January 2021


Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

First American Financial Corporation, a global provider of title insurance, settlement services and risk solutions for real estate transactions, announced that its property and casualty insurance subsidiaries have entered into book transfer agreements with Safeco, a Liberty Mutual Company, and Heritage Insurance Holdings. The agreements provide qualifying First American property and casualty insurance agents and customers an opportunity to efficiently transfer their policies to Safeco or, in certain circumstances, Heritage.

The entry into these agreements is the result of the initiation of a process by the company, announced in October of last year, to exit its property and casualty business and to maintain focus on its core business.

“Safeco and Heritage are leaders in book transfer arrangements and have a strong commitment to serving independent agents,” said Dennis J. Gilmore, CEO, First American Financial Corporation. “These agreements allow us to exit our property and casualty operations, while providing a valuable option for many of our agents and customers to move forward with established and well-respected carriers.”

The company expects the transfer to be completed by the end of the third quarter of 2022.

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

Law firms that have gone up against Allstate Fire and Casualty Insurance Co. in the past four years could be eligible for a piece of the pie in a new lawsuit — if it ever gets to a verdict or reaches a settlement.

A Houston law firm wants to form a class action with other Texas personal injury plaintiffs firms in a lawsuit against the major car insurance company that allegedly put up unqualified expert witnesses just to drive up litigation costs.

Allegations against Allstate

The plaintiff, The Estes Law Firm, estimated in its complaint that the class could include more than 10,000 Texas law firms.

Plaintiff lawyers who oppose Allstate are forced to spend their time and resources responding to improper affidavits by three other defendants that Allstate uses as expert witnesses, Marc Chapman of Austin and Dallas residents Rhonda Guitreau and Jana Schieber said the original complaint in Estes Law Firm v. Allstate Fire and Casualty Insurance Co.

Attorneys at Rusty Hardin & Associates in Houston are representing the putative class. Partner Ryan Higgins said the Hardin firm has a case where Allstate used one of the three experts and was doing research to prepare a motion to strike the expert. He and the other two expert witnesses had been struck by courts over and over again.”

“Clearly, it is a strategy to increase the costs for the case to be prosecuted,” said Higgins. “If I spend an additional 20 hours dealing with an affidavit that is going to be struck, it is time away from plaintiffs counsel. It doesn’t ultimately impact the client himself. What it does — it is part of strategy, we believe — is to make it difficult to litigate cases against Allstate.”

Supporting arguments against Allstate

The litigation alleged Allstate has been retaining the witnesses “in an effort to improperly harass and defraud plaintiffs and all other members of the class.” When Allstate uses one of the three witnesses, it forces a plaintiff’s attorney to incur time and expenses to file motions to strike them. When that fails, plaintiffs lawyers must do depositions of their own experts or bring them to trial, so they can counter the improper affidavits.

The complaint explained that Texas Civil Practices and Remedies Code Ch. 18 lays out the procedure for a plaintiff to recover medical expenses in litigation. In an affidavit, they list the doctor, how much expenses they incurred, and how much they’ve paid already. The court uses the form to prove up medical bills and expenses. This allows a plaintiff to avoid bringing his doctor to court to testify about medical bills.

The law also gives a defendant the chance to file a counter-affidavit that means they intend to controvert a medical expenses claim. A qualified expert witness with experience in the relevant medical field, must prepare the counter-affidavit.

“Allstate, in an effort to harass, delay, and bully plaintiffs and their lawyer, intentionally ignore the requirements of Chapter 18 and hire unqualified people to prepare so-called controverting affidavits in areas they have no knowledge, skill, training, education or experience,” said the complaint.

Chapman isn’t a doctor. He’s a consultant who used to be a hospital reimbursement manager who sent out its bills. The complaint alleged he has zero qualifications to offer opinions about whether a medical bill is reasonable. But Allstate keeps hiring him to write affidavits saying bills are too expensive for surgeons, doctors, chiropractors, radiologists and other providers, the complaint alleged. It added that Allstate knows he’s not qualified.

“Chapman’s affidavits and opinions have been struck by almost every court in Texas,” the complaint said. “It is easier to list the courts where Chapman has not been struck than to identify every case and court striking Chapman.”

Similarly, the complaint alleged that Schieber — a nurse in the 1990s — isn’t qualified to talk about billing rates for most medical providers and courts have struck her repeatedly. She may only be a qualified witness if talking about a nursing bill from the 1990s, the complaint said. It added that Guitreau — also struck by most Texas courts as an expert — only has experience in hospital administration where she sent out bills for hospitals.

The Estes Law Firm is suing the defendants for fraud and civil conspiracy and trying to recover actual damages, attorney fees and court costs and punitive damages for itself and the whole class of Texas plaintiffs law firms that have dealt with Allstate.

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

Florida’s property insurance market is “spiraling towards collapse” and requires immediate attention if there is any chance of protecting the market, consumers, and ultimately, the state’s economy, according to an analysis about to be presented to the Florida Legislature.

The report points a finger at the state’s “litigation economy” as the main contributor to insurance market woes— seeing it as more of a direct cause than the many weather events Florida has suffered.

Among its findings:

  • Litigation costs are 17% higher for insurers in Florida than in other catastrophe-prone states.
  • The fees paid to attorneys by Florida carriers far exceed the damages paid to the insureds.
  • In 2019 alone, Florida insurers paid almost $3 billion in lawsuit costs that translated into higher premiums for insureds.
  • Although the volume of claims after storms is a factor in costs, claims unrelated to catastrophes account for approximately 60% of all litigation.
  • Florida consumers are paying a “hidden tax” to fund the litigation that averaged about $680 per family in 2020.

The report, “Florida’s P&C Insurance Market: Spiraling Towards Collapse,” was authored by Guy Fraker of Cre8tfutures Innovation System & Consultancy. Fraker has worked with the insurance industry for 30 years, including on auto insurance and autonomous vehicles, and with primary carriers, reinsurers and related sectors.

In tracing how the market got to the crisis point, the report identifies four Florida laws passed between 2011 and 2019 as fostering the litigation crisis. They are statutes governing assignment agreements, mandatory replacement cost coverage for residential roofs, multi-year statute of limitations to file a first notice of loss and the one-way attorney fee s that were

Also, two state Supreme Court rulings have exacerbated matters.

This litigation environment has carriers steadily hemorrhaging capital and surplus. Fraker’s report says the roughly 6% of homeowners insurance claims being litigated are equal to the cost of a “good solid Cat 3 hurricane” every 12 months.

“This market is at a critical inflection point. The longer and broader these trends continue, the more likely the state will face a recovery measured in generational time horizons,” the report warns. “The time for hoping some theoretical break point doesn’t materialize is over.”

Fraker was commissioned last year to do the Florida market analysis by insurers, lawsuit reform groups, and others. Florida State Senator Jeff Brandes, a member of the Senate Banking and Insurance Committee who has been sounding alarms about the Florida property insurance market, helped spearhead the effort.

Fraker’s study argues that the state’s residential P/C insurance marketplace “faces a convergence of existential threats in the form of increasingly unpredictable claims litigation, from rising costs of risk capital and from its persistently high exposure to natural catastrophe risks.”

The report argues that “targeted legislative reforms are needed in order to preserve the insurance industry’s viability while serving property owning Floridians and Florida’s economy,” while adding that “without intervening public policy solutions, the residential property insurance marketplace will experience failure.”

Fraker said in an interview with Insurance Journal that he agreed to do the report on “behalf of Florida’s economy and Florida’s consumers, not the industry [or] any other stakeholder groups.”

In compiling the report, Fraker said he interviewed insurance executives from companies, regulators, lobbyists/advocates, plaintiff counsel firms, defense counsel firms, building and roofing contractors, consumer advocates, reinsurers, ratings agencies, as well as investors and a climate scientist. He also analyzed litigation records and reviewed thousands of documents from regulators.

While Florida has faced three consecutive years of major hurricanes from 2017 to 2019, insurers have insisted that the insurance problems are tied to an exponential increase in litigation.

Florida domestic carrier results showed a continuous drop in surplus over the last five years that culminated in a single year underwriting loss of more than $1 billion through the third quarter of 2020.

Florida Insurance Commissioner David Altmaier told the Senate Banking and Insurance Committee on Jan. 12 that carriers were on pace to nearly double their losses in 2020 compared with 2019, as their surpluses fell from $6.7 billion to $6.1 billion in just the first three quarters of the year. The combined ratio for Florida domestics was over 100% in the third quarter of 2020 and has been “trending upward for several years.”

Carriers writing property risks in the state have been responding by pulling back capacity in certain areas including south Florida and more recently central Florida, along with filing for rate increases. Altmaier said insurers submitted 105 rate filings in 2020 for increases of 10% or more and 55 of those filings were approved; in 2016 only six rate increases were approved.

Florida’s insurer of last resort, Citizens Property Insurance Corp., has received a flood of new policyholders over the last year as consumers struggle to find coverage in the private market.

The problems are also starting to impact Florida insurers’ ability to get reinsurance capital in the catastrophe prone state.

“These losses are having a direct impact on the surplus position of our industry,” Altmaier said. “As capital and surplus deteriorates, companies lose the flexibility to be able to write additional business … that has consequences for the consumer.”

Litigation Explosion

Fraker blames a convergence of several events that have “moved the market from stabilizing towards total collapse.”

Fraker said four individual Florida statutes governing assignment agreements, mandatory replacement cost coverage for residential roofs, multi-year statute of limitations to file a first notice of loss and the one-way attorney fee statute were passed between 2011 and 2019 “individually and in an isolated form without real consideration for how they might someday form a relationship.”

Additionally, two Florida Supreme Court decisions – Joyce vs. FedNat (2017) that found a contingency fee multiplier does not need to be reserved for rare and exceptional circumstances; and Sebo vs. American Home Assurance (2016) where the court shifted to using the Concurrent Causation Doctrine that permits a covered cause of loss (such as wind) to combine with damage caused by non-covered cause of loss – helped propel the market towards crisis.

“The combination of these policies and court decisions represents an ideal combination for significant financial exploitation,” the report states. “The volume of claims following each major storm became the fuel and the architecture for an economic engine distinct to Florida generally referred to as ‘Litigation

Insurers have racked up more than 200,000 lawsuits since 2013, many of them stemming from non-catastrophe water damage and roofing claims, and many of them with assignment of benefits agreements attached. After reforms were passed in 2019, there was a dip in AOB lawsuits, particularly for Citizens, Fraker notes. However, by the third quarter of 2020 plaintiff attorneys had established a work around to AOB with a “Demand to Pay,” instead filing first party suits against carriers.

According to Fraker, the cost of this litigation cannot be understated. He found that while there has been an obvious influence of catastrophic storms on claim frequency, non-catastrophe claims have accounted for approximately 60% of all litigation filed against Florida’s domestic companies while 40% of the litigation is associated with cat losses.

In analyzing more than 3,000 insurance cases, Fraker found that litigation costs are 17% higher for Florida insurers than in other catastrophe-prone states. The fees paid to attorneys by Florida carriers for this litigation are on average more than 750% of the damages paid to the plaintiffs/insureds. In one case Fraker examined, the plaintiff attorney was awarded 21,041% of the damages in fees.

Insurers have paid out more than $12 billion in fees to attorneys since 2013 and were engaged in more than 221,000 suits between 2014 and 2020, according to the report.

The costs of all this litigation equals approximately $3 billion in expenses “being forced upon Florida property owners,” the report states. In 2019 alone, Florida insureds paid between $2 billion and $2.7 billion in costs allocated to suits in the form of increased premiums.

Fraker said just 8% of damages are paid to insureds while plaintiff attorneys receive about 71% of the insurance litigation cash flow “because they are allowed to, not because plaintiff attorneys are motivated to do harm.”

Insurer defense costs range from 237% to 307% of damages, or 21% of total litigation.

“Florida’s P&C litigation economy may be rooted in hurricane recovery. However, like every emergent economy, the state’s litigation economy required nurturing and protections in order to become established,” the report says. “Yet, unlike an economic system balanced by governance relevant to all stakeholders, Florida’s litigation economy operates almost entirely at the expense of insurers, then ultimately the State’s economy and resident consumers. As a result, the value of corporations, the value of jobs, and spendable consumer income is either destroyed or greatly degraded.”

Forecasting Litigation

It isn’t just Florida insurers paying the price of the litigation. Reinsurers and investors are paying close attention to the Florida market because it is no longer profitable, and they are now seeing a negative return on their investments.

Florida carriers already pay 30% to 35% more on reinsurance premiums than other hurricane prone states and soaring litigation costs creates more concern. Fraker said insurers have underestimated preliminary damage assessments immediately following a hurricane by an average of 300% because of unforeseen litigation costs and that is also influencing reinsurance rates.

For reinsurers as well as domestic carriers reflecting upon 212,000 litigated cases since 2015, the inability to reliably model litigation “is the final push off the cliff for Florida’s P&C market.”

Fraker said because “there’s no way to reliably forecast the dollars and cents of this litigation storm,” he created a new financial construct called the litigation probable maximum loss (LPML). It is similar to the probable maximum loss (PML) model companies use in modeling catastrophic storm damage, but the LPML forecasts the range of litigation frequency and severity from thousands of insurance litigation data points extracted between 2016 to 2020.

“Output from forecasting litigation costs through this construct is an assessment of litigation frequency and severity uncertainty, which is significantly influencing reinsurance rates in Florida which then becomes a cost burden affecting Florida’s domestic carriers, and ultimately for Florida consumers,” the study notes.

Florida consumers are the ultimate victims of what is happening Fraker says, as they are essentially paying a “hidden tax” to fund the litigation. This hidden tax averaged $487 per family in 2019, and is growing annually by 25.6%, totaling about $680 per family in 2020. That “tax” is being paid to less than 2,500 attorneys and contractors in the state.

Meanwhile, the narrative by plaintiffs’ attorneys that insurance companies created this crisis because of poor claims’ handling practices is a “catastrophic PR failure” on the part of the industry, Fraker said.

“The reality is whether it’s a catastrophe claim or not, 92.5% of all claims are closed within a year; 80% of the claims that require more than one year involve representation by a third party,” he said. The carriers in the marketplace have between a 95.2 and a 98.3 policy holder retention rate, he writes.

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

The coronavirus pandemic has brought life insurance to the top of the priority list for many Americans. Fully a third of consumers last year reported that they had purchased or were planning to purchase new or additional life insurance, according to a survey from Lincoln Financial.1https://368159e4de58b81707e3a5ea674cad33.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html

KEY TAKEAWAYS

  • Life insurance applicants with no COVID-19 risk factors will see lower rates.
  • Insurers will soften COVID-19 restrictions on issuing policies.
  • More insurers will offer no-exam life insurance policies.
  • Hybrid life insurance policies will continue to proliferate, but guaranteed universal life may be on the way out.

Looking Back on 2020 and Ahead in 2021

“Anytime you have an event that’s as impactful as COVID-19 has been, that threatens mortality, the demand for life insurance goes up,” says Byron Udell, president and CEO of Accuquote. “It happened in 2001. After 9/11 we had an immediate spike in demand that never really went down.”https://368159e4de58b81707e3a5ea674cad33.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html

Along with the pandemic’s increased demand for life insurance came some hurdles to issuing new policies—chiefly the perceived danger of face-to-face interaction with a medical examiner—so companies had to make adjustments. Some customers faced difficulty getting policies last year if they had COVID-19 risk factors. 

As the industry turns to 2021, experts anticipate further evolution in how insurance companies are addressing the challenges of COVID-19. Here’s what’s on tap from the life insurance industry this year:

Lower Rates for Consumers Without COVID-19 Risk Factors

Some insurance carriers have increased underwriting restrictions for people with comorbidities associated with a higher risk of death from COVID-19, such as diabetes or cardiopulmonary disease.

“But for customer segments who represent very low mortality risk related to COVID-19—people in their 30s and 40s with no underlying conditions—we’ve seen rates come down, and for non-smokers specifically,” says Jennifer Fitzgerald, CEO and co-founder of PolicyGenius. “I think we can expect to see more of that in 2021.” 

Insurers Softening Restrictions Related to COVID-19

Last year, insurance carriers imposed a number of limitations related to the coronavirus. For instance, many stopped offering temporary coverage, which is coverage while you’re going through the underwriting process. Some also required customers to wait 30 days after international travel to apply for insurance.

“Some carriers weren’t issuing to anybody over 70, period,” Udell says. “Then that became really stupid. They eventually backed off of that. I expect insurance companies to soften up their requirements as they become less concerned about the risk of COVID-19 affecting mortality.” 

While many carriers have started offering temporary coverage again, some still impose a 30-day waiting period following international travel. And no one is certain how carriers will respond to customers who’ve gotten the COVID-19 vaccine. 

“It’s too early in the vaccine development and distribution process for carriers to commit to any related adjustments in pricing or underwriting,” Fitzgerald says. “But it’s something we’re keeping a close eye on.” 

More No-Exam Life Insurance Offerings

“Medical exams have become more difficult to administer, especially in the last eight months,” Fitzgerald notes. As a result, many carriers have started offering no-exam life insurance policies up to a certain face value, or increasing the face value they’ll now issue with no exam. For instance, SBLI has raised its no-exam face value limit to $750,000 from $500,000. 

Other companies are offering a “maybe no exam” option in which they reserve the right to order an exam, but you might not have to have one. 

“Almost all the carriers have developed some way to issue on a maybe-no-exam process,” Udell says. “And they continue to raise the limits, because if they don’t, they’re going to lose to companies that have the higher limits for those cases.” 

More Hybrid Life Insurance Policies 

Hybrid life insurance policies incorporate certain features of long-term care insurance policies—giving consumers some benefits of both. For example, a hybrid product might have slightly higher premiums but allow you to pull money out for long-term care expenses, reducing the death benefit dollar for dollar. 

“This is a category that has grown tremendously in the past five years, mostly on permanent products, and it’s very popular,” Udell says. “Most carriers that don’t have these features available are playing catch up at the moment and will likely be introducing these options moving forward.”

Guaranteed Universal Life Insurance May Be on the Way Out

Guaranteed universal life insurance is a type of permanent life insurance in which you pay a guaranteed annual premium for your entire life. “It’s sort of like term [insurance] forever,” Udell says. 

As interest rates continue to stay low, an increasing number of companies are dropping the insurance offering because it’s no longer profitable. “Those products are drying up like crazy,” Udell says. “If we don’t see some interest rate increase, most of the remaining carriers still issuing the product will raise prices dramatically or pull out.”SPONSORED

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Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

Florida homeowners’ insurance specialists are reporting continued performance deterioration and a decline in capitalization levels, despite the most severe losses from the record 2020 hurricane season occurring outside of the Florida market, Fitch Ratings said in a recent report.

According to the rating agency, underwriting losses rose sharply for a group of 28 property/casualty (P/C) insurers focused on Florida homeowners’ insurance business, accounting for 60% of direct state market share for the $10 billion of direct premiums written in the state. The specialists had an aggregate combined ratio of 131% through 9M20 versus 111% at year-end 2019.

Florida homeowners’ insurance premium rates are rising in response to these poorer underlying loss trends and past catastrophe losses. Requested base rate increases in excess of 10% were common across Florida specialist carriers’ 2020 annual rate filings.

Fitch said carriers have cited rapid growth in litigation from non-catastrophe water damage claims as a driver of higher losses, as the pace of property damage claims that result in a lawsuit in Florida remains elevated relative to the broader U.S. market. Litigated claims tend to settle at values well in excess of those without a lawsuit, from both higher indemnity payments and defense costs.

Recovery in underwriting results from rate increases have been offset by higher reinsurance costs, with Florida-focused mid-year 2020 renewals showing a second year of sizable reinsurance rate increases, in some cases as much as 30%-35%.

Florida homeowners’ insurance specialists have business profiles characterized by limited scale and concentration in a volatile product segment, with further poor segment performance potentially leading to market exits and consolidation, Fitch said. Combined with less favorable risk-adjusted capital levels, high dependence on reinsurance and the recent poor profitability trends, the large majority of these companies would be rated below ‘BBB’ by Fitch.

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

After extending the moratorium on cancellations and nonrenewals put into place at the start of the pandemic, Citizens Property Insurance Corp. has announced it will resume processing these as of Feb. 1, 2021.

The Florida insurer of last resort said in a bulletin to agents that the board of governors at its December meeting approved lifting the temporary moratorium established in March 2020 to ease the burden on policyholders due to the COVID-19 health risk.

Cancellations and nonrenewals for policies that had exceptions made due to the COVID-19 health risk will be processed on Feb. 1. After that date, Citizens will only make hardship exceptions to those policyholders who continue to be affected by loss of employment, diminished wages or business income, or other monetary loss realized during the state of emergency and directly impacting the ability of the policyholder to make payments.

The company said this is a standard similar to that used in Gov. Ron DeSantis’ executive order that narrows criteria in prior orders for relief from foreclosures and evictions.

Citizens will continue to offer temporary payment arrangements to impacted policyholders to select by Jan. 31, 2021. Quarterly payment plans will continue to be available to policyholders as of Feb. 1. After Jan. 31, new payment arrangements would be offered only to policyholders who continue to experience a loss of employment, diminished wages or business income, or other monetary loss.

Citizens has begun mailing invoices for each policy term to list-bill (mortgagee-billed) and direct-billed policyholders with a past due premium of $5 or more. The total past-due premium is due on Jan. 31, 2021. Citizens said it would email affected agents a list of their past-due policies that are direct-billed and list-billed before Jan. 31, 2021, with more information.

Citizens said that as of Nov. 30, 2020, payment exceptions had been made on 30,799 policies (6.04% of policies) for a total of more than $24 million. The insurer also made 25,857 underwriting exceptions for 10,678 new business policies and 15,179 existing policies.

Citizens had originally planned to end its moratorium last summer but reversed its decision after Florida CFO Jimmy Patronis urged the insurer not to cancel customer policies during hurricane season and the ongoing COVID-19 pandemic.

“Hurricane season is just beginning to heat up and we are in the middle of an unprecedented health and economic crisis. This is not the time to cancel Citizens’ home insurance policies,” Patronis said on July 24.

Citizens’ program for alternate documents and deferrals, as outlined in the April 3 Update on Response to the Coronavirus Health Risk, also will end on February 1.

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

For the first time in more than a decade, personal auto insurance rates will decline in the U.S., according to ValuePenguin.com, which anticipates a 1.7% drop across the U.S.

New York and Indiana are the only states expected to see increases, which should be marginal, according to the site.

The declines are attributed to fewer motorists on the road and a reduction in claims during 2020 because of the pandemic. This has resulted in the average cost of auto insurance in 2021 to sit at $1,636, the personal finance site reported.

The lowest rates are in Maine, North Carolina and Indiana, according to ValuePenguin, while Arkansas, Ohio and Michigan saw the biggest year-over-year decreases.

Rates are expected to go back up in 2022 as more Americans return to normal routines. Further, increasing incidents of distracted driving and more expensive claims from technology-laden vehicles will drive up rates.

Although auto insurance rates have come down, policies still remain 106% more expensive when compared to a decade ago.

Insurance has major influence on the buying process

Research from DealerPolicy found car insurance can play a major role in customer satisfaction, spending power and dealership profitability. In fact, 71% of consumers said they would like insurance information at the time of purchase, and more than 60% would use those savings on a nicer car or F&I products such as prepaid maintenance, gap insurance and anti-theft equipment.

However, less than half of car shoppers reported dealers helping them consider insurance options during the buying process, despite 93% of dealers saying they do so, according to DealerPolicy.

The survey also found that 71% of consumers simply add new cars to their existing policies rather than shopping around.

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

In recent years, there have been a number of unprecedented catastrophic losses that have negatively affected the capital held in reserve by insurers and reinsurers, creating a hard market for many lines of business. (Photo: gopixa/Shutterstock)

According to Willis Towers Watson’s 2021 Insurance Marketplace Realities Report, hard market conditions are expected to continue into 2021, with rate increases in almost every line.

The most affected lines will be property, umbrella, directors and officers (D&O), and fiduciary, followed closely by cyber insurance. Non-challenged properties are predicted to see increases of 15% to 25% in 2021, while umbrella increases will stagger from 30% for low-moderate hazard to 150% for high hazard excess. All categories of D&O are expected to see double-digit increases in 2021, with some as high as 70%.

Cyber insurance rates are expected to increase by 10% to 30%, while general liability rates are expected to increase by 7.5% to 15%.

Workers’ compensation rate decreases are flattening, according to Willis, with a slight increase in response to high severity/excess losses. Unsurprisingly, workers’ compensation remains the casualty line with the most COVID-19 claim activity.

Some moderation in property rates is anticipated by mid-2021, following two cycles of rate increases by that point, per the report.

A bright spot on the horizon may be found in the following statement by Joe Peiser, global head of broking at Willis Towers Watson: “However, our experience in this hard market is that there is a wide range of results; renewal results are not huddled around the mean. This means underwriters are underwriting, and there is the opportunity to differentiate your risk.”

What makes a hard market?

A hard market may also be referred to as market tightening. This is because insurance availability, usually of a particular line, becomes more difficult to obtain and often may be more expensive. This typically happens in the commercial property and casualty markets as a result of catastrophic losses, large jury verdicts, or other factors affecting the profitability of insurers and reinsurers.

In simple terms, the insurance industry takes in premiums to pay losses. A certain portion of their premiums typically go to reinsurers to offset catastrophic losses or to free up capital, and another portion gets set aside in reserve funds. Insurers invest the premiums they take in to make money off the investments. The amount set aside in reserve is determined by actuarial calculations that consider previous loss history and earnings, and actuaries use this to make predictions about losses and the rates necessary for the company to maintain a profit.

The actuarial predictions are not just for the current year but usually for five or maybe ten years. If the insurer doesn’t set aside enough reserve funds, they get downgraded as to their financial stability by rating agencies such as A.M. Best and Standard & Poors. Therefore, insurers must take in enough premium to cover the losses that happen in the current year and have enough in reserve to cover unexpected catastrophic losses that were not accounted for in the actuarial predictions.

When policyholders start seeing their rates increase or with higher deductibles required in a hard market, some policyholders may decide to self-insure their risks to keep premiums lower. By self-insurance, they may decide not to purchase insurance for some risks and simply go bare — meaning that the entity will pay for its own losses; or they may self-insure all or part of their deductible.

In a hard market, policyholders look for new ways to insure their risk. Groups of policyholders with similar exposures may create an insurance pool, where each member contributes to the premiums and losses.

Another way entities insure their risk is through captive arrangements. In a hard market, you are apt to see a lot more captives being formed. The continuing hard market and captive growth is the subject of this discussion.

The role of captives

A “captive insurer” is generally defined as an insurance company wholly-owned and controlled by its insureds. Its primary purpose is to insure its owners’ risks, and its insureds benefit from the captive insurer’s underwriting profits.

A recent survey by Marsh noted that the firm formed a record number of new captives in the first seven months of 2020, with 76 new captives, a 200% increase compared to the same period last year.

With premium increases and commercial insurers cutting back on their limits, many organizations are expanding their captives. Those without captives are looking to get captive feasibility studies done, as reported by Jim Swanke, head of captive solutions, North America for Willis in Minneapolis.

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

Many drivers consider that car insurance is too expensive or they deny its importance. Disregarding a service that can potentially save drivers thousands of dollars is a huge mistake. If the price is the problem, check the following tips for lowering the costs.

  • Check all available discounts. Insurance companies provide a wide range of discounts. It is wise to check the discounts offered by each company before signing a contract. When getting online quotes, the user can easily check for how many discounts he is eligible for and how much he will save. The most common discounts include low mileage, safety devices, safe driver, homeownership, and paying-in-full.
  • Paying in advance will help drivers save around 10%. Drivers are asked how often do they want to make payments. Paying for the entire policy in advance will help drivers save a lot of money. The driver can save around 5%-10% just by paying the full value. Some companies are more generous and offer a 15%-20% discount. In this case, the value of the discount will be higher than 1 monthly premium.
  • Ask for higher deductibles. The policyholder is able to set the deductibles. By selecting a higher deductible level, he agrees to pay more when he files a claim. Deductibles range from $250 up to $1000 or more. In many cases, the recommended value for both comprehensive and collision coverage is $500. When getting online quotes, the client is able to set the deductibles to some predetermined values. After each change, the prices are updated and the user can view how deductibles influence the total cost.
  • Bundle policies under the same company. Placing multiple vehicles or multiple belongings can be really beneficial. Besides having access to discounts, the policyholder will have to deal with less paperwork. Multi-insurance discounts vary by provider, with some companies offering as much as 20% discount for combining home and auto insurance.
  • Compare-autoinsurance.org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc.

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 954-606-5660 at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business  & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer. My email is lee@myUSAssurance.com

The Federal Emergency Management Agency (FEMA) has once again procured private sector reinsurance from more than 30 carriers for the National Flood Insurance Program (NFIP) to protect the government program from large losses.

Under the 2021 reinsurance program, FEMA transferred an additional $1.153 billion of the NFIP’s financial risk to the private reinsurance market. This annual reinsurance agreement is effective throughout 2021.

The 2021 reinsurance placement covers portions of NFIP losses above $4 billion arising from a single flooding event. FEMA said it paid a total premium of $195.8 million for the coverage.

The agreement is structured to cover:

  • 9.43% of losses between $4 billion and $6 billion.
  • 28.084% of losses between $6 billion and $8 billion.
  • 20.168% of losses between $8 billion and $10 billion.

“We value the role of private insurance companies and investors in assuming a portion of the NFIP’s flood-risk exposure from catastrophic flood events, which improves long-term financial outcomes for FEMA, the U.S. Treasury and federal taxpayers,” said David Maurstad, FEMA’s senior executive of the NFIP..

Reinsurers Participating in 2021 NFIP Program

  • Allied World Insurance Company
  • Convex Insurance UK
  • Everest Reinsurance Company
  • Fidelis Underwriting Limited
  • Hannover Ruck SE
  • Liberty Mutual Insurance Company
  • Lloyd’s Syndicate 2001 Amlin
  • Lloyd’s Syndicate 1274 Antares
  • Lloyd’s Syndicate 1969 Apollo
  • Lloyd’s Syndicate 1910 Ariel
  • Lloyd’s Syndicate 1414 Ascot
  • Lloyd’s Syndicate 2987 Brit
  • Lloyd’s Syndicate 1084 Chaucer
  • Lloyd’s Syndicate 0435 Faraday
  • Lloyd’s Syndicate 0033 Hiscox
  • Lloyd’s Syndicate 4472
  • Liberty Specialty Markets
  • Lloyd’s Syndicate 2791 Managing Agency Partners
  • Lloyd’s Syndicate 1458 Renaissance Re
  • Lloyd’s Syndicate 4444 Canopius
  • Lloyd’s Syndicate 2003 XL Catlin
  • Lloyd’s Syndicate 2010 MMX Lancashire
  • Lloyd’s Syndicate 2623 Beazley
  • Lloyd’s Syndicate 623 Beazley
  • Lloyd’s Syndicate 4000 Hamilton
  • Munich Reinsurance America Inc.
  • Navigators U.S.
  • Odyssey Reinsurance Company
  • QBE Reinsurance Corporation
  • RenaissanceRe Europe AG
  • SCOR Reinsurance Company
  • Swiss Reinsurance America Corporation
  • The Cincinnati Insurance Company

He said the NFIP reinsurance program helps the NFIP better prepare financially for potential losses from significant flooding events similar in size to hurricanes Harvey (2017), Sandy (2012) and Katrina (2005), bolsters its claims paying capacity and reduces the reliance on the need to borrow from the U.S, Treasury in the event of large losses.

The NFIP’s Treasury debt is currently about $20 billion

Combined with the three capital markets reinsurance placements in 2018-20, FEMA has transferred $2.35 billion of the NFIP’s flood risk to the private sector.

FEMA’s 2020 traditional reinsurance placement was worth $1.33 billion in coverage and in 2019 it was for $1.32 billion.

If a named storm flood event is large enough to trigger all reinsurance agreements, FEMA will receive qualifying payments. For named storms resulting in NFIP claims exceeding $10 billion, FEMA will receive the full $2.35 billion of reinsurance coverage from the private markets.

FEMA contracted with reinsurance brokers Guy Carpenter, a subsidiary of Marsh & McLennan, and Aon Reinsurance Solutions, to assist in securing the reinsurance placement.

FEMA received authority to secure reinsurance through the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014. FEMA’s 2021 reinsurance placement builds upon its previous reinsurance placements as further development toward a stronger financial framework.

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