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

With its abundance of unneeded new roofs on houses – 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 householders insurance coverage coverage will skyrocket to $4,231 in 2022, practically thrice the U.S. annual common of $1,544.

“Floridians pay the very best householders insurance coverage premiums within the nation for causes having little to do with their publicity to hurricanes,” stated Triple-I CEO Sean Kevelighan.  “Floridians are seeing householders insurance coverage turn into 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 elements contributed enormously to the web underwriting losses Florida’s householders’ 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 positioning of 79 % of all householders insurance coverage lawsuits over claims filed nationwide, though Florida’s insurers obtain solely 9 % of all U.S. householders insurance coverage claims, based on the Florida governor’s workplace. For example how lawsuits have weighed on insurer working prices, JD Supra, citing the Florida Workplace of Insurance coverage 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 web underwriting losses for Florida householders’ insurers totaled greater than $1 billion every year.

“The state’s householders’ insurers have been pressured to answer these unlucky market developments this yr by limiting new enterprise, non-renewing current insurance policies, and even canceling insurance policies mid-term,” Kevelighan stated. “What’s extra, 4 householders insurance coverage corporations have been declared bancrupt since February — all whereas extra People are shifting to Florida than every other state.”

Residents Property Insurance coverage 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.  Residents gives insurance coverage protection to householders unable to discover a private-sector insurer prepared to promote them a householders insurance coverage coverage.

Putting additional stress on the affordability and availability of householders’ insurance coverage within the state, third-party ranking bureaus have downgraded the monetary scores of some insurers working in Florida.

The everyday Florida householders’ 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 based mostly on knowledge and analyses from Florida’s OIR, the Nationwide Affiliation of Insurance coverage Commissioners (NAIC), and Triple-I’s estimates of what insurers are paying right this moment for house substitute prices.

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

To assist Floridians and others residing in pure disaster-prone states higher handle danger and turn into extra resilient, Triple-I launched a number of years in the past its Resilience Accelerator initiative, Kevelighan stated.

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

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