November 2015

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

The Florida Office of Insurance Regulation (OIR) ordered Florida’s largest property insurers on Oct. 23 to submit detailed information on water loss claims, mitigation services, litigation and assignment of benefits. OIR stated the data call would help evaluate the impact that assignment of benefits is having on property claims.

OIR is requiring the top 25 HO-3/dwelling fire writers in Florida to submit information for this data call, including Citizens Property Insurance Corp. However, OIR said the data call is available to any personal residential property writer that would like to participate. The deadline for companies to submit this information is December 7.

The insurers are required to provide responses on issues ranging from how claims are filed and how much is paid, to detailed claims information, including names and addresses of the water mitigation companies, contractors, public adjusters and attorneys representing policyholders on claims going back to January 2010. OIR also has requested specific geographic information on where losses are occurring across the state.

Citizens, the state’s insurer of last resort, has been vocal about its rapid rise of water loss claims since 2012, particularly in Miami-Dade County where the frequency and severity of water loss claims far exceeds any other region in the state, the company said.

Citizens President, CEO and Executive Director Barry Gilway welcomed the data call request, saying he’s confident the OIR investigation will provide data from private companies that corroborates Citizens’ analysis that water claims are the leading driver of rates across the state, especially in South Florida.

“As the state’s non-profit insurer of last resort, Citizens is doing all it can to keep premiums as low as possible for our policyholders,” Gilway said. “The surprising increase in the frequency and severity of water loss claims, particularly in Miami-Dade County, over the past several years makes it more difficult for us to control the need for rate increases.”

A Citizens analysis of premium costs shows that water loss claims account for 33 cents of every premium dollar paid by its Florida customers. But in Miami-Dade, more than half of every premium dollar goes to pay for water loss claims, Citizens said.

“The bottom line is this. Were it not for water losses, most Miami-Dade customers would see a decrease in rates for 2016,” Gilway said. “As it stands, however, the average homeowners’ rate in Miami-Dade will climb by more than 6 percent.”


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

The property insurance market in Florida has significantly shifted in market share as Citizens Property Insurance Corp. (Citizens)—the state-run property insurance company—continues to depopulate and move policyholders to the private market, which has increasingly seen the emergence of newly formed, in-state writers.

While these new companies have experienced significant growth driven by the dynamics of Citizens’ shifting market position, there is significant risk as proper risk management, risk analytics and overall infrastructure to manage the growth are in some cases untested, according to a new special report from A.M. Best.

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While Florida has not had a significant hurricane in the past few years, it has been impacted by other unique issues, including sink-hole claims. The Best’s Special Report, titled, “Florida Property Insurers Remain Untested: Will 2015 Be the Year?,” states that these storms along with sink-hole losses, escalating reinsurance costs and general market conditions have caused many larger, national carriers to reduce Florida property exposures. Beginning in 2007 and continuing to the present time, many of the long-term top 10 insurance market leaders have been replaced by several less-experienced companies.

A.M. Best’s analytical process for Florida-concentrated companies encompasses the same qualitative and quantitative evaluations as all companies do.

In the case of those companies with exposure to wind events, a key component in the analysis is its exposure to hurricane loss and the recoveries of reinsured losses. Not surprising, many companies have a very high gross probable maximum loss. In addition, a stress test is performed on the company’s capitalization that measures the capital position post an event and its ability to absorb a subsequent event on its capitalization.

As was evident in 2004, when several hurricanes caused significant insured property losses, the possibility of multiple severe events and correspondingly multiple reinsurance retentions and reinstatements is a real possibility.

This group and the other carriers will eventually be tested when the major hurricane(s) make landfall in Florida. While the financial resources to respond to all their affected policyholders financial loss is considered measurable, the operational resources to handle the volume of claims in an efficient and timely fashion will be equally tested. A.M. Best will continue monitoring the Florida market, with analytical emphasis put on catastrophe risk management and the standard and stress-tested scenario measurement of risk- adjusted capitalization. Understanding each entity’s financial condition after single or multiple catastrophe events, as well as its ongoing ability to respond to subsequent events, continues to be a critical component of the interactive A.M. Best analysis and the assignment of ratings.

Source: A.M. Best

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