Cat Fund increase ahead
Property insurance rates and premiums really are going down for most Florida homeowners, the Cat Fund is poised to increase rates on reinsurance it provides to property insurance companies, plus Florida regulators release a batch of proposed rules and forms. It’s all in this week’s Property Insurance News.
Are Rates Going Up or Down?: It’s a legitimate question to ask, especially when we saw these two very different headlines on the same day last week: Charlotte County homeowners see insurance rates spike after impactful hurricanes (WINK-TV, Ft. Myers) and Truist says Florida property insurance cost is declining 20% YoY (Investing.com). Both stories talk about premiums – the amount policyholders actually pay. Jake Holehouse, president of HH Insurance in St. Petersburg, told Tampa Bay’s Fox 13 last week that homeowners insurance premiums are dropping anywhere from 10% to 40% as carriers widen coverage guidelines.
Some in the news media – and in our insurance world – tend to interchange the term premiums with rates. But they are two different (yet related) terms. Florida Insurance Commissioner Mike Yaworsky has explained the rate as the cost per brick, and the premium as the cost of all the bricks to replace your house. The premium is subject to inflation, availability of materials, and other factors, including additional coverages you choose to add. Insurance News recently reported on the impact the current inflation rate of 3.3% is having on insurance companies and claims severity. As for property insurance rates in Florida, they continue to decline, according to this new report from the Insurance Information Institute. It chronicles the declines in both property and automobile insurance rates since the Florida Legislature’s 2022 and 2023 consumer and litigation reforms.
Cat Fund Rate Increase: The Florida Hurricane Catastrophe Fund Advisory Council has given its nod to a recommended 4.26% average increase in Cat Fund rates for the 2026-2027 contract year for insurance companies that keep the same level of reinsurance coverage with the Cat Fund as last year. The increase is the result of seven carriers lowering their coverage levels from 90% to 45% (insurers with 90% coverage will therefore get more coverage for the higher rate, as a result). The recommendation comes from the Cat Fund’s actuary, Paragon Strategic Solutions, in its report (and subsequent spreadsheet) that also projects the Cat Fund’s retention will be $11.93 billion, up from $10.67 billion last year. The capacity remains at $17 billion. The Advisory Council approved the 2026-2027 contract year reimbursement formula rule, which remains substantially unchanged. Final decisions on all of this will be made by the State Board of Administration at its June 9 meeting.
Wind Mitigation Discounts: As we anticipated in our last edition, the Florida Office of Insurance Regulation (OIR) has now proposed an updated Form 1699 and Form 1700, the actual mitigation discount credits needed to fully carry out the updated wind mitigation discount program for Florida homeowners under its proposed revision of Rule 69O-170.017. We anticipate OIR will soon schedule a public workshop to hear the growing feedback from insurance companies. Still to come from OIR is an updated discounts schedule (Form 1655) that insurance companies will use to generate and communicate the policy discount to the consumer. The proposed rule and forms will be effective January 1, 2027 and require carriers to submit new filings to adopt the relativity tables within 90 days of January 1. The rule still allows an alternative study to support modifying the discounts.
All eyes are on how different the bottom-line premiums are going to be. Remember, you have to have debits and credits; some believe the new credits will be greater for those along the coast, with inland residents subsidizing the cost. The ultimate benefit to the consumer has yet to be determined. If any of our insurance company writers want to go through the exercise of figuring the difference between the old and new credits, please let us know. The repository for all related documents can be found on OIR’s Wind Mitigation Resources webpage.
Individually Rated Risk & Excess Rates: OIR is also expected to hold a workshop on a proposed change to Rule 69O-137.008 on filing of statistical and quarterly reports for individually rated risks and excess rates, and associated Form OIR-B1-588. It seems the proposed rule would change filing requirements to every quarter, even if the company has no individually rated risks or excess rates. Right now, those same companies are not required to file until after the fourth quarter.
Market Conduct Exam Based on Complaints: OIR is also proposing a change to Rule 69O-138.003 on market conduct exam methodology. The rule applies to all insurance companies and updates the method OIR will use to determine whether to do a market conduct exam on an insurance company due to consumer complaints on claim handling. OIR will schedule a workshop on this updated rule only if one is requested by next Monday, April 20.
LMA Newsletter of 4-13-26
