May 13, 2022
  • May 13, 2022

Property Insurance Companies Seeking Big Rate Hikes For Florida Policyholders Florida

By on August 10, 2020 0

(The Center Square) – A quadfecta of factors merge into one reality for Florida’s 6.2 million property insurance policyholders: Significant rate hikes await next policy renewal – if carriers to low cap choose to renew them.

Tallahassee-based Capitol Preferred Insurance Co. (CPI) has filed a proposal for a 26.2% premium increase for its 84,000 customers, and its subsidiary, Southern Fidelity Property & Casualty (SFPCI), has submitted a proposal 31.1% rate increase at the Florida Office of Insurance Regulations (OIR).

CPI and SFPCI join growing list of insurers citing skyrocketing reinsurance costs, losses from the 2017 and 2018 hurricanes, coastal flooding and excessive litigation to demand broad hikes in insurance rates goods.

State law requires insurers to appear before the OIR if they propose rate increases of more than 15%. Between 2013-19, only one did.

Since December, however, at least eight insurers have requested rate hikes exceeding 15 percent, including Edison’s Insurance Co., nearly 22 percent; Speed ​​risk, 28%; and National Specialty Insurance Co., 28 percent.

Many other carriers have requested increases just below this 15% threshold. Security First, which initially sought a 17.5% increase, increased premiums by 12.8% and did not renew 5,000 policies.

Universal Property and Casualty, the state’s largest carrier, asked for a 12.4 percent increase; people’s confidence, 10.9 percent; AIG, 9.6%; Florida Family, 6.5%; and FedNat, 5.5 percent.

CPI operates in South Carolina and Louisiana, in addition to Florida, and owns SFPCI, which has 113,000 policies in Florida, South Carolina, Louisiana and Mississippi.

CPI had 108,870 policies in Florida as of May 3, according to OIR, making it one of the top 10 home insurance companies in the state.

OIR approved CPI’s request in May to dispose of 23,800 policies inherited from SFPCI in February 2019, leaving it with 84,000 Florida policies, “to protect the best interests of the public and policyholders.”

CPI initially proposed a 47% increase, changed it to 36.5% and then to 26.2% after the OIR issued a consent order in May allowing it to abandon the 23,800 policies because without cancellations, the carrier “will continue to generate unsustainable losses”.

CPI reported net losses of $ 5.1 million in 2017, $ 17.8 million in 2018 and $ 25.7 million in 2019.

At an IRO hearing in February, CPI / SFPCI President and CEO Jimmy Graganella said reinsurance costs and lawsuits were the main drivers of the rate hike, the fluctuation losses and coastal flooding unrelated to hurricanes also contributing.

Florida’s insurance structure is based on reinsurance, essentially insurance for insurers, as many independents that emerged after major carriers abandoned the state after the 2004-05 hurricane season are small-cap. .

Many rely on private capital from hedge funds and other sources that are essentially gambling. Hurricanes will not cause massive losses.

After a decade without a hurricane, Hurricane Irma of 2017 caused $ 17 billion in damage, and Hurricane Michael of 2018 caused up to $ 12 billion, ending an era of “soft prices”.

Since Florida allows claims to be filed three years after an event, reinsurers are hedging their bets by asking carriers to increase rates from 25 to 45 percent to account for increased losses from the 2017 storms. and 2018.

CPI also cited increasingly common coastal leaks and flooding due to rising sea levels as significant cost factors.

Graganella said that although Florida lawmakers revised the state’s ‘assignment of benefits’ (AOB) provision in 2019, excessive litigation continues to impose significant costs on insurers, with 36% of claims received. by its companies last year filed by lawyers on behalf of policyholders, up from 4% a few years ago.

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