As insurance company costs exceed premiums
The clamor for more state property insurance relief takes on a new voice in Congress, State Farm suffers another big underwriting loss, Citizens Property Insurance reports encouraging news on lawsuits, and yet another drop in Florida workers’ compensation insurance rates. It’s all in this week’s Property Insurance News.
Property Insurance Relief: As we’ve chronicled in these pages, the outcry for more relief from Florida’s double-digit property insurance rate increases is long and loud. Now Congressman Maxwell Frost (D-Florida) is adding his voice to the chorus, based on what he describes in a letter to Governor DeSantis as “emergency roundtable” discussions with his central Florida constituents. He references Floridians who’ve had their policies cancelled, quotes of up to $13,000 annually for homeowners coverage, and one resident who is now forced to choose between coverage and paying monthly household bills. Maxwell wants a meeting with the Governor to push for more legislative action. As I’ve said before, rates will continue to rise because we can’t control the weather or inflation. What we can control is the cost of reinsurance, as we explained in last week’s newsletter.
Ongoing Market Signs: The health and profitability of insurance companies are reflecting this as well. S&P Global Market Intelligence last week reported national statutory Q3 results for State Farm, showing its property and casualty group had its largest underwriting loss in the 22 year history of such quarterly reports. The 12 group members of State Farm Mutual Automobile Insurance Company had an S&P calculated net underwriting loss for the first nine months of this year of $12.49 billion, including $5.27 billion in Q3. The year-to-date result approached the group’s full-year 2022 underwriting loss of $13.23 billion. S&P put the group’s year-to-date combined ratio at 118.3% and its Q3 combined ratio at 122.5%, meaning its paying out 18% more in claims and expenses than it is receiving in premiums so far this year. In conversations with long time property insurance veterans, one quipped “Losing $12.5 billion after losing $13.2 billion in 2022 is a lot of money, even for State Farm. Legislators won’t like to hear it, but that’s why rates need to keep going up.”
Positive Sign at Citizens: There is continued welcome news on the Citizens Property Insurance litigation front, plus a new program is now online – its newest effort in Alternative Dispute Resolution. Highlights from last week’s Citizens’ Claims Committee Meeting revealed:
- Citizens new and renewal policies issued after October 1 now contain an endorsement of mandatory arbitration through the state Division of Administrative Hearings, which it expects will settle litigated claims in reduced time and with less legal cost.
- The number of new lawsuits in the first nine months of 2023 is down 23% compared to the same period in 2022. Pending suits are down 8%, yet currently number 18,663.
- Citizens reports a gap now between the number of Notices of Intent to Litigate and the number of new lawsuits, thanks in part to elimination of Assignment of Benefits (AOB) contracts.
- New AOB lawsuits are down 42% compared to last year.
- While lawsuit numbers are down, representation at First Notice of Loss is up 33% so far compared to last year.
- Citizens continues to receive about 100 claims per week from the September 2022 Hurricane Ian.
Workers’ Comp Decrease: The Florida Office of Insurance Regulation last week announced it approved the NCCI request to decrease the statewide overall workers’ compensation insurance rate by 15.1%. This is the seventh consecutive year of rate decreases and applies to both new and renewal workers’ comp policies effective in Florida as of January 1, 2024. You can read more here.
LMA Newsletter of 11-20-23
