Plus, the “reinsurance bridge” to stability
Signs of a spike in filed lawsuits to get ahead of expected tort reform, the need for a reinsurance bridge to weather this upcoming hurricane season as Citizens Insurance makes a tough reinsurance buy, Hurricane Ian claims approach $14 billion, plus our now official insurance commissioner. It’s all in this week’s Property Insurance News.
Credit: Vladislav Chorniy
Sue While You Can: As has happened in the past, the rush to the courthouse is alive and well. Based on reports from some insurance companies, we are anticipating a spike in new lawsuits this month so that those running litigation factories can get in their last gasp of filed lawsuits prior to the Governor signing the expected tort reform legislation. Please let us know if you are experiencing a recent increase in insurance lawsuits.
© Can Stock Photo / radiantskies
Reinsurance Bridge: There is an effort underway to engage the Governor and Florida Legislature to help reduce the cost of property insurance by making reinsurance more affordable to insurance companies. Industry experts say if the state would step in with more state-sponsored reinsurance or what is being called a “reinsurance bridge,” it could reduce homeowners rates about 15% versus the 30%+ rate increases we are seeing on top of the 2022 increases. The $3 billion collectively made available by the legislature in the 2022 insurance market reforms may sound like a lot, but it’s a small piece of what’s needed to reinsurance all the risk in Florida.
I discussed the market pressures with Joyce Kaufman last Wednesday on her noon radio program on 850 WFTL Radio in South Florida, including the need for a reinsurance bridge (listen here at the 5:00 mark). Joyce is in a condo association that just saw its property insurance renewal premiums go up “and it looks insane,” she said. She later had on the program Senator Blaise Ingoglia (R-Spring Hill), who called reinsurance “the next crisis we need to fix.” Joyce urged her listeners to send her their HOA notices with insurance increases to help in the cause. Later that day, I spent an hour speaking with condominium and homeowners associations across the state on the KW Property Management & Consulting webinar to share a roadmap for rate relief. I pointed out that as the reinsurance costs go up, so do our homeowners and condo premiums. Condo association rates have gone up an average of 33% with increases as large as 370% on some properties.
Citizens Reinsurance: We listened this past Friday afternoon to the special Citizens Property Insurance Board of Governors Meeting, where they discussed a proposal to spend $61.25 million in the capital markets to purchase $500 million in reinsurance coverage for this coming 2023 hurricane season. But the attachment point (the dollar amount of claims needed to trigger a payout) is $51.5 billion. Board Chairman Carlos Beruff was adamant that this was not a good use of Citizens’ resources, but the Board voted 5-2 to approve the reinsurance deal. One expert that we asked, commented that “it was a great deal for investors, as there are only about 3 storms in the last 120 years that have caused more than $50 billion in personal residential losses.” We’d like to hear what you think.
Hurricane Ian Claims: The Florida Office of Insurance Regulation reports estimated insured losses from September’s Hurricane Ian were $13.9 billion as of March 9, with 708,255 total claims filed. Nearly 80% of those claims are closed. About 68% of claims were closed with payment and 32% without payment.
Florida Insurance Commissioner Michael Yaworsky
Florida’s New Insurance Commissioner: It’s official – Michael Yaworsky was appointed this past week as Florida Insurance Commissioner by the Governor and Cabinet sitting as the Financial Services Commission. Yaworsky has been interim commissioner since mid-February, as we previously reported. We wish Commissioner Yaworsky the best in tackling the ever-challenging insurance market!
LMA Newsletter of 3-20-23
