Market responding with greater rate hikes & Citizens migration
With the tropics heating up as we head into the heart of hurricane season next month, Florida’s Insurance Consumer Advocate has issued a timely reminder to consumers and the industry about contractor fraud. It came out in the same week as another insurance company appeared at a public hearing asking for a double-digit rate hike, in part because of such fraudulent and questionable claims, and the release of an updated policy count from Citizens Insurance.
Insurance Consumer Advocate Tasha Carter’s message included a section on deductibles, highlighting part of Florida’s new property insurance reform law in SB 76. “Waiving an insurance deductible or offering services at no charge for filing an insurance claim is illegal in Florida. You are responsible for the deductible amount listed on your insurance policy, as this is a contract between you and the insurance company. If a contractor states that they can repair your home without you paying a deductible, beware! Find another professional,” Carter wrote. We would hasten to add previous advice from the Department of Financial Services (DFS): Anyone (homeowners, insurance professionals, attorneys, etc.) who sees violations of the law to report them, using its Insurance Fraud Portal. This includes unlicensed activity & other violations of SB 76 and SB 1598.
Speaking of contractor fraud, the Florida Office of Insurance Regulation (OIR) held a public rate hearing this past Friday where they discussed the almost 36% rate increase that Southern Fidelity Insurance Company is seeking. The company attributes the increase to questionable claim activity. The hour-long hearing (which you can watch here) included back and forth with OIR regulators and the Insurance Consumer Advocate who had great questions ranging from the need for the increase and why, when some decreases were indicated, the company didn’t feel like they were warranted. Carter shared some specific policyholder feedback: “A 35.7% rate increase is outrageous and this increase is beyond the pale. I am retired on a fixed income and I am guessing I am not alone in this sentiment.”
Another policyholder remarked they would take their policy elsewhere. However, that’s become a diminishing option as fewer companies are willing to take on additional policies in Florida. Most, like Southern Fidelity, are either raising rates, shrinking their footprint, or increasing underwriting requirements (or all three). So what’s happening is those private market policies are migrating to the state-backed Citizens Property Insurance Corporation. Citizens is adding about 5,000 policies on average each week and had more than 661,000 policies at the end of July. Compare that to the nearly 487,000 polices it had on July 31, 2020. Citizens expects to add another 105,000 policies by year’s end.
OIR is taking public comments on the Southern Fidelity rate request through September 3 via email at [email protected].
LMA Newsletter of 8-23-21
