It’s not just the weather
Florida isn’t alone in big double-digit hikes in property insurance rates, surplus lines insurance companies continue to see huge premium growth and especially in Florida, the important distinction in seeking prejudgment interest on a claim, plus could all Florida insurance agents be required to take a flood insurance course one day? It’s all in this week’s Property Insurance News.
Rising Rates: It’s not just the weather, but more inflation and ever-rising reinsurance costs that are driving property insurance rates here in Florida and in other states, too. Last week we reported that two carriers filed for rate increases of more than 50% on their Florida policies. But in North Carolina, carriers are seeking an average 42% rate hike, with much higher increases at the coast of up to 99%. The state hasn’t seen impacts from a major hurricane since fall 2020.
The Texas Windstorm Insurance Association (TWIA) is now looking at a much bigger purchase of reinsurance for this upcoming hurricane season, as much as $3.7 billion, which will be reflected in rates. Artemis reports “The driver is exposure growth, with TWIA’s policies in-force having risen and inflationary effects increased the values exposed at the same time.”
Our Florida rate increase requests underscore that the Florida Legislature this session has the opportunity to address the cost of reinsurance and do all it can to lower it. A few changes in the law governing the Florida Hurricane Catastrophe Fund could level-off rate increases and provide some consumer relief. The Governor is also trying to provide relief with his proposals to suspend the premium tax and other ideas to bring about $400 million in premium relief for Florida homeowners, but we have not seen any movement from the Legislature on either idea.
Surplus Lines Growth: Rising reinsurance costs are also driving increased rates and premiums from surplus lines companies, those that Floridians turn to when they can’t get a policy from an admitted insurance company or the state-backed Citizens Property Insurance. U.S. stamping offices report surplus lines property premiums rose nearly 32% ($5.84 billion) in 2023 over the previous year. Florida 2023 property premium of $7.17 billion was up 41.7% ($2.1 billion) from 2022. Property as a percentage of total surplus lines premium is highest in Florida at 46.5%. “There are a few different factors, the biggest one probably being that reinsurance costs are increasing, which ends up resulting in higher premiums and rate to the end consumer,” said Bob McNamee of Jimcor in an interview with Insurance Business.
Claims Ruling: Citizens Property Insurance was successful last week in overturning a trial court ruling that had awarded prejudgment interest in a lawsuit filed by a homeowner over a Hurricane Irma claim. Florida’s Third District Court of Appeal in Miami ruled that to be entitled to prejudgment interest, homeowner Annette Peipert was required to show that Citizens denied her claim before later admitting coverage. “Peipert’s argument fails because it was undisputed below that Citizens did not deny coverage. Rather, the claim arose because the parties disagreed over the scope of loss and damages, not the existence of coverage,” the court wrote.
Knowledgeable Agents: Should Florida property insurance agents be required to take a flood insurance course? We think so. So does the New Hampshire Department of Insurance, which requires all insurance agents to take a flood insurance course regardless of whether they sell flood, within one year of getting their insurance license. “Ensuring that resident producers are properly trained in this area is crucial for protecting consumers and mitigating risks associated with flooding,” according to the department’s news release.
LMA Newsletter of 2-19-24
