Plus, rising auto rates xx
Another property insurance company reduces its policy count in Florida due to challenging market conditions, Florida drivers now pay the most in the nation for auto insurance, Citizens responds to the dubious US Senate Banking Committee’s letter, plus a former FEMA administrator takes on a new job to better coordinate public-private disaster recovery efforts. It’s all in this week’s Property Insurance News.
Policy Reduction: Nationwide Insurance has joined the growing list of companies that are nonrenewing some of their homeowners insurance policies in Florida. Letters to impacted policyholders started to go out last month. Nationwide lists natural disasters and severe weather as the primary cause behind these non-renewals, telling WFTS-TV in Tampa, “…we are being more selective about where we write certain amounts of business and the amount of overall risk we are willing to write.” It follows Progressive Insurance Company’s announcement in September 2023 that it was nonrenewing 115,000 residential policies in the state. Upwards of 20 companies have either nonrenewed some or all of their personal lines Florida policies in the past two years.
Insurance companies evaluate their financial performance within a specific marketplace. We have seen time and again where companies leave Florida because they are facing losses and unfavorable market conditions. That’s why we’ve seen a number of insurance companies leaving Florida, in addition to the nine that have gone bankrupt in the last three years. As we’ve reported in these pages, excessive lawsuits and fraud are part of the reason.
Highest Auto Insurance: Florida now has the distinction of having the highest-priced car insurance in the nation. The average full coverage auto policy here is $3,941 annually, according to the latest data from the Insurance Information Institute. That’s 55% higher than the national average of just more than $2,500 per year. The biggest cost driver: Hurricane Ian, which destroyed almost 100,000 vehicles in fall 2022. Severe accidents, excessive lawsuits, and a high rate of uninsured drivers (26%) are also cited for the increase. Costs are increasing nationwide, as well, due to inflation in repair and parts and higher vehicle prices.
Tim Cerio, President & CEO, Citizens Property Insurance
Citizens Answers: In our December newsletter we reported on the letter from Senator Sheldon Whitehouse (D-Rhode Island), chairman of the U.S. Senate Budget Committee, to Florida’s Citizens Property Insurance Corporation. In it, Whitehouse requested various documents and information and questioned Citizens’ ability to pay claims, suggesting that it would someday need a federal bailout. Citizens President & CEO Tim Cerio has responded in this letter, noting “the assumptions in the correspondence suggest a fundamental misunderstanding of how Citizens operates, and they underestimate Citizens’ claims-paying ability. As Florida’s insurer of last resort, Citizens is structured so that it will always be able to protect its policyholders and pay claims.” LMA appreciates Tim Cerio’s candor in setting the record straight and Citizens diligent pursuit of depopulation in returning more policies – and risk – to the private market.
Pete Gaynor, DRCA Chairman
New DRCA Boss: Former FEMA Administrator Pete Gaynor has been named the new Chairman of the Disaster Recovery Coalition of America (DRCA). The former Marine served as head of FEMA for nearly two years under the Trump Administration and has since been Senior VP and Director of National Resilience, Response, and Recovery Programs for the LiRo Group. Among his stated goals at the DRCA is to focus on fostering collaboration among government agencies, private sector organizations, and community stakeholders to enhance America’s disaster response capabilities. He will work closely with DRCA members to develop innovative strategies, share best practices, and advocate for policies that strengthen the nation’s resilience in the face of natural and man-made disasters..
LMA Newsletter of 1-15-24
