Plus, the $2M fine against lawyers
The Florida Legislature failed to provide additional reinsurance help to property insurance companies as private reinsurance firms remain largely standoffish on the Florida market, flood claims are rising from Hurricane Ian, pushback on whether climate change is impacting insurance costs, plus the $2 million regulatory fine against a law firm accused of insurance fraud. It’s all in this week’s Property Insurance News.
Affordable Reinsurance Scarcity: Artemis reports major reinsurer Swiss Re is the latest firm still unmotivated to provide needed reinsurance to the Florida market in the upcoming June 1 renewal. “I don’t expect us to be particularly enthusiastic in this space. We’ll evaluate the risks and pricing we can achieve,” it quotes CFO John Dacey, despite the “probably better” market resulting from the 2022 legislative reforms. Dacey said the 18% year to date price increase is expected to continue with “substantial” prices increase for some loss impacted layers. Higher reinsurance prices of 50% to 100% – for those insurance companies that can afford it – are passed along to Florida policyholders.
Unfortunately, the Florida Legislature in this recently ended session did not pursue an additional reinsurance bridge needed to build upon last year’s reforms. Several more insurance companies have stopped writing new policies this year as a result. The just passed “Insurer Accountability” bill (SB 7052) “does nothing to lower rates,” former State Senator Jeff Brandes, who now runs the Florida Policy Project, told the Orlando Sentinel last week. “Nothing in this bill encourages more companies to come (to Florida).”
Ian Flood Claims: FEMA’s National Flood Insurance Program (NFIP) has now paid more than $3.9 billion in claims to more than 48,000 policyholders from last September’s Hurricane Ian. The claims cover Florida, South Carolina, and North Carolina, but the vast majority are in Florida. As of May 2, about 95% of claims have been closed. FEMA’s December revised NFIP claims estimate was between $3.7 billion and $5.2 billion, which has now been reached with this latest report.
Climate Data Call: The Federal Insurance Office is asking insurance companies for details on the impact that so-called climate change is having on insurance costs and availability. The insurance industry and state regulators are objecting. Last week Senator John Thune (R-SD) and Senator Tim Scott (R-SC), Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs, sent a letter to Treasury Secretary Janet Yellen raising concern that the data call could result in “state insurance regulators and insurers being coerced into adopting costly, one-size-fits-all climate-mitigation strategies.”
Lawyers Fined: Last November we shared the story of the McClenny Moseley & Associates law firm of Texas. The firm, along with its restoration contractor partner, Disaster Solutions, thought it was hilarious in a Facebook post that they had filed a record number of lawsuits for claim damages from the 2020 Hurricanes Laura and Delta. A federal judge wasn’t amused and in March suspended the firm from practicing in his court. Now Lousiana’s Department of Insurance has dropped the hammer as well. Insurance Commissioner Jim Donelon last week issued $500,000 fines each to founding partners James McClenny and John Moseley, Louisiana managing partner William Huye III, and to the firm itself, together with a cease-and-desist order. Donelon accuses them of unfair trade practices and insurance fraud involving at least 850 Louisiana homeowners and policyholders. We applaud the commissioner and his leadership. You can read more in ‘Agents of chaos:’ How a Texas law firm undermined Louisiana’s hurricane recovery in yesterday’s Times-Picayune/New Orleans Advocate. Lawyers such as Matthew Monson are rightly concerned that Louisiana has inherited Florida’s problems in this area. He too, has been a leader in sounding the alarm on insurance policyholder abuse. We applaud his efforts.
LMA Newsletter of 5-8-23