Florida insurance market needs strong medicine in English 2022


Florida insurance market needs strong medicine in Hindi 2022: If Florida's homeowners' insurance market were on a medical exam, the diagnosis would find the patient in dangerously poor condition. The patient's vital signs—his financial consequences—are troubling. What's more, there are many co-morbidities. The reception of symptoms collectively reveals the patient to be one step away from the emergency room. Consider the seven symptoms of the disease below:

insurance market
insurance market

1. Red ink. Insurers operating in Florida report highly unprofitable results. Insurance companies collectively lost $1.5 billion of their Florida businesses in 2021, a year with no hurricanes hitting the peninsula.

In 2016-2019, Florida's homeowners insurance market reported a combined ratio of 117.5 percent. This means that for every hundred dollars of premiums received, insurers paid $117.50 in damages and expenses. It reports a combined ratio of 100.7 percent compared to the overall insurance industry. The industry's investment earnings ratio -- investment income divided by net premium -- yields profitable overall industry results with a seven-point profit margin of 7.9 percent. Investment income, however, wasn't enough to drag Florida homeowners' businesses into the black, as investment income resulted in an operating margin of 109.6 percent, meaning Florida homeowners insurers averaged one hundred dollars in premium revenue each. To lose $9.60.

2. Administration of the funeral. Several Florida insurers have gone bankrupt in recent months and years. The common denominator in corporate obituaries from these companies is the claim cost far higher than the premium increase. The most recent casualties include Gulfstream, Avatar and Johns.

3. Be a solitaire. Many property insurers are realizing that continuing in the Florida market is bringing in good money after bad, and are strategically withdrawing from the state. The most recent such announcement was in March from Lexington Insurance Company, part of the American International Group family. What is troubling Lexington's departure is that Lexington is an excess and surplus (E&S) line insurer. E&S companies focus on high-risk business no standard insurer would touch. While standard insurers move out of burning buildings (figuratively), E&S carriers move into burning buildings. Because they are willing to insure the business others will not, regulators allow E&S insurers the freedom to charge premiums and issue insurance contracts as they see fit, without the standard lines insurer having to oversee rates. and forms without following the railings established by state-based insurance regulators.

4. Limit your losses. Insurers that continue to operate in the Sunshine State are taking defensive tactical measures, canceling policies, limiting coverage and raising rates

5. Those who fight and run away live to fight another day. The growth and profitability strategy for insurers with a Florida footprint is to grow their business out of state while shrinking their Florida portfolio. For example, Legacy Insurance, which had 86 percent of its 2021 business in Florida, reported in its Q4 2021 earnings call that policies for Florida personal lines were down 10.9 percent and personal lines outside Florida were up 10.7 percent. .

6. Inflammation of citizens. Citizens Property Insurance Company (Civil), a state-run "insurer of last resort" is becoming an "insurer of first resort" as private market insurers avoid offering coverage to customers who cannot find insurance elsewhere. In late March, Citizens President and CEO Barry Gilway estimated that his company could have more than a million policies in place by the end of 2022. Citizens is adding about 5,500 new policies per week. At the end of March 2022, citizens had 801,341 policies, up from 570,000 a year earlier.

7. Litigation went wild. In a recent Citizens report, Gilway also noted a "troubling trend" in litigation year-on-year as of June 2021—the number of lawsuits against insurers, excluding citizens, from year-on-year is 51. The percentage rose to 50,951 versus 33,800. First six months of 2020. The longer-term picture is troubling—the same report shows an increase in Florida homeowner lawsuits from 27,416 in 2013 to 85,007 in 2020.

Litigation, Litigation, Litigation

Unlike many Louisiana insurance companies that fell victim to damages from Hurricane Ida in 2021, Florida insurance failures and pullouts were not driven by natural disaster damages. The cause of the Florida crisis is excessive litigation.

Although excessive litigation is the proximate cause of Florida property insurance issues, it is not fair to blame lawyers. Lawyers sue - it's their job. The problem stems from a set of laws and the unintended consequences of state Supreme Court rulings that have enabled contractors, lawyers and homeowners to increase the number and value of claims payments. A comprehensive report by Guy Fraker on the dire state of Florida insurance agrees with this assessment, finding that "everyone is taking advantage of the rules of the game."

The Florida Office of Insurance Regulation 2020 Annual Report presents the striking statistic that “Florida accounted for 76.45% of all homeowner suits opened against insurance companies in the US in 2019, while all homeowners’ suits opened by insurance companies.” The claims accounted for only 8.16%. America."

The Cure
Reforming the broken Florida homeowners insurance market required the resolution to pass a comprehensive set of reforms in the state legislature. In the legislative session ending March 2022, the only significant bill to be introduced was SB 1728, which was temporarily adjourned, and ultimately never reconsidered in the final days of the 60-day regular session. have failed. The bill is meant for unscrupulous roofing contractors, but it's very thin medicine for a critically ill patient who could go on life support if this year's hurricane season worsens.

Just as operating a patient suffering from multiple ailments is complicated, resolving Florida insurance issues is no easy undertaking. We suggest introducing the following legislative initiatives:
Kill the roof replacement monster. Roofs should be valued on actual cash basis, not replacement cost. A homeowner's insurance policy is not a maintenance agreement. Natural deterioration of the roof is not a cover for damages.

SB 76, approved in the 2021 legislative session, took aim at unscrupulous roofing contractor solicitation practices, including contractors promising "free roofs" when any damage is a result of roof age rather than wind damage. A federal court blocked that part of the bill, alleging that soliciting roofing contractors is a form of protected free commercial speech.

SB 1728, as introduced in the 2022 legislative session, would allow contractor solicitation and advertising, provided the contractor submits a statement to the homeowner clarifying that the homeowner is responsible for paying the deductible. The statement also said that it is a felony for the contractor to waive the deductible or file a claim with false information. It will also introduce only roof deductible for new policies.
Direct high-risk assets to the E&S market. Properties exposed to high hazards because of location or because their construction is not stormproof should not be artificially subsidized by the broader market. In California, which has its own homeowner insurance issues from wildfires, the amount of E&S homeowner premiums has tripled since 2018.
Eliminate one-way attorney fees. Plaintiffs assigned as repair service providers for insured damage account for about a third of lawsuits filed against insurers. Only a few plaintiff attorney firms have a high level of concentration.
Introduce loadstar charges. A LostStar fee is an attorney's fee calculated by multiplying the appropriate number of hours spent on a case by the appropriate rate. A bill (SB 1910) was introduced to achieve this reform in 2022, but it died in the Banking and Insurance Committee.
Improved Citizens. Citizens must have rates reflecting the inherent risk of the asset. Citizens' rate hikes are artificially capped at a maximum of 11 percent. There is no cap on rate filing in the private market, which gives the state regulator an actuarial justification for the requested rate change.

Without a special session focusing on pressing Florida property insurance problems, it appears the situation will only get worse. June 1 is the renewal date for reinsurance treaties protecting Florida insurers. Expectations are for an increase in the reinsurance rate, which will be given to homeowners, pushing Florida homeowners' insurance premium levels to an even higher level. June 1 is also the official start of the Atlantic hurricane season. If there is one ray of hope for this cloud, it is that the additional pain could prompt legislators to take action and support the reforms needed and do so with remittances.

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