FMHA Proposes Manufactured Housing Insurance Coverage

The Florida Manufactured Housing Association has announced it is studying the feasibility of starting its own insurance company to write coverage for mobile home owners. According to Frank Williams, FMHA executive director, if the study has a positive outcome, it could begin offering mobile home owners coverage in the first quarter of 2006.

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

There are about 850,000 mobile homes in Florida and FMHA estimates 25,000 new ones homes are sold each year.

Williams contends affordability is a big issue.

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

Even prior to 2005, mobile home insurance coverage was almost impossible to find. It was a key policy referred to Citizens Property Insurance Company, Florida’s insurer of last resort.

In a market in which rates have risen rapidly, mobile home owners with Citizens policyholders will be hit with a 33.7 percent rate increase in Broward and Miami-Dade in February if the Florida Insurance Commission approves a rate hike the carrier has requested. Citizens’ premiums on mobile homes, including windstorm coverage, range from $800 to $1,300. Premiums vary, based on size and the insured value.

Safeway Property Insurance, based in Gainesville, has been writing coverage for mobile homes when other insurers shied away. In the 11 months before the storms, Safeway wrote 24,000 new policies, many with windstorm coverage.

“‘I could have written more policies if we had the capacity,” 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 Florida carriers don’t want mobile 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 to reduce its risk.

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

“After last year’s hurricane season, there were a number of companies that had offered mobile home coverage that de-cided 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, said William Stander, a government affairs representative for the Property Casualty Insurers Association of America.

Stander said that several PCIA members that previously sold mobile home coverage in Florida have now left the state entirely.