A catastrophe modeling firm said the slow progress fixing a huge backlog of hurricane damaged homes in Florida is boosting labor and material costs and will raise the cost of repairing future storm damage.
Researchers at Risk Management Solutions (RMS), Newark, Calif. said the elevated price of labor and materials that resulted from last year's hurricanes is expected to persist through this year's hurricane season that begins today.
Their analysis of the insurance claims data from the 2004 storms shows that as of last month, repair costs in the southeast U.S. remained 20 to 40 percent above the national average.
With a considerable amount of repairs still underway in Florida, the efforts have been slowed due to a shortage of materials and contractors. Worldwide construction projects such as the rebuilding effort in Iraq and construction of the Three Gorges Dam in China have resulted in higher prices for plywood, steel, and cement, RMS said.
The firm noted that in Florida it takes outside contractors on average a period of four months to be registered to operate in the state. This obstacle in the opinion of Phil LeGrone, claims research director for RMS, has been a factor in the rate of repairs.
Mr. LeGrone said, based on clients' opinions expressed at the PCS Catastrophe Conference in New Orleans last May, residential repairs in Florida will not be completed until first quarter of 2007.
Meanwhile, in response to the requests of Florida homeowners for more transparent insurance policies, Governor Bush signed a homeowner's insurance law into effect today with provisions to be implemented as the year progresses.
The new law prohibits non-renewal of homeowner's policies who have sustained hurricane damage until 90 days following the completion of repairs.
Agents must now fill out a mandatory policy checklist providing details of what is and is not covered by the policy
Insurance companies must notify the policyholder of the potential cost associated with a hurricane deductible. In addition any rate hike exceeding 15 percent is subject to a public hearing.
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