St. Petersburg’s property insurance bill soars 55 percent
Homeowners are not the only ones experiencing sticker shock when renewing property insurance, as city officials must pay $3.24 million more in 2023 than they did a year ago.
City council members, acting as the Budget, Finance and Taxation Committee, recently heard how protecting city facilities would cost 55% more this year. The sharp increase is predominantly due to a spike in property values and 2022’s Hurricane Ian, the nation’s second-costliest named storm.
Compounding the issue is Florida’s faltering insurance industry, which lost several carriers even before a busy 2022 Atlantic hurricane season. It all adds up to the city’s coverage costs soaring from $6 million to $9.24 million.
Tony Leavine, executive vice president of Brown and Brown Insurance, led a March 9 presentation to city officials and described a lack of options. Councilmember Ed Montanari asked if homeowners would experience the same hike.
“Absolutely; I will tell you that if you look in some of the condo markets, it’s more than 55%,” Leavine replied. “If you owned all of this property outright, with no lenders involved, you could make any decision that you wanted to manage the increase and take the risk on how you felt. As soon as there is a lender involved, it becomes a conversation of what level of risk they are willing to take.”
City-owned property insurance encompassed three programs – water resources, general property and highly protected risk. Water resources include reclamation and treatment facilities and pump and lift stations.
Those properties have a total insured value of $552.15 million, with nearly $250 million in coastal flood zones. Council members reduced their coverage limit to $150 million last year to cut costs.
However, Leavine said, “if you would have asked us to go create a $552 million full-value program this year – I don’t believe it would have been available.”
The general property category includes Tropicana Field, Albert Whitted Airport and The Pier, and encompasses a total property value of $1.11 billion. Brown and Brown listed the stadium as a “major underwriting issue” due to its $430 million appraisal. That is also the plan’s limit.
In addition, background documents state that the Trop’s “unique aging roof construction and lack of historical and actuarial loss data makes insurers uncomfortable.”
The only city-owned property in the highly protected risk program is the St. Petersburg Police Department’s headquarters. Facilities in that category meet additional criteria, and insurance covers acts of terrorism.
The facility is also fully insured for $79 million.
Montanari asked about a comparison page showing St. Petersburg nearly doubling Tampa’s coverage last year. There is an even greater discrepancy between St. Pete, Ft. Lauderdale and Miami.
“I hate to say this about other cities, but I feel that they’re not adequately protected, in our opinion,” said Blaise Mazzola, risk manager for the city. “I am hesitant to say they are appropriately insured … having done this for a while, I prefer where we are, compared to where they are.”
Leavine called the current insurance market the most challenging he has faced throughout his career. Ian caused $50-$60 billion of insured damages throughout Florida and about $115 billion nationally.
He also noted the number of city underwriters increased from 18 to 24 this year, which “speaks to how many people actually have to participate to fill out the program.”
Montanari called the price spike “eye-popping” and asked if premiums would return to normal in the coming years. While Leavine said the market always experiences some correction after an active storm season, he doesn’t expect rates to drop 55%.
He explained that carriers allowed policyholders to insure buildings they could never rebuild for the value amount. That resulted in litigation issues that state leadership is attempting to address.
Leavine added that there are more unknowns than answers – with hurricane season less than three months away. However, he relayed that it could be worse, as premiums increased 140% in 2006 following Hurricane Katrina.
“Insurance is just one of those things,” said Councilmember Copley Gerdes. “You hate to pay for it, but you’re going to hate worse not having it.”
The committee approved the new plan, which takes effect April 1. Assistant City Administrator Tom Greene assured council members the city has enough resources in its insurance general fund to cover the $3.24 million increase.
Mazzola relayed that the surplus is due to putting money saved in previous years aside for these occasions.”This is what we can buy,” he said.
“This is what we can afford, and I think we’re being responsible by doing so.”
March 17, 2023at3:50 pm
Well thank goodness the state is focusing on more important things, like cracking down on diversity programs in our Universities and revoking liquor licenses of businesses that host drag shows.
March 17, 2023at7:24 pm
March 18, 2023at3:14 pm
The state is concerned on distracting the general population from the real issues. This is the oldest trick by politicians. The good ole smoke screen.
March 18, 2023at6:03 pm
The City is lucky. Our Condo Association insurance doubled last year and will go up again this year. It’s about 2 1/2 X what it as in 2021.
March 19, 2023at2:55 pm
And with the new laws being instituted by the legislature and the Governor, the insurers that remain will pay you peanuts when you file a claim.
March 19, 2023at8:59 pm
You think that is bad? Here in Englewood, FL our premium is going to almost quadruple next month.