Triple-I Blog | Fraud, Litigation Push Florida Insurance Market to Brink of Collapse

With its abundance of unneeded new roofs on properties – and flashy lawyer billboards at each flip claiming huge settlements on claims – Florida’s insurance coverage market is on the verge of failure. This man-made disaster is inflicting monetary pressure on shoppers, because the annual value of a mean Florida owners insurance coverage coverage will skyrocket to $4,231 in 2022, almost thrice the U.S. annual common of $1,544.

“Floridians pay the very best owners insurance coverage premiums within the nation for causes having little to do with their publicity to hurricanes,” mentioned Triple-I CEO Sean Kevelighan.  “Floridians are seeing owners insurance coverage turn out to be costlier and scarcer as a result of for years the state has been the house of an excessive amount of litigation and too many fraudulent roof-replacement schemes. These two components contributed enormously to the web underwriting losses Florida’s owners’ insurers cumulatively incurred between 2016 and 2021.” 

Two main hurricanes made landfall within the state since 2016: 2017’s Irma and 2018’s Michael.

No direct hits occurred in Florida over the previous three hurricane seasons. 

Florida, nonetheless, is the location of 79 % of all owners insurance coverage lawsuits over claims filed nationwide, despite the fact that Florida’s insurers obtain solely 9 % of all U.S. owners insurance coverage claims, in accordance to the Florida governor’s workplace. To illustrate how lawsuits have weighed on insurer working prices, JD Supra, citing the Florida Office of Insurance Regulation (OIR), reported $51 billion was paid out by Florida insurers over a 10-year interval, and 71 % of the $51 billion went to attorneys’ charges and public adjusters. The 2020 and 2021 cumulative internet underwriting losses for Florida owners’ insurers totaled greater than $1 billion every year.

“The state’s owners’ insurers have been compelled to reply to these unlucky market traits this yr by proscribing new enterprise, non-renewing current insurance policies, and even canceling insurance policies mid-term,” Kevelighan mentioned. “What’s extra, 4 owners insurance coverage firms have been declared bancrupt since February — all whereas extra Americans are shifting to Florida than every other state.”

Citizens Property Insurance Corp., the state-backed property insurer of final resort in Florida, has seen its coverage rely rise to almost 900,000 this month statewide.  Its coverage rely determine stood at about 420,000 in October 2019.  Citizens gives insurance coverage protection to owners unable to discover a private-sector insurer prepared to promote them a owners insurance coverage coverage.

Placing additional strain on the affordability and availability of owners’ insurance coverage within the state, third-party score bureaus have downgraded the monetary scores of some insurers working in Florida.

The typical Florida owners’ insurance coverage policyholder paid $2,505 for protection in 2020, Triple-I discovered, and that determine rose to $3,181 in 2021.  Triple-I’s evaluation was primarily based on information and analyses from Florida’s OIR, the National Association of Insurance Commissioners (NAIC), and Triple-I’s estimates of what insurers are paying right now for house substitute prices.

During a particular legislative session in May 2022, Florida lawmakers handed Senate Bill 2B, which Gov. Ron DeSantis signed into regulation. The measure is aimed toward easing owners’ premium will increase and lowering extreme litigation.

To assist Floridians and others residing in pure disaster-prone states higher handle threat and turn out to be extra resilient, Triple-I launched a couple of years in the past its Resilience Accelerator initiative, Kevelighan mentioned.

The Resilience Accelerator’s aim is to exhibit the ability of insurance coverage as a power for resilience by telling the story of how insurance coverage protection helps governments, companies and people recuperate quicker and extra fully after pure disasters. “The insurance coverage business’s concentrate on resilience is beginning to pay dividends as extra Americans acknowledge the very actual dangers their residences face from floods, hurricanes, and different pure disasters,” Kevelighan added.

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