AOB vendor defender files for bankruptcy xx
Florida property insurance rate filings show a downward trend for the first time in years, despite another insurance company seeking a rate increase; Citizens Property Insurance pursues a record reinsurance purchase for hurricane season; plus a bankruptcy filing for a well-known insurance industry adversary. It’s all in this week’s Property Insurance News.
Falling Rates: The Florida Office of Insurance Regulation (OIR) released another market update on May 17. It shows that after years of dramatic rate increases, nine insurance companies have filed a rate decrease in 2024 and 10 others have filed a 0% increase. A 30-day average request for homeowners’ rates was 1.6% compared to 7.6% one year ago. It also verifies that the average homeowner’s premium in the admitted market in Florida is currently about $3,600. OIR credits legislative reforms from 2019-2023 for the encouraging results, which it says has also positively impacted reinsurance pricing. The report covers other positive developments in Florida’s marketplace, including reduction in the frequency and severity of litigated claims from abusive lawsuit practices, greater financial stability by carriers, new carriers writing homeowners policies, and reduction in the state-backed Citizens Property Insurance policy count.
“Restoring rational claims practices stimulates appetite for growth in the market and rate reduction for consumers,” the report notes. Other states are looking at our recent legislative reforms to strengthen their own markets, including Georgia and Louisiana (tort reform) and Hawaii (CAT Fund). Florida recently presented its reforms as a model to the National Association of Insurance Commissioners for nationwide consideration. As the Wall Street Journal reported Friday, Florida is now among the group of states with the smallest rate increases in the U.S. as S&P Global Market Intelligence reports the national homeowners insurance market posted its worst underwriting results in over a decade in 2023.
Next Rate Hearing: While the OIR report is encouraging, those rate decreases are not universal. People’s Trust Insurance will go before OIR at a public rate hearing this Thursday (May 30) at 2pm to consider a 14.8% rate increase in its Dwelling Fire (DP-1) policies. The use-and-file filing was effective August 11, 2023 for new business and September 24, 2023 for renewal business and applies to the company’s Basic Choice Dwelling coverage with no water coverage. This is the fifth public rate hearing of the year.
Citizens Reinsurance: Citizens Property Insurance Corporation recently approved the purchase of private reinsurance coverage of $5.53 billion, its largest-ever purchase, comprised of $500 million of existing private risk transfer remaining from 2023 and $5 billion of new private risk transfer. Its board approved spending up to $750 million to accomplish this, if the reinsurance is reasonably-priced. Under this scenario, Citizens would expose all of its surplus in a 1-in-100-year event and would have a potential Citizens policyholder surcharge of $567 million for that 1-in-100 year-event. There’s more details in Citizens’ 2024 Preliminary Layer Chart.
CFO Julie Montero told the board that Citizens’ exposure grew by 31% in 2023 and is expected to grow by 7%, despite an expected small decrease in its policy count in 2024. She said market pricing on a risk adjusted basis is expected to be similar to 2023, ranging from a -5% to a +5%. “However, capacity is constrained, as all insurers need more capacity in 2024,” Montero said. “This is due to significant increases in exposure replacement costs, as well as the RAP (Reinsurance to Assist Policyholders Program) and FORA (Florida Optional Reinsurance Assistance) reinsurance layers now expired, which translates into additional need for approximately $1 billion of reinsurance coverage from the private market, as well as an increase in the Florida Hurricane Catastrophe Fund retention from $9.5 billion to $9.9 billion.”
Richie Kidwell
Kidwell Group Bankruptcy: An Orlando man well-known for filing thousands of lawsuits against Florida insurance companies has now gone to federal bankruptcy court to protect his own business. Insurance defense attorney Matthew Monson reports that Richie Kidwell’s Kidwell Group, which does business as Air Quality Assessors of Florida, has filed for bankruptcy and is asking to reorganize under Chapter 11 protection. Besides having a mold detection business, Kidwell is president of the nonprofit Restoration Association of Florida of independent contractors. As we’ve chronicled in these pages, they have lost or withdrawn from numerous lawsuits against the state of Florida over the recent legislative reforms. In his filing he blames the legislature’s ban of Assignment of Benefits (AOB) contracts, noting his company’s revenue went from $8 million in 2023 to less than $400,000 in 2024. Boohoo. This is further proof that these reforms are working as intended. Monson also mentions this video where Kidwell explains his estimating practices.
LMA Newsletter of 5-28-24
