The Home Insurance Guru

The Board of Governors for Florida’s Citizens Property Insurance Corp. approved on Wednesday a 2015 rate package that reflects an overall average 2.9 percent statewide decrease for personal residential policyholders across the state.

Citizens said single family homeowners will see an average drop of 3.2 percent for the coming year under a slate of rate recommendations that must be approved later by the state’s Office of Insurance Regulation. Overall, personal and commercial rates will decrease by 1 percent.

Citizens said sinkhole rates in Pasco, Hillsborough and Pinellas Counties will remain the same for 2015. Sinkhole policyholders in Hernando County, which continues to have the highest loss ratio in the state, will see a 10 percent increase.

Citizens, Florida’s largest property insurer with over 928,000 policyholders, has raised its rates for four consecutive years.

But following eight hurricane seasons with no major storms, five years of rate adjustments under the glide path and historically low reinsurance costs, Citizens said nearly seven in 10 Citizens personal lines policyholders will see rate reductions in 2015, with 58 percent of customers receiving reductions of more than 5 percent.

Chris Gardner, chairman of Citizens’ Board of Governors, said the 2015 rates reflect Citizens’ best actuarial estimate of its rate needs for the coming year. “Following five years of prudent rate filings under the glide path, actuarial estimates now indicate rate reductions are in order for a significant number of our policyholders,” Gardner said.

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http://www.insurancejournal.com/news/southeast/2014/06/26/332946.htm

Florida’s largest property insurer may be dropping its rates next year.

Citizens Property Insurance is considering rate proposals for 2015 that would lower rates by about 3.2 percent for most homeowners. The state-created insurer says the proposal would apply to nearly 70 percent of those with homeowner policies.

The Citizens board will vote Wednesday on the proposal. State regulators must approve the plan as well.

Citizens, which has more than 928,000 policyholders, has raised its rates for four straight years.

But company officials say several factors have diminished the need for rate hikes next year. Citizens has built up a surplus because the state has not been hit with a hurricane since 2005.

Some customers, including those who live near the coast, will still pay more in the coming year.

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http://www.insurancejournal.com/news/southeast/2014/06/25/332929.htm

The parent company of one of Florida’s largest home insurers has entered into a non-binding deal to purchase another state-based insurer in a move that could affect 21,500 state policyholders.

HCI Group Inc. announced it will acquire Prepared Holdings LLC  and its subsidiary Prepared Insurance Co.

HCI Group is the parent company of the Tampa, Florida-based Homeowners Choice Property & Casualty Insurance Co.

The Tampa, Florida-based Prepared Insurance provides coverage to 21,500 policyholders, representing $48 million in annual premiums. The letter of intent sets the purchase price at $27 million less any monies owe under certain notes and other expenses.

The letter of intent also spells out other provisions of the deal, which have yet to be negotiated. Additionally, the deal is contingent on approval by the state’s Office of Insurance Regulation.

Homeowners Choice had 163,000 policyholders as of January 1, making it the seventh largest homeowners’ insurer in Florida.

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http://www.insurancejournal.com/news/southeast/2014/06/24/332778.htm

Florida’s passage of a homeowners’ claims bill of rights left few satisfied after lawmakers largely codified current law while avoiding controversial issues such as the practice of policyholders assigning their claims payments to contractors.

The bill of rights was a priority of the state’s Chief Financial Officer Jeff Atwater and was initially drafted by the state’s insurance consumer advocate’s office.

Atwater said the bill is needed given that about 350,000 homeowners file claims each year and his office receives 125,000 calls from policyholders either filing complaints or searching for answers about their claims.

“This much-needed bill of rights will notify Florida homeowners of their rights and responsibilities when filing an insurance claim and give them confidence that they will be treated fairly during a stressful situation involving their home,” stated Atwater.

The 12-point bill of rights is meant to inform homeowners of timelines such as one requiring insurance companies to acknowledge a claim within 14 days of being filed. Additionally, insurers must within 30 days of receiving a proof-of-loss statement, confirm a claim is covered, partially covered or denied. Within 90 days, insurers must either pay the claim in full or in part or deny the claim.

The bill of rights also advises policyholders what they need to do in case they have property damage, including that they should contact their insurer before hiring a contractor.

While Atwater and his allies have been declaring victory, some who participated in crafting the bill walked away disappointed in an outcome that created no new legal rights for homeowners or insurers.

What seemed at first a rather non-controversial piece of legislation turned into a heated debate over a so-called “assignment of benefits” provision.

Under this provision, homeowners can sign over their financial rights to be paid for a claim so that instead the payments are made directly to a contractor making repairs instead of to the homeowner.

The contractor also assumes the policyholder’s legal right to dispute a claim and file suit against an insurer. If the contractor prevails in court, in addition to the insurer having to pay the claim, it must also pay the contractor’s legal bills.

From insurers’ point of view, this has created a cottage industry where trial lawyers and contractors work to maximize the monies they can receive from insurers regardless of the real cost of the claim.

Personal Insurance Federation of Florida Executive Director Michael Carlson said that is a major reason his association supported doing away with the assignment of benefits.

“What we are seeing under assigned benefits is unscrupulous contractors who tell homeowners that in order to get repairs they have to sign a form signing away their rights,” said Carlson. “Then the vendor will inflate the claims costs then tell the insurer you owe us this much or we will sue you.”

Carlson said that in addition to increasing claims costs and unnecessary litigation, the assignment of benefits practice keeps consumers in the dark about their own claims. For example, he said, policyholders have had lawsuits filed on their behalf without their knowledge.

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http://www.insurancejournal.com/news/southeast/2014/06/23/332627.htm

Florida Gov. Rick Scott has signed legislation designed to encourage private insurers to offer flood insurance, but the industry is tamping down expectations that it will result in a viable market in the near future.

The legislation creates a statutory framework allowing private insurers to offer four different types of flood coverage ranging from standard coverage, which mirrors the current National Flood Insurance Program policies, to three other enhanced coverages.

The legislation also allows private insurers to file their own rates prior to October 1, 2019, after which they must be approved by regulators. The time period is so Florida insurers can develop state flood data that is currently not available under the NFIP.

Florida Insurance Commissioner Kevin McCarty says it will ultimately benefit consumers.

Biggert-Waters Debate

Lawmakers first pursued the flood insurance bill with a sense of urgency in response to the federal Biggert-Waters Insurance Reform act of 2012, which was designed to address a $24 billion funding shortfall in the National Flood Insurance Program caused largely by hurricanes Katrina and Sandy.

Biggert-Waters required some flood premiums to rise, in some cases substantially, until they attained actuarial levels and for most subsidies to be phased out. It also called for new flood maps that also raised some premiums and expanded flood zone areas so that more people had to buy coverage.

Eliminating long-time premium subsidies on homes built before 1974 and keeping property owners from pass along those subsidies when they sold their homes meant that 280,000 Florida homeowners faced rate increases and other confronted difficulties selling their homes.

More than two million Florida residents are covered through the NFIP, and state’s policyholders pay $3.60 in premiums for every $1 in claims, factors some say favor the creation of a private market.

However, after there was a public uproar over the Biggert-Waters changes, Congress amended that reform law to limit rate increases, retain premium subsidies and allow subsidies to pass through to new owners when a house is sold. As a result he urgency over the need for a private market waned.

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http://www.insurancejournal.com/news/southeast/2014/06/17/332214.htm

A Florida judge has signed-off on a plan by regulators to allow a failed Florida property insurer’s policyholders to be assumed by another company, although policyholders will retain the option to seek coverage elsewhere.

Leon County Judge Kevin Carroll on Friday approved the deal that could result in Heritage Property and Casualty Insurance Co. assuming as many as 36,000 policyholders left seeking coverage due to the insolvency of the Sunshine State Insurance Co.

The Jacksonville, Fla.-based Sunshine State was taken over by the Department of Financial Services Division of Rehabilitation and Liquidation on June 3 after the state Office of Insurance Regulation reported the insurer could no longer meet the state’s capital requirements.

Sunshine State officials said that an accounting error related to its 2008 and 2011 catastrophic reinsurance treaties and a 2013 fourth quarter operational loss left the insurer in an untenable financial position.

Subsequent to taking over Sunshine State, the DFS held a bidding process that involved 10 companies that were evaluated based on a number of criteria including rates, surplus, catastrophic coverage and other financial considerations.

As a result, the Clearwater, Florida-based Heritage secured the non-exclusive rights to assume Sunshine State’s residential homeowner and condominium book of business.

DFS Spokesperson Chris Cate said the goal is to continue Sunshine State’s policyholders’ coverage with as little disruption as possible.

“We make it a top priority to ensure that the impacted policyholders are able to maintain coverage with a sound company and that families are protected in the event of a damaging storm or other unforeseeable disaster,” said Cate.

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http://www.insurancejournal.com/news/southeast/2014/06/16/332133.htm

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Florida regulators have taken over an insolvent domestic residential property insurer, but a deal is in the works for another private company to assume the insurer’s 37,000 policies.

A Leon County Circuit Court judge issued an order earlier this week clearing the way for the state Department of Financial Services to take over Sunshine State Insurance Co.

In issuing the liquidation order, the judge cleared the way for United Property & Casualty Insurance Co. (UPC), which had looked into buying the insurer but pulled out of those talks, to assume Sunshine State’s existing policies.

Sunshine State’s financial woes became apparent in February when the insurer first reported to regulators that it would fail to meet a March 1 deadline to file its 2013 annual financial statement. Sunshine State reported that it had discovered an accounting error related to its 2008 and 2011 catastrophic reinsurance treaties. The cost of fixing those errors, plus an operation loss in the fourth quarter of 2013, forced the company officials to tell state regulators that it could no longer meet the state’s surplus requirements.

Insurance Commissioner Kevin McCarty then ordered Sunshine State to either increase its surplus by $15 million or be acquired or recapitalized by another company along with a good faith deposit as of May 15.

McCarty further ordered that if Sunshine State could not meet the May deadline, the insurer would be required to transfer its policies to another insurer or provide a 45-day written cancellation notice to its 37,684 policyholders.

United Insurance Holdings Corp., parent of UPC,  expressed an interest in purchasing Sunshine State in a letter of intent on May 15, the date regulators set for Sunshine State to either increase its surplus by $15 million or find a buyer.

However, a few weeks later, UPC President John Forney, in a letter to regulators, said that after a further review of Sunshine State it would no longer keep that commitment.

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http://www.insurancejournal.com/news/southeast/2014/06/04/331022.htm

The new line will be written by Heritage’s wholly-owned subsidiary, Heritage Property & Casualty Insurance Co.

Randy Jones, commercial president, says the commercial residential program was developed after feedback from its agent partners helps to fill a market need. “Because of their size and overall complexity, many of these properties may not qualify under the typical eligibility guidelines established by other companies.”

The Commercial Division is led by Jones and Arlene Luis, executive vice president, who both have over 30 years of combined experience in the Florida market and worked at American Capital Assurance prior to joining Heritage.

The new commercial residential line will offer a ange of commercial products, including coverage for condominium associations, homeowner associations, continuing care retirement communities, and apartment complexes.

Based in Clearwater, Fla., Heritage Insurance offers home, condominium, rental, and commercial residential insurance through a network of independent agents.

Please call L & S Insurance at 1-888-244-7400 for quotes on Home, Auto, Flood, Business & Commercial and Life & Financial products as well.

http://www.insurancejournal.com/news/southeast/2014/06/02/330742.htm