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Florida Homeowners Market Update

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Dark clouds on financial filings

The second quarter financials from insurance companies doing business in Florida were due this past Friday to the Florida Office of Insurance Regulation (OIR) and we are awaiting a cumulative report on underwriting gains/losses.  The first quarter saw $2.5 billion in total homeowners insurance rate increases.  At least 8 carriers filed increases in excess of 15% (some as high as 28%) and another 6 companies filed increases of less than 15%.  Only a very few filed rate decreases.

To those who dismiss this as “only a 12% average increase,” this is clearly going to negatively impact consumers.  As Florida’s Consumer Advocate Tasha Carter put it at a winter OIR rate hearing, that type of increase can amount to $30 per month for some policyholders, the equivalent of a tank of gas for the family car at a time when Floridians are on tight budgets due to the coronavirus economic downturn.

State Senator Jeff Brandes (R-Pinellas) summed it up in this tweet last week:

So why are we steeling for second quarter financials to be worse?  It’s the upward cost pressures on carriers, including higher reinsurance costs and incurred but not reported losses for many carriers from 2019.  These include claims creep (delayed reporting of claims from the 2017 and 2018 hurricanes), increased litigation costs, and worse than anticipated weather claims.  These factors cause insurance companies to have to increase their reserves going forward or look for ways to reduce their exposure (including cancelling or non-renewing policies).

The Tampa-based insurance litigation analytics firm CaseGlide predicts a final wave of claims are on the horizon between now and September 10, the three-year statutory deadline to file claims from 2017’s Hurricane Irma.  But the statute of limitation on new Irma lawsuits isn’t up until September 2022.  Its analysis, shared with Trading Risk, notes that the number of new suits filed against Florida’s 17 largest primary property carriers dipped to just under 4,500 in July.  While that’s down 3% from the previous month, it’s the second-highest recorded this year.

“Meanwhile, new assignment-of-benefit (AOB) cases reached a six-month high in July.  New AOB lawsuits had been declining in the lead-up to May 2020, but have been rising since then and accounted for nearly a quarter of all reported lawsuits last month,” according to the article.

I invite my readers to sign up now for tomorrow’s webinar by Demotech, the financial analysis and ratings firm that specializes in evaluating Florida’s property insurance companies.  The session, titled “A Tale of Two Tails,” will feature a plaintiff and defense attorney discussing their different views on insurance claims lawsuits and the cost-consequences involved in protracted litigation.  I’ll be part of the panel along with Paul Handerhan of the Florida Association for Insurance Reform (FAIR).  It will also include a roundtable discussion with other stakeholders, including CaseGlide’s Wesley Todd, sharing how best to convince the Florida Legislature to take action.  Tomorrow’s webinar is the second of a four-part series hosted by Demotech this hurricane season.

We will likely get more insight as well on these second quarter financial report filings.  You can register for this free webinar by clicking here.  We hope to see you there!

LMA Newsletter of 8-17-20

 

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Tags: CaseGlide, Claims expectations, Demotech, Florida Homeowners Insurance Market, Florida Office of Insurance Regulation, Florida Reinsurance, Insurance Litigation, Senator Jeff Brandes, Tasha Carter

“Lisa this is another great newsletter, and we appreciate the time and energy you put into these informative updates – you are on top of these topics!”

Mike Graham, CEO
Smart Vent Products, Floodproofing.com, & Risk Reduction Plus
Juno Beach, FL

“Your newsletter is fabulous!  I greatly appreciate the topics you expose, so that insurance professionals like myself can keep up with the latest events that affect the public we serve and ourselves.”

Cynthia Hoehn, Independent Property & Casualty Personal Lines insurance agent
Clermont, FL

“Just a quick note to let you know how much I have appreciated your newsletter over the years and the assistance they offer for those in the field of claims. We depend on the information more than you will ever know!”

Laurie Rasberry, Chief Claims Officer
Acorn Claims
Prosper, Texas

“Great article on Risk Rating 2.0!”

Austin Perez, Senior Policy Representative for Federal Housing, Valuation, Insurance and Commercial Issues
National Association of Realtors
Washington, D.C.

“Another great Newsletter on Florida industry this week.  Your service and advocacy in Florida is very important to keeping me updated and apprised of the Florida insurance laws, trends and overall environment.  Something similar is very much needed in Louisiana, too.”

Jennifer Tedesco, Esq., Claims Director
Pharos Claims Services
Orlando, FL

“Just wanted to say that I thoroughly love your newsletter. It’s is always informative and insightful to the ins and outs of our industry.  You are an inspiration and an important asset in the insurance world.  Keep up the great work!” 

Cynthia Scott, President
University Insurance Group
Davie, FL

“I have followed your weekly newsletter and podcasts and now have a full appreciation for what you bring to this industry.  You are an inspiring force, plain and simple.  I wanted you to know that you make a difference.  Thank you for all you do!”

Jeffrey Karam, CPCU
Bradenton, FL

“Lisa Miller is a true champion for the insurance industry, with her regular updates! We appreciate all you do and keeping us up to date on priority issues!”

Gillian Lloyd, Account Executive
Zywave
Milwaukee, WI

“Thank you Lisa for staying on top of, as well as advocating, for Florida residents and legislative reform. Your newsletters are very informative and enjoy reading the points of view.”  

Shawna Miller, Sr. Claims Quality Assurance & Compliance Manager
Florida Peninsula Insurance Company
Jacksonville, FL

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