Insurer of last resort or major player?
As the Citizens Property Insurance policy count accelerates at an even greater rate, there’s new skepticism on whether raising its coverage cap is such a good idea. Meanwhile an upcoming report suggests Citizens could one day provide all wind coverage in Florida. Plus, video of current door-to-door roofing solicitation gone wild and a new expose on suspended insurance plaintiff attorney Scot Strems. It’s all in the week’s Property Insurance News.
Citizens Coverage Cap: In the last newsletter, we reported that state regulators are considering raising the $700,000 replacement cost coverage cap currently in place for Citizens policies in all but two counties (Miami-Dade and Monroe, where the limit is $1 million). In that newsletter, we asked our agent friends if they’ve seen a lack of a “reasonable degree of competition” with the private market, required for such a move among the remaining 65 counties and no one has said so.
Citizens President & CEO Barry Gilway commented to the Insurance Journal that “it’s probably something that should be avoided,” as Citizens now has more than one million policies. The weekly rate of new policies has grown from 6,000 in June to 13,000 now. Raising the Coverage A cap would simply send more policies to Citizens, raising its exposure and the potential for big assessments on all Florida policyholders. Again we ask: where’s the proof this is needed?
FSU Report: The Insurance Journal recently shared a report by Florida State University’s risk management and insurance program on the recent 30th anniversary of Hurricane Andrew. The report interestingly outlines the evolution of the Florida homeowners market since then and (at the bottom of page 22) offers predictions for the future.
“Since hurricane wind coverage is difficult to insure profitably, it might be strategically and economically prudent to intentionally remove it from the primary market. With recent legislation (SB 76) allowing Citizens to increase rates gradually over the next few years and the ability to assess policyholders in the event of a deficit, Citizens may be in a better position to insure wind than the primary insurers.”
This is another topic that raises questions. “Wind coverage is not what is ailing the Florida property insurance market. It’s abuse of assignment of benefits and frivolous litigation,” Melissa Burt DeVriese, president of Security First Insurance told the Insurance Journal.
The report also calls for more research to be done on why Florida has such a large number of fraudulent claims and excessive litigation (with 9% of the nation’s homeowners insurance claims yet 79% of the homeowners insurance lawsuits).
Door-to-Door Drama: WFTS-TV ABC Action News in Tampa recently did a story with residents of a neighborhood who were being bothered by roofing solicitors they said were offering “free roofs” if the homeowner would simply take advantage of a free inspection. There’s doorbell video of one of the encounters. Offering free roofs, courtesy of the insurance company, was outlawed in SB-76, which was passed by the Florida Legislature in 2021 but whose enforcement has been enjoined for now by a federal court.
Scot Strems: Florida Trend is out with an expose of the suspended and infamous South Florida insurance plaintiff attorney Scot Strems, who it calls a ‘poster child’ of our property insurance crisis. We’ve chronicled Strems’ numerous disciplinary hearings and racketeering lawsuits over the past two years, which are still ongoing. His story “built the insurers’ case for reigning in lawyers” as Florida Trend put it and the excessive litigation that has been a principal driver of the crisis.
LMA Newsletter of 9-19-22
