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The New Year is bringing a new round of homeowners insurance rate filings and this week there will be three companies – with proposed rate increases from 26% to 111% – that will go before the actuaries at the Florida Office of Insurance Regulation (OIR) in public rate hearings to make their cases.  

The three hearings, beginning this Friday January 21 at 8:30am, will consider:

  • Southern Fidelity Insurance Company’s filing on a use and file basis, requesting an 84.5% increase in Homeowners Multi-Peril (HO3) policies, effective December 1, 2021 for new and renewal business; and a 111.1% increase in Property/Personal (Dwelling Fire) policies, effective January 1, 2022 for new and renewal business;
  • Cypress Insurance Company’s proposed 26.3 % increase in Homeowners Multi-Peril (HO3) policies, effective December 22, 2021, for both new and renewal business; and
  • Centauri Insurance Company’s filing on a file and use basis, for a 28.3% increase in Property/Personal (Dwelling Fire) policies, effective April 15, 2022, for new and renewal business.

As we’ve reported in these pages, and worthy of repeating again as we begin a new year and new legislative session, there are four key drivers that have increased property insurance rates by double-digits in Florida over recent years:

  • Underwriting losses from catastrophe claims, including loss creep ($1 billion in 2020 and $1.14 billion through third quarter of 2021)
  • Adverse loss reserve development (cost of claims greater than reserves allotted – by $682 million in 2019)
  • Higher reinsurance costs (up 54% in 2020 and especially impactful on Florida’s reliant domestic market)
  • Increases in costly litigation, despite the Florida Legislature’s 2019 Assignment of Benefits (AOB) reform and its 2021 Litigation & Solicitation reform

In fact, what all of these factors have in common as a constant driver is the growing frequency and size of insurance litigation.  Insurance Commissioner David Altmaier has noted, using NAIC data, that Florida has 8% of all homeowners’ claims in the U.S., yet 76% of all homeowners’ claims lawsuits.  

The James Madison Institute recently examined these rising property insurance costs, while also detailing several recommendations on how to curtail this insidious growing trend that’s impacting millions of insurance consumers across the Sunshine State.  Its report, Battening Down: Policy Reforms to Avoid a Florida Insurance Meltdown, outlines how insurance rate increases have stemmed from behavior by stakeholders exploiting vulnerabilities in the law, highlighting meaningful steps the Florida Legislature has taken in recent years to combat the abuse, and offering solution to stabilize the insurance market and promote more investment, competition, and lower rates for Florida consumers.    

Also of note, OIR is out with its guidance to all personal and commercial residential insurance companies on the new property claim litigation reporting requirements implemented by SB 76.  You can read its Informational Memorandum for details.  OIR is now engaging in rulemaking to adopt the required reporting form and carriers are encouraged to provide feedback about the form.  OIR anticipates the first annual residential property claim litigation data call will be due in the first quarter of 2023 but may request data prior to that to establish baseline data.

Mark A. Niess

VP, Sales | InsurTech

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