Despite legislative reforms passed during the 2021 Legislative Session, Florida’s homeowners have continued to see dramatic property rate increases. At the same time, the insurance industry is losing billions to unnecessary lawsuits from third-party contractors. In the first three quarters of 2021, financial results show that property insurers had $1.22 billion in underwriting losses. So, what does this have to do with your property insurance rates going up? Everything.
Florida’s insurance marketplace has been plagued by unscrupulous cottage industries whose business model is capitalizing on consumers’ insurance policies. Bad actors in construction, roofing, public adjusting, and legal industries have used abusive solicitation and marketing tactics to manipulate the claims process for their benefit. Only 8.15% of all U.S homeowner claims were opened in Florida in 2019. Yet, Florida accounted for more than 76% of property claim lawsuits in the U.S. The cost of bad actors and third parties filing false or inflated insurance claims is passed along to all of us.
January 2022 saw a steep increase in litigated claims, the first month to do so for a while. January’s steep increase could be the result of a return to normalcy following the holidays, or it could be that claims are now flowing through SB76’s new process and into litigation. It bears mentioning that these numbers alone likely aren’t enough to assess the state of the market.
Two more property insurers, including one of the largest insurers in Florida, have stopped writing new policies in the state, marking the fifth and sixth carriers this year to pull back from the turbulent Florida waters. The news about struggling insurance carriers in Florida has become almost routine. In the past three months, some of the best-known insurers have said they will stop writing new homeowner policies or won’t renew thousands. While an almost-unprecedented number of companies have pulled back from the Florida market in recent months, other carriers can still be found to write homeowners insurance – It all depends on what part of the state you’re in. Everyone is seeing rate increases,especially when they get that letter in the mail that they have an escrow shortage. Insurance industry advocates have said the rate increases and writing suspensions show that the Florida market is in deep crisis, affecting homeowners, businesses and the real estate market. Many have pinned their hopes on more legislation that could help curb claims litigation and roof-replacement costs, among other changes.
These rising litigated claims figures and AOB cases will not give underwriters confidence that legislative efforts are going to stem this tide and may be yet another driver for a harder reinsurance renewal season in Florida in June.