Florida property insurance coverage market’s ‘staggering losses’ are ‘not sustainable’

Many Florida property insurers are in search of double-digit price hikes citing ballooning reinsurance prices, “loss creep” from 2017-18 hurricanes, coastal flooding and litigation.

Florida lawmakers have tried to gradual the surges with their 2019 adoption of an “task of advantages” reform invoice and this yr’s approval of Senate Invoice 76, which slashes time to file claims from three years to 2, reduces lawyer “multiplier charges” and permits insurers to cowl solely the depreciated quite than the total worth of changing roofs greater than 10-years-old.

Whereas these legal guidelines primarily deal with trimming fraud and litigation, they do little to deal with the state’s ailing property insurance coverage market, dominated by thinly capitalized independents since main company insurers deserted the state within the early 2000s.

Home Minority Co-leader Evan Jenne, D-Dania Seashore, wonders if lawmakers want a brand new strategy in resolving the a long time’ previous property insurance coverage disaster after they convene their 60-day 2022 legislative session on Jan. 11.

“Ought to we be transferring in a totally completely different path?” he requested Wednesday after a presentation by Residents Property Insurance coverage Corp. President/CEO Barry Gilway earlier than the Home Insurance coverage & Banking Subcommittee.

“What we’ve been making an attempt to do, a number of it has been constructed on each other,” Jenne mentioned. “But we constantly discover the identical outcomes and discover ourselves in these sticky conditions. Ought to we be taking a look at one thing new?”

Gilway requested lawmakers to deal with the “sea of pink ink” that contributes to sustained net-income losses posted by dozens of Florida personal insurers, attributing a lot of it to reinsurance prices, basically insurance coverage for insurers bankrolled by catastrophic fund markets.

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Gilway mentioned the state’s Workplace of Insurance coverage Regulation (OIR) in 2020 obtained 105 price filings from insurers in search of will increase above 10%, calling the state’s insurance coverage market “not sustainable.”

“The consistency of loss throughout all the market is totally staggering,” he mentioned. “It’s not a choice that one or two firms are making. The truth is that what is going on within the market is impacting each single firm out there.”

Together with Residents, which was created by the Legislature in 2002 to function the state-backed “insurer of final resort” for these amongst Florida’s 6.5 million landowners unable to seek out property insurance coverage.

In 2012, Residents’ coverage depend swelled to 1.5 million with the state backing $10 billion in property insurance coverage insurance policies. A “depopulation” initiative to switch insurance policies – and legal responsibility – to personal insurers whittled the depend to 419,475 in October 2019.

However when Residents added almost 22,000 insurance policies final month, its depend rose to 708,919 insurance policies, backing almost $7 billion in properties, almost 200,000 greater than Sept. 30, 2020. Residents forecasts enrollment of 1 million to 1.3 million in 2022.

Final month, Residents Board of Governors unveiled three proposals for the 2022 session designed to scale back its coverage depend by rising prices for policyholders. In essence, they permit Residents to shift policyholders beneath its program to personal insurers if their charges don’t exceed Residents’ by extra the 20%. The subcommittee didn’t talk about these proposals.

Rep. Tom Fabricio, R-Miramar, mentioned lawmakers ought to look into opening the insurance coverage market to surplus-lines carriers and Rep. Matt Willhite, D-Wellington, mentioned a disabled veteran constituent instructed him he could lose his dwelling as a result of he can’t pay his property insurance coverage invoice.

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“The place’s the breaking level for the disabled army veteran, who’s on a set revenue, who can’t insure his dwelling, when they’re at a breaking level themselves?” he requested.

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