An influential insurance industry watchdog has announced a new mission: promoting and keeping tabs on the growing market for certain energy-efficiency improvements.
Principals of the nonprofit Florida Association for Insurance Reform have formed a separate company to build consumer confidence in the Property Assessed Clean Energy program, a unique strategy for financing energy-efficiency and storm-hardening improvements without credit checks, cash up front or conventional loans.
Financing for the improvements are instead repaid through assessments against the properties themselves in the same manner as school taxes or community improvement bonds that can be transferred to new owners or paid off as a condition of a home’s sale.
The new company, Clean PACE Inc., will certify that PACE contractors and financial providers meet “high standards for customer friendly processes, high quality standards and customer satisfaction,” according to Clean PACE’s mission statement. Clean PACE will review providers’ consumer finance protections, contractor controls, underwriting, marketing and advertising, governance and program capital.
Improvements funded by the program can generate enough savings from reductions in energy and insurance bills to offset much if not all of the repayment costs, proponents say.
And while cities throughout South Florida have approved PACE financing and more contractors have become certified, FAIR president and CEO Jay Neal wants more property owners to take advantage of the program.
“We have to do a better job of making them understand what they can get for their investment,” Neal said Tuesday at a workshop organized in Davie by the association’s educational arm, FAIR Foundation, to explore preparation strategies for climate change and future hurricanes.
Residential improvements eligible for PACE financing include new roofs, awnings, solar panels, air conditioning units and ducts, insulation, LED lighting, hurricane-resistant impact windows, reinforcement of existing roofs, water barriers for protection against floods, low-flow plumbing systems to conserve water, rainwater catchment systems and even artificial turf.
Workshop sponsors included PACE providers Ygrene Energy Fund, the state’s leading PACE provider with about 3,000 completed projects and $100 million in available financing; Renew Financial, based in Oakland; and CounterPointe Energy Solutions and its subsidiary AllianceNRG, which funds PACE programs in Florida, California, Louisiana, Connecticut and New Jersey.
PACE programs become available to homeowners and businesses after local governments — counties and cities — approve property assessments as the method of repayment. Mortgage lenders are then obligated to collect payments as part of a homeowner’s escrow account.
PACE-funded improvements can help reduce effects of climate change by reducing usage of electricity and water usage, Neal said. Storm-hardening improvements, such as new roofs and impact windows, reduce risks of storm-related property damage. That reduces insurance costs for individual property owners, and in turn reduces the amount of catastrophe reinsurance — which is insurance purchased by insurance companies — needed by Florida’s insurance industry.
When the industry can reduce its dependence on reinsurance, it becomes less vulnerable to swings in the global reinsurance financing market.
Assessment-financing of improvements support efforts to reduce climate change because “energy savings benefits the home itself rather than the homeowner,” said Devesh Nirmul, senior director of Renew Financial during a panel discussion on PACE programs.
FAIR supports efforts to cut statewide reinsurance costs in half over 20 years, Neal said.
Formed in 2010 in Fort Lauderdale, FAIR has evolved into an influential watchdog over the insurance industry with dual interests: promoting a strong private property insurance market and protecting customers from unnecessary rate increases and erosion of coverage. Members include insurers, real estate agents, trial attorneys, construction companies and consumer groups.
