Plus, lightning taking an increasing toll
Providing consumers understandable answers about Florida’s challenging property insurance market, another insurance company seeks a double-digit increase, the growing policy assumption rate by private carriers in Citizens Insurance depopulation, plus an ominous weather distinction for Florida. It’s all in this week’s Property Insurance News.
Melissa Burt DeVriese, President, Security First Insurance. Courtesy, WPTV-TV
Educating Consumers: The changing Florida property insurance market, besieged in recent years by rapidly increasing homeowners rates and reduced availability, was the subject of a recent hour-long television special produced by WPTV-TV in West Palm Beach. Executives from several insurance companies participated in lengthy interviews to shed some light. Among them was Melissa Burt DeVriese, President of Security First Insurance, who explained how insurance companies set their rates. The company has had its first rate decrease (5%) in nine years, with DeVriese explaining how weather, reinsurance costs, and excess fraud and litigation are all cost drivers. (Her segment starts at timecode 10:30 into the program.) The company was lauded by the state CFO for engaging in the My Safe Florida Home Program, which he noted reduced premiums for participating Security First customers by nearly 40%.
Rate Hearing: First Protective Insurance Company went before state regulators in a public hearing on June 27, seeking a statewide average 15.6% increase on homeowners HO-3 policies and a 3% average increase on condominium unit HO-4 policies. The overall net rate increase of 14.7% impacts about 202,000 policies. The company’s representatives said a higher reinsurance cost from 2023 was the primary driver of the rate increase, along with significant non-hurricane catastrophes since 2019. Legislative reforms under SB-2A are working, they said, in reducing loss experience and that the company expects to submit a filing for a rate decrease in the near future, as a result. This was the second public rate hearing of six this year where Florida’s Insurance Consumer Advocate asked the company if any consideration had been given to reducing commission and brokerage fees to reduce a rate increase (and the answer, as before, was “no.”) You can read our complete report here.
Citizens Property Insurance: Citizens’ depopulation program continues to see positive results, with over 132,000 policies removed year to date, representing $63.6 billion in exposure. The increasing assumption rate stands at an impressive 61%. The majority of takeout offers by private insurance companies are either less than the Citizens premium (27%), or within 20% of the Citizens premium (making the Citizens policyholder ineligible by law to remain with Citizens). Only 1% of assumed policies are returning to Citizens. Effective July 1, HB 1503 allows surplus lines carriers to take out some non-homesteaded properties from Citizens. The depopulation is expected to languish during this hurricane season and pick-up again the last three months of 2024, as Citizens’ policy count now is up again to 1.2 million.
King of Lightning: Florida remains the nationwide leader in the number of insurance claims filed for lightning damage, with about 6,000 filed in 2023 and a total cost of claims of $104.5 million or $17,416 per claim. Although Texas had fewer claims (at 4,664, coming in third behind Georgia), its average cost per lightning claim was $41,654. Damage by lightning (as damage by anything else these days) is more expensive than ever to fix and more frequent. According to the Insurance Information Institute report, the number of lightning claims in 2023 hit 70,787 (up 13.8% from 2022) with a claims cost of $1.2 billion (up 30% from 2022). Rising inflation, including higher replacement, construction and labor costs impacted claim costs, according to the report.
LMA Newsletter of 7-8-24
