Reinsurance’s role in rising rates
A Florida property insurance company says it will be able to lower rates for some of its customers, an incoming company to the Florida market warns that restricting cancellations will deter other carriers from writing here, plus the NAIC announces a new data call and an agreement on data sharing with the federal government. It’s all in this week’s Property Insurance News.
Rate Hikes & Drops: Pinellas Park, Florida-based American Traditions Insurance Company went before Florida insurance regulators last week at a public hearing. It is asking for a statewide average rate increase of 24.6% on just over 64,000 Mobile Home Multi-Peril policies and a 26.3% increase on about 12,000 Mobile Home Physical Damage policies. Significantly, the company said it would lower rates by 7.1% for 712 of those multi-peril policies and by 8.2% for an undisclosed number of the Physical Damage policies.
This is the third company to have a public rate hearing this year and like one of the others, the company testified its need for higher rates is driven by rapidly rising reinsurance costs from 2020 through 2023, so far. Company representatives testified that reinsurance costs for the mobile home multi-peril program increased over 25% in 2022 and then greater than 30% in 2023. Its DP-1 net reinsurance cost increased 28.9% in 2022 and another 58.4% on top of that in 2023. Regulators will make a decision on the rate requests in the next several weeks.
Unhelpful Policy: SB 1004/HB 1149, the so-called “agents bill” pushed by the Florida Association of Insurance Agents that ultimately failed to pass in this legislative session, drew sharp criticism last week by the CEO of an insurance company poised to begin writing new business in Florida this year. Ken Gregg, CEO of Orion180 insurance companies, told the Insurance Journal that “If this thing passes, it would absolutely bring up a question of concern about coming to Florida, or how much I’m willing to do in Florida.”
The bills required that if there is a zip code with a flood event as determined by regulators, insurance companies must stay on a risk in that zip code for 270 days, regardless of whether flood damage was covered in the policy. And if, during that time, there is a loss (flood or otherwise), insurers must stay on the risk for the earlier of repair or one policy renewal period. Once again, the Journal’s Southeast Editor Willam Rabb tells “the rest of the story” about controversial bills that would stifle investment and reverse many strides made in recent legislative insurance market reforms.
NAIC Data Call: The letters are in the mail now to more than 400 companies from the National Association of Insurance Commissioners (NAIC) to take part in the Property & Casualty Insurance Market Intelligence (PCMI) Data Call on homeowners insurance. The data call will collect and analyze data covering more than 80% of the U.S. property insurance market by premium. It’s designed to help state regulators “better understand how markets are performing in their states, and identify potential new coverage gaps, including changes in deductibles and coverage types, and affordability and availability issues.” Data is due from companies by June 6, 2024.
The NAIC also announced that it has reached agreement with the Federal Insurance Office (FIO) to share anonymized data from the PCMI Data Call. The FIO had been proposing its own data call as we’ve reported, to collect detailed information from insurance companies to analyze how climate change is affecting the cost and availability of property insurance coverage. The industry and state insurance regulators have objected and this agreement eliminates the need for a separate FIO data call.
LMA Newsletter of 3-11-24
