Three condominiums in South Palm Beach and one in the South End of Palm Beach are the founding members of The Palm Beach Windstorm Self Insurance Trust, the only such group in the state able to meet new hurricane-damage requirements.

Offering an insurance alternative to storm-wary coastal communities, the trust began operations Jan. 2. Ambassador South, the Barclay House, the Mayfair and Dune Deck signed up on opening day, and open enrollment began Jan. 18.

The trust now has 58 condominium and cooperative members and has given quotes to 28 more. Membership is open to condominium and cooperative associations east of Interstate 95 that have values of more than $10 million.

State Sen. Jeff Atwater, R-North Palm Beach, supported legislation last year that would allow local trusts greater control over the cost and availability of hurricane coverage. Atwater delivered the first policies Jan. 17 to Ambassador South.

Many participating condos are members of the Citizens Association of Palm Beach. The organization was not officially involved but acted as a catalyst and had a member on the trust's formation committee.

A volunteer insurance consultant steered the concept. Richard Duer, of Stuart, retired from AON Risk Management, was a consultant for Wachovia Insurance Agency, which represented Old Port Cove condominiums in North Palm Beach. Duer said he was always in the insurance business, but not in sales.

"I help people form insurance companies. I'm the one who came up with the idea (for the Palm Beach trust). Wachovia wanted to find a solution to the condo insurance problem and invited me in as an outside consultant," Duer said.

It was difficult to conform to all the state's requirements, "and we're the only (trust) that did," Duer said.

For example, there must be a founding group, such as the trust, and agreements to sign up "the day you start operations."

That means buildings with staggered dates for policy renewals pose some obstacles. In addition, the founding group cannot be involved in policy sales.

Each condo association has to select an agent, which prompts some hesitation, Duer said.

Those handling some of the business include Plastridge Insurance Co., whose principal is Tom Lynch, former chairman of the board of the Palm Beach County School District and former mayor of Delray Beach. Another agency writing coverage is the Insurance Office of America, based in the Abacoa area of Jupiter.

Plastridge Insurance was briefed on the program a couple of weeks ago, and its agents have proposed self-insurance to a couple of clients who are weighing the material, Lynch said.

The rates are "a little lower" now, he said, adding that this alternative coverage might become more attractive after an anticipated rate increase by Citizens Property Insurance Corp., the state insurer of last resort.

"It's my understanding Citizens will have a fairly large increase, which will make self-insurance more enticing," Lynch said.

On buildings valued at less than $10 million, Citizens "won't raise rates until Jan. 1. But if it's more than $10 million on any one building, they can change the rates. And we've been told they plan to."

The two kinds of coverage have different criteria, he said, citing the trust's mandatory 5 percent windstorm deductible per occurrence, compared with Citizens' 3 percent deductible.

"That's the difficulty when competing with Citizens. If (a client) is willing to go to 5 percent (deductible), we give them a comparative analysis," Lynch said. "Some probably don't belong in self-insurance."

The experimental program is meant for bigger buildings, Lynch said.

"A lot of them are newer buildings with newer roofs, wind-resistant glass and hurricane shutters, which makes (the terms) reasonable," he said.

Lynch cited some potential savings:

? Palm Beach Windstorm Self Insurance Trust, with a 5 percent deductible, can have 35 percent lower rates than Citizens at 3 percent.

? With 5 percent deductibles for both, self-insurance can offer a 5 to 10 percent reduction over Citizens. But with the rates that Citizens is expected to impose, residents with coverage through the self-insurance trust could see 35 percent lower rates even with equal deductibles, Lynch said.

Leon Silverman, a resident of The Meridian, represented the Citizens Association of Palm Beach on the trust's formation committee, working on the project for more than a year.

According to Duer, Silverman recently returned from New York and will meet with the trust committee this week.

Gerald Frank, past president of the Citizens Association, said he was skeptical at first, "but maybe there are some better guarantees now."

Being an officer of a condominium board involves weighing risks, Frank said.

"I'm afraid, on behalf of 80 or 100 residents, to go with something not proven," Frank said.

"I'd have a serious problem recommending it, until there is some proof of financial stability in a disaster. I'd be nervous. I could never jeopardize, and make decisions for, a whole group of people with something so new."

Frank said one way to spread the risk would be broader geographic participation.

"Two buildings here, maybe some 50 miles away and some on the west coast (of Florida), to balance it geographically," Frank said.

"Otherwise, it's a total wipeout of the funds to cover a disaster."

For more information, condo associations can contact an insurance agent or call the self-insurance trust at (954) 593-0325.