Citizens Property Insurance chief details struggling industry to Florida lawmakers
TALLAHASSEE, Florida – Pointing to a “sea of ââred ink,” the head of state-backed Citizens Property Insurance Corp. on Wednesday described a private insurance industry losing money as homeowners make money. face high interest rates and struggle to find coverage.
âThe consistency of losses across the market is absolutely astounding,â Citizens President and CEO Barry Gilway told the House Insurance & Banking subcommittee. âIt’s not a decision made by one or two companies. The reality is that what happens in the market has an impact on every business in the market. “
Gilway appeared before the panel less than six months after lawmakers passed a measure (SB 76) to try to strengthen the property insurance system. But as evidence of lingering problems, the number of citizen-written policies has climbed to more than 700,000 and is expected to exceed one million next year as homeowners turn to her for coverage.
As Gilway’s presentation focused heavily on financial issues in the insurance industry, Representative Matt Willhite, D-Wellington, asked about the impact on homeowners, citing a disabled veteran who suffered severe increase in tariffs.
âWhere is the breaking point for the disabled military veteran, on a fixed income, who cannot insure his house when he himself is at a breaking point? Willhite asked.
With lawmakers preparing to begin the 2022 legislative session in January, Wednesday’s meeting did not include detailed discussions on proposals to address the issues. As an example of an idea, representative Tom Fabricio, R-Miramar, raised the possibility of opening up the market more widely to so-called surplus line carriers, which are not subject to the same regulatory oversight than more traditional insurers.
But House Minority co-leader Evan Jenne D-Dania Beach pointed to many changes in the property insurance system over the past two decades and questioned whether the state needs a new approach.
âShould we be going in a completely different direction? Jenne asked. âMuch of what we’ve tried to do has been built on top of each other. Yet we continually find the same results and find ourselves in these delicate situations. Should we be considering something new? “
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Citizens was originally created as an insurer of last resort, but has seen tremendous growth since mid-2020 as private insurers hike their rates and cut policies in an attempt to stem financial losses.
Citizens added nearly 22,000 policies last month and had 708,919 policies as of September 30, according to data published on its website. He had won nearly 200,000 policies since September 30, 2020, when he totaled 511,055 policies, and Gilway recently said that an initial forecast for 2022 included 1 million to 1.3 million policies.
Many lawmakers and heads of state have long sought to move homeowners from citizens to the private market, in large part due to concerns about the financial risks to taxpayers if Florida is hit by a major hurricane.
But alongside private insurers reducing the amount of coverage they will purchase due to financial issues, Gilway said citizens often have cheaper rates than private companies. Additionally, many homeowners in areas such as Southeast Florida rely on citizens because they have few other coverage options.
Legislation passed in April took a series of steps, including trying to help curb lawsuits against insurers and gradually raising the cap on rate increases for citizen customers.
But a key piece of the bill designed to prevent contractors from soliciting homeowners to file roof damage claims was blocked by a federal judge over concerns about the First Amendment. Insurers claim they have faced rising costs due to unnecessary and even fraudulent claims for roof damage.
Gilway’s comments on Wednesday, in some ways, echoed state insurance commissioner David Altmaier, who told a Senate committee last month that the state of the property insurance market was “dire.” .
Gilway, who said he has been in the insurance business for 51 years, used charts to show lawmakers that dozens of private insurers have suffered losses in net income in recent years. Among the factors he cited were litigation costs and reinsurance costs, which is basically insurance that insurers buy as a backup.
Additionally, Gilway said the Office of Insurance Regulation in 2020 received 105 rate requests from insurers that called for increases of 10% or more. Customers of some companies have seen their prices increase by more than 25% in 2020 and 2021, according to information presented by Gilway.
Gilway said the situation was not “sustainable”.
“It is not acceptable that Floridians are facing increasing rates which are staggering,” he said.