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Florida’s Cost of Risk

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Agents worried

Photo by ra2 studio/Shutterstock

Ask any insurance agent and they will tell you “I’m worried.”  Why are they worried?  For starters, property insurance companies have no choice but to shrink their footprint and raise their rates.  Some ask why?  To which I say, “I can’t count the reasons!”  New data from OIR, plus a recent webinar by Demotech, the rating service for residential property insurers focused on Florida, are shedding some additional light.

You have seen time and again in our newsletter, references to Florida’s insane litigation environment where policyholders have no idea they are a pawn in a lawsuit; where plaintiff lawyers threaten that “if you don’t pay me what I’m asking, you (the insurer) will be facing a fee multiplier”; where private vendors team with law firms to cook up and/or inflate a claim; and where reinsurance is sky high and we all gotta pay for it.  As one former regulator said to me last week, “am I hearing this right?  Are things really this bad?”  To which I replied, “I haven’t seen a market like this in my lifetime.”  Here’s an example of a solicitation currently in the marketplace: https://www.facebook.com/132003600195132/posts/3136267789768683/?vh=e

Claims creep is one of the culprits for our market woes (the others being growing attorney fees, rising reinsurance costs, and resulting rising rates and market contraction).  OIR’s January data call shows claims from 2017’s Hurricane Irma grew by 60,000 from the 1,002,000 claims in the last report in November 2018, which itself was 14 months after the storm.  Insured losses totaled $17.44 billion, up from $11.1 billion in the last report.

At last week’s Demotech webinar, Wesley Todd, CEO and co-founder of CaseGlide, noted there are still thousands of new Hurricane Irma lawsuits coming in every month and he expects that to accelerate between now and the September 10 three-year anniversary, which is the statutory deadline for filing Irma claims.  He put the open Irma claims now at 5-10%, depending on the county, with new claims “interfering with the carriers’ focus on closing existing claims,” he said.

Reinsurance was also discussed during the webinar.  Risk-adjusted rates rose 20%-50% and while Florida and the Gulf Coast have seen the steepest prices, it’s increased elsewhere as well.  Some insurance companies decided to retain more net exposure.  Despite the hefty reinsurance rate increases, some analysts warn Florida rates may still not cover the true cost of risk.

For my part, I told the webinar audience that agents are losing business.  Companies are not writing business or they are cutting appointments and shrinking their agent count because of all these factors.   Demotech President Joe Petrelli added that Citizens Property Insurance is likely to be repopulated for a number of reasons.  On the legislative front, Paul Handerhan said his team at the Federal Association for Insurance Reform is focusing on crafting narrow policy reform, identifying those putting their self-interest ahead of consumers, and targeting those bad actors with a group of stakeholders working together.

We invite you to join the effort.  Please email me at LisaMiller@LisaMillerAssociates.com or call me at 850-528-9229.  Demotech’s next webinar on the 2020 Florida storm season is scheduled for August 18 and you can register here.

LMA Newsletter of 6-22-20

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Tags: Citizens Property Insurance Corporation, Demotech, Federal Association for Insurance Reform, Insurance Litigation, Paul Handerhan, Property Insurance Market, Reinsurance

“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

“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

“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

“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

“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

“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

“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

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