News on Fla’s property insurance market
Florida’s “dire” property insurance market as described by Insurance Commissioner David Altmaier that we talked about in the last newsletter is causing some additional repercussions in the market. Meanwhile, there are new filings in the two federal lawsuits challenging Florida’s newest insurance reform law (SB 76), plus Citizens Insurance is beefing-up property inspections.
FIGA Assessments: The property insurance market crisis is seeing a growing number of companies with red ink, requiring increased scrutiny by state regulators. Two companies became insolvent earlier this year and their remaining assets collectively weren’t enough to cover the more than 1,300 unpaid claims worth about $168 million. The Florida Insurance Guaranty Association (FIGA), tasked to pay those outstanding claims, will face an account deficit of its own doing so. In August it applied to Altmaier’s Office of Insurance Regulation (OIR) for a 0.7% increase in premium assessments to its member insurance companies to help re-balance the fund. OIR last week approved the increase, allowing insurance companies to pass along the assessment surcharge beginning with January 2022 policy renewals. You can read the details in FIGA’s statement on its website. This is the first time in nine years that FIGA has sought to increase the surcharge.
Legal Challenges to SB 76: As we’ve reported, there are two lawsuits in federal court challenging Senate Bill 76 (SB 76, now Florida Statute section 489.147), Florida’s newest insurance reform law. The new law is designed to stem market instability that can lead to insolvencies, as well as double-digit rate increases, misleading roof solicitations, costly claims practices, and excessive litigation that we’ve experienced over the last few years. Gale Force Roofing and Restoration, which won a preliminary injunction on the law’s section dealing with prohibited advertisements and soliciting, last week filed a Motion for Summary Judgment in the case, along with a filing of exhibits. A second lawsuit, filed by the Restoration Association of Florida, et al, seeks to throw-out the entire law. The group filed an amended lawsuit on October 7. It still seeks a preliminary injunction on the entire law. Trial dates are set for May and June, respectively of next year. The president of the Florida Association of Public Insurance Adjusters recently penned this column decrying that targeting storm victims is not protected free speech.
Citizens Inspections: Taking a clue from the increased litigation abuse and fraud by a small but determined group of contractors, public adjusters, and their lawyers, Citizens Property Insurance Corporation has decided to beef-up home inspections on new and renewal policies. The state’s taxpayer-backed insurer of last resort is moving forward with expanded inspections to improve underwriting results and support its exposure reduction strategy. For the last five years, Citizens completed inspections for about 1% of its policies on an annual basis. It now plans to increase to 2-3% by the end of this year. The carrier will be spending up to $43 million over the next four years to enhance inspections to 9-11% of total properties it insures. Citizens’ market research on 16 private market carriers showed the rate of inspections varied, but over half specifically indicated they inspect 100% of the homes at new business, either exterior only or both exterior and interior inspections.
LMA Newsletter of 10-18-21
