hearing in Tallahassee to discuss potential remedies to help affected homeowners. Requiring home insurers to cover drywall claims hasn’t been discussed.
Boca Raton attorney Allison Grant sued American Home Insurance Company in federal district court in March on behalf of Fort Myers residents Keith Baker and Linda Leri after the insurance company denied their insurance claim for damages related to Chinese drywall.
Although they said their 9,200-square-foot home was inspected after they filed their claim, it was denied because of a contamination exemption in their policy, the lawsuit says. American Home Insurance denies even inspecting the couple’s home, in court documents, but says contamination or pollution exemptions would apply anyway.
‘The same thing’
“Most of the companies are doing the same thing,” said Grant, who has a list of clients who have been denied help from their insurance companies. Grant said she’s waiting to see what happens with this lawsuit before going after other insurance companies.
“With Chinese drywall, what’s so unique about it, is that when these policies were written, they didn’t know what Chinese drywall was,” Grant said. “To exclude it, I think it’s wrong.”
Copyright © 2009 The Miami Herald
Private investors dominate foreclosure market
Cities and municipalities are having trouble spending money allotted by the federal government’s controversial Neighborhood Stabilization Program, which Congress passed last year to acquire houses in blighted neighborhoods.
The goal was to buy vacant properties at 1 percent less than appraised value, rehab them, and either sell or rent the homes to low-income residents. The stumbling block is that private investors and affluent homebuyers purchase the homes first at cheap prices.
Some people don’t see that as a problem. “If the private market is coming back and buying houses and crowding the government out, that’s not a bad thing,” says Joseph Pigg, senior counsel at the American Bankers Association.
In some areas, the nonprofit National Community Stabilization Trust is working with banks to give government access to foreclosed homes before they are put on the market. But that may be too little, too late.
“It’s very unclear when the dust settles how much real change in neighborhood stability and quality of life we’ll see,” says housing expert Alan Malachi of the Brookings Institution.
Source: CNNMoney.com,
The goal was to buy vacant properties at 1 percent less than appraised value, rehab them, and either sell or rent the homes to low-income residents. The stumbling block is that private investors and affluent homebuyers purchase the homes first at cheap prices.
Some people don’t see that as a problem. “If the private market is coming back and buying houses and crowding the government out, that’s not a bad thing,” says Joseph Pigg, senior counsel at the American Bankers Association.
In some areas, the nonprofit National Community Stabilization Trust is working with banks to give government access to foreclosed homes before they are put on the market. But that may be too little, too late.
“It’s very unclear when the dust settles how much real change in neighborhood stability and quality of life we’ll see,” says housing expert Alan Malachi of the Brookings Institution.
Source: CNNMoney.com,
Sunday, October 4, 2009
Outlook improves for state reinsurer: Cat fund blowing in a new direction?
While Florida’s troubled reinsurance program is showing some improvement, the future of the Florida Catastrophe Fund, or Cat Fund, may hinge more on the weather than on any controllable, man-made aspects.
However, changes recently made by the Florida Legislature and a reluctance of certain private insurers to buy large pieces of coverage has reduced the overall size of exposure for the Cat Fund for the hurricane season. New estimates show that there is about a 5.3 percent chance that the Cat Fund will exhaust its available resources.
“Now we’re three feet underwater instead of being at the bottom of the pool attached to the drain,” says Property Casualty Insurers Association of America Assistant Vice President William Stander.
Those in charge of the Cat Fund say that the reinsurance fund is starting to see a rebound, highlighting that $6.4 billion worth of exposure has been transferred back to the private market this year.
“There’s no such thing as a financial institution that’s too strong or too safe, but that said, there’s no doubt the Cat Fund is moving in the right direction,” says Ash Williams, the executive director for the Florida State Board of Administration, which manages the Cat Fund and the state pension fund.
The Cat Fund was created following Hurricane Andrew and expanded in 2007 by $12 billion to deal with rising property insurance rates; but the fund’s ability to pay claims was questioned last year after recession crippled the credit market. Financial advisers warned that it was unlikely the fund would be able to borrow enough money to meet its obligations should a large storm hit the state. That analysis caused a ripple effect among rating agencies and carriers that depend on the fund.
This spring, Florida legislators chose to undo some of the 2007 changes, including approval of a comprehensive property insurance bill that gradually cuts back some of the coverage reinsurers can offer to Florida carriers. The new law mandates a $2 billion reduction in coverage every year until it is completely eliminated by 2014. The law also increased the cost of Temporary Increase in Coverage Limit coverage, and authorized the Cat Fund to charge insurers more to build a cash reserve.
Despite some ongoing questions, the board of governors for Citizens, Florida’s state-backed insurer, decided in May to purchase the maximum amount from the state reinsurer instead of seeking additional reinsurance from private organizations. Citizens said that purchasing coverage from the Cat Fund transfers a significant amount of risk at a far lower cost than private reinsurance.
Source: Florida Underwriter (09/09) Fineout, Gary
© Copyright 2009 INFORMATION, INC.
However, changes recently made by the Florida Legislature and a reluctance of certain private insurers to buy large pieces of coverage has reduced the overall size of exposure for the Cat Fund for the hurricane season. New estimates show that there is about a 5.3 percent chance that the Cat Fund will exhaust its available resources.
“Now we’re three feet underwater instead of being at the bottom of the pool attached to the drain,” says Property Casualty Insurers Association of America Assistant Vice President William Stander.
Those in charge of the Cat Fund say that the reinsurance fund is starting to see a rebound, highlighting that $6.4 billion worth of exposure has been transferred back to the private market this year.
“There’s no such thing as a financial institution that’s too strong or too safe, but that said, there’s no doubt the Cat Fund is moving in the right direction,” says Ash Williams, the executive director for the Florida State Board of Administration, which manages the Cat Fund and the state pension fund.
The Cat Fund was created following Hurricane Andrew and expanded in 2007 by $12 billion to deal with rising property insurance rates; but the fund’s ability to pay claims was questioned last year after recession crippled the credit market. Financial advisers warned that it was unlikely the fund would be able to borrow enough money to meet its obligations should a large storm hit the state. That analysis caused a ripple effect among rating agencies and carriers that depend on the fund.
This spring, Florida legislators chose to undo some of the 2007 changes, including approval of a comprehensive property insurance bill that gradually cuts back some of the coverage reinsurers can offer to Florida carriers. The new law mandates a $2 billion reduction in coverage every year until it is completely eliminated by 2014. The law also increased the cost of Temporary Increase in Coverage Limit coverage, and authorized the Cat Fund to charge insurers more to build a cash reserve.
Despite some ongoing questions, the board of governors for Citizens, Florida’s state-backed insurer, decided in May to purchase the maximum amount from the state reinsurer instead of seeking additional reinsurance from private organizations. Citizens said that purchasing coverage from the Cat Fund transfers a significant amount of risk at a far lower cost than private reinsurance.
Source: Florida Underwriter (09/09) Fineout, Gary
© Copyright 2009 INFORMATION, INC.
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