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Self-Storage Industry Jolted By Insurance
Problems
By RANDY DIAMOND - The Tampa Tribune
Published October 6, 2006
Diane Diaz thought owning a self-storage
facility would be a good business venture, catering to suburban homeowners in
need of space to store their possessions. For seven years, her business plan for
Spacesavers Storage Center paid off.
But in July, Diaz was hit by the changing
dynamics of Florida's tumultuous property insurance market.
Despite never having filed a claim with her
insurer, her commercial coverage was not renewed. She found a new carrier, but
the annual insurance premium on the 475-unit storage center increased to
$87,000. That's more than a five-fold increase from the $16,000 she paid her
former carrier.
Diaz said her operating profit for the year
was wiped out overnight.
"It's very difficult to pass along that kind
of increase to your customers," she said.
Diaz was among about 50 storage center owners
and managers who attended a meeting Thursday in Tampa sponsored by the Florida
Self Storage Association to discuss changes in the property insurance market.
Rising commercial insurance rates was just one
problem storage center owners said they are facing. Others reported being unable
to find insurance at any price after having policies canceled. Some owners said
they must sign on for much higher deductibles to get or keep coverage.
Few solutions surfaced at the meeting. State
Rep. Dennis Ross, R-Lakeland, chairman of the House Insurance Committee,
predicted property insurance for businesses and residences will continue to be
difficult to find and that customers will see further rate increases, perhaps
for years.
Ross said insurance company losses from the
2004 and 2005 hurricane seasons in Florida have resulted in risk being
reassessed, resulting in higher rates.
Insurers are being required by state
regulators and insurance rating agencies to have more capital on hand to deal
with the risk of hurricanes. Meanwhile, reinsurers, who share risk with primary
insurers, have jacked up their rates, Ross said. Those costs are being passed on
to customers, he said.
One of the panelists at Thursday's meeting,
insurance broker Gene Bonina of Acordia Inc., said that if the Spacesavers
Storage Center was in Pasco County, about eight miles from the location in
Hillsborough County, he could have found them insurance for a third of the
$87,000 premium.
Diaz said that didn't make sense to her. Her
storage center is several dozen miles from the Gulf of Mexico and no greater
hurricane risk in its location on Bruce B. Downs Boulevard than it would be in
Pasco County.
"Insurers have written off whole ZIP codes and
counties," Bonina said.
Reporter Randy Diamond can be reached at (813)
259-8144 or rdiamond@tampatrib.com.
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