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The Florida Office of Insurance Regulation is monitoring the state’s property insurance situation that is seen as in a crisis by those in the industry.

The regulator said the insurance market has been buffeted by multiple hurricanes in the last several storm seasons, as well as by other market challenges like assignment of benefits (AOB) abuse, that “have led to high loss reserve development, increased litigation, and increased cost of catastrophe reinsurance.”

As a result, Florida carriers are recording unprecedented losses and responding with drastic rate increases and a major pullback in capacity.

“Unfortunately, these developments have presented challenges not only to our property industry, but also to our consumers,” OIR stated.

This is the second article in a two-part series examining the Florida insurance market: Read Part One: Florida Property Insurance Market Inches Closer to Crisis – Part 1

While it is too early to know the full impact of the new AOB law, OIR said it has issued a data call to begin tracking its effect. Starting in 2022, OIR will institute a statutorily mandated annual data call to understand the full impact of legislation on the market.

Additionally, OIR is currently performing an analysis of insurer holding company affiliates. In July, it sent a letter to 60 companies it regulates requesting information of the companies that is “intended to best inform the Office how the underwriting results of your company may be improved,” the letter stated.

When asked why OIR requested this info at this time, the regulator told Insurance Journal the analysis is a targeted examination of insurers to evaluate their MGAs and other affiliates within the holding company system as a “supplement to OIR’s ongoing activities throughout the year.”


Legislative Fix

The industry says the only way to stem the tide of rising litigation and rates is to enact legislation that addresses the market’s cost drivers. Some ideas that have been floated include shortening the timeframe for filing initial hurricane loss claims from three years to two – as is the case with sinkhole damage – and eliminating the contingency fee multiplier on property lawsuits.

“We think it’s entirely inappropriate to provide a [fee] multiplier to an attorney who represents a homeowner on a typical property claim,” said Michael Carlson, president of the Personal Insurance Federation of Florida.

Carlson said stakeholders are looking at something similar to a law passed in Texas in 2017 to address hailstorm lawsuit abuse. That law limits liability for insurance companies following storm damage by requiring notice before a suit can be filed to allow the insurer to address any outstanding claim issues. Attorney fees may not be awarded if the court finds the insurer was entitled to but not provided with pre-suit notice. It also cuts penalties for insurers sued for offering too little money on storm claims, including wind and hail damage, while making it harder for those suing to collect attorneys’ fees.

Please enjoy the full article below;