When it comes to finding solutions to the windstorm insurance crisis, Benson's Lighting & Fans is in the dark.
Owner Ric Jolie said the 43-year-old company was recently dropped by the insurer covering its warehouse. After a lengthy search, only one carrier was willing to write a new policy, but the premium was exorbitant: $40,000 - more than four times the $9,000 he formerly paid, plus a $100,000 deductible.
``Who carries that kind of cash?'' he asks. Jolie has no choice but to pay up. His mortgage lender requires insurance.
Across South Florida, thousands of small- and medium-size companies - entrepreneurial ventures that form the backbone of the regional economy - face similar, if not worse, situations as the insurance crisis begins to hit home at businesses. Now well into the hurricane season, many companies are finding that windstorm coverage is unaffordable - or unavailable.
In recent weeks, at least a dozen insurers, including Travelers, North Pointe and Zurich, have canceled commercial policies outright, won't renew existing policies or are not taking new business. Owners of shops, restaurants, manufacturing plants, hotels and office buildings are in a bind because there is no state-run insurer of last resort for them. Homeowners can turn to Citizens Property Insurance if their insurers drop policies or go out of business.
State officials said last month that they are studying whether to revive an insurance pool to cover commercial properties that no one else will cover. Last week, the Office of Insurance Regulation set up a website to survey business owners about their insurance problems. But overall, there has been little progress from Tallahassee.
`A CRISIS FOR US'
That's no comfort for South Florida's business owners.
``I can't speak for other people, but this is a crisis for us,'' said Barr Keator, owner of B&K Equipment Supply in Davie, a 13-year-old company with four employees. He says that somehow insurance companies need to be cajoled to stay in Florida and state government should take a bigger role in doing that.
Keator found out last month that his property insurance will be canceled in September, although he has never made a claim. He hasn't yet found coverage.
Insurance agents are frustrated, too.
``We're not having any luck'' finding insurance for commercial clients, said Phil Lyons, vice president of InSource, a Dadeland-area agency. Many commercial real estate deals are not closing because the buyers can't buy insurance, he added.
A major problem, he said, is that reinsurance - basically, insurance that insurance companies buy to protect against potential losses - is in short supply. The cost of reinsurance also has risen dramatically. That cost is passed on to policyholders.
After eight hurricanes hit the state in the past two years, insurers also fear another bad season. Many have drained their cash reserves after paying losses from those storms.
Their solution: Reduce risk. That means get policies off their books by canceling them immediately or as they come up for renewal.
Pablo Conde, president of A&A Underwriters in Miami, has been scrambling to find insurance for about 100 clients who are losing their North Pointe coverage on Thursday. North Pointe is dumping thousands of policies in the state.
Conde said some of the businesses will ride out the rest of the hurricane season without windstorm protection because it either is not available or is prohibitively expensive.
Gayle Bainbridge, who has been selling commercial insurance in South Florida for 25 years, also has to tell clients that no windstorm coverage is available. ``I think crisis is a good word,'' she said. Even when she finds policies, ``the deductibles are catastrophic.''
Insurers that are still writing are selective, very selective, about the properties they will take on.
Lyons said that CNA and The Hartford will consider only fire- and wind-resistant buildings that are less than
10 years old. Keator, the Davie small businessman, said Zurich was dropping his policy because his building is more than 25 years old.
Another company, Federated Mutual, won't write policies on properties within 10 miles of the coast.
That's what Steven Gissin, owner of Heaven Cycle, a motorcycle accessories store on Bird Road, was told a month ago when Federated dropped him.
``I don't know'' what to do, he said. ``I have two agents looking. But my policy ends Aug. 21.''
The difficulty of replacing his windstorm policy has been a shock for Gissin, who has been in business since 1977. ``I used to have my choice of 10 companies fighting for me.''
Gissin owns his building outright, so there is no banker demanding insurance. But facing an uninsured catastrophe could be disastrous for his company and its three longtime employees.
Although commercial windstorm coverage has received far less attention than the headaches of homeowners, experts say the situation could imperil the South Florida economy.
A region full of businesses with huge deductibles or no insurance means that restarting the economy - always a challenge after hurricanes - would be even more problematic than usual if one or more massive storms hit South Florida this year.
Lyons at InSource fears that some commercial property owners are falling into technical default because their lenders require windstorm coverage.
``The problem is banks can't get coverage either,'' he said. But the banks are in a bind because they don't want to call the loan.
Yet even absent a storm, companies that are spending huge sums on insurance must divert spending in other areas. At Benson's Lighting, for instance, ``staff enhancement, building enhancement - all were on the budget for this year,'' Jolie said. ``They're not going to happen.''
Jose Ojalvo, president of Miatex, a wholesaler of home-furnishing fabrics, recently had his policy canceled by North Pointe. After many phone calls, Ojalvo still hasn't found a new insurer.
Even without the windstorm coverage, he said, premiums for liability, business interruption and his contents have soared.
``I've never had a claim, and they're making me pay like I'm a criminal,'' said Ojalvo, whose company, which turned 30 this year, has 14 employees. ``It's going to be very hard to stay in business.''
A DEEPENING CRISIS
Many companies can't find windstorm insurance or rates have soared. Unlike homeowners, businesses don't have an insurer of last resort like Citizens. Recent developments:
* North Pointe: Plans to cancel nearly half of its 28,000 commercial policies in Florida.
* Travelers: Plans to drop as many as 3,000 of the businesses it insures along the coast.
* Other insurers reducing commercial exposure in South Florida: MapFre, Independence Casualty and Surety, National, Zurich, Indian Harbor, XL Specialty, CNA, The Hartford, Federated.
* One is adding: Denver-based managing general agency iCat has started to offer windstorm coverage in Florida. Agents said the program isn't rated, meaning that financial strength hasn't been vetted.
HAVE YOUR SAY
* Tell the state: The Florida Office of Insurance Regulation is conducting a survey to gauge the growing crisis among businesses that can't find affordable commercial insurance. Go to www.floir.com and click on Hot Topics.
* Tell us: How is your business coping with the insurance crisis? E-mail Nancy Dahlberg, ndahlberg@MiamiHerald.com.