July 2022


By William Rabb

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A Florida law firm that has made a lucrative business out of the Medicare Secondary Payer Act – and disrupted the auto insurance industry in the process – has scored another victory at the federal appeals court level.

The 11th U.S. Circuit Court of Appeals decided this week that a lower court had erred when it dismissed a lawsuit brought by MSP Recovery against Metropolitan General Insurance Co. and its sister companies. The defendants are auto and liability insurers and subsidiaries of MetLife Inc.

“We hold that at this procedural stage, MSP Recovery’s complaint plausibly alleged that defendants had a demonstrated responsibility to pay the claims, and we therefore reverse and remand this case to the district court for further proceedings…” reads the opinion, written by Judge Barbara Lagoa.

Ruiz

MSP Recovery was founded by Coral Gables attorney and entrepreneur John Ruiz, who has become something close to a billionaire, according to news reports. It is a law firm that acts as a collection agency, working on behalf of health insurers who provide Medicare Part C plans, also known as Medicare Advantage, to Medicare beneficiaries. As the court explained, the Medicare Secondary Payer Act was enacted in 1980, as a way to save money for the government health plan that covers older Americans.

When Medicare beneficiaries are injured in a car crash, the law requires that their no-fault auto insurer pay its share for the medical care. Until the Act was adopted, Medicare had often paid for everything, even if the auto insurance policy obligated the insurance company to cover much of the treatment.

Although the law has been in effect for more than four decades, it has only been in recent years that MSP and Ruiz have figured out a way to earn large fees by suing auto insurers after Part C insurers said they weren’t getting reimbursed properly for the medical costs. The Medicare Secondary Payer Act allows private causes of action lawsuits and double damages as a way to enforce the law.

Insurers have said that most of the unpaid obligations are relatively small amounts and that Ruiz and his firm are piling up large fees – and legal costs for defendants – for no great benefit to Medicare or Medicare Advantage health insurers.

But the appeals court has been seeing things MSP’s way. In the last five years, the 11th Circuit, which hears appeals from federal district courts in Florida and much of the Southeast, has upheld MSP Recovery’s claims, overturning 12 lower court dismissals of the lawsuits, MSP said in a statement.

Sponsored by Florida Surplus Lines Service Office (FSLSO)

The latest decision could have a lasting impact on the auto insurance industry, the law firm said.

“MSP Recovery believes that the decision rendered by the 11th Circuit in Metropolitan has broader implications because several other Southern District Court judges have dismissed, or partially dismissed, claims asserted by MSP Recovery in several other pending lawsuits that remain on file,” the company said in a news release. “MSP Recovery believes that this latest ruling from the 11th Circuit will likely impact the scope of the claims being litigated in those actions.”

In December, a Florida state court in Miami also found in favor of MSP, sanctioning an insurer for failing to turn over data that could show it was shifting costs to Medicare.

The secondary payer law notes that plaintiffs must show that auto insurers had a “demonstrated responsibility” as primary payer for the Medicare beneficiaries’ medical costs. The 11th Circuit has held that can be shown through various means, including auto insurers’ policies, which are contractual obligations, or settlement agreements with their insureds who are Medicare recipients.

In the Metropolitan General case, MSP said it identified thousands of instances in which the defendant insurers failed to pay or pay timely, forcing the Medicare Advantage organizations to cover the bills. The firm did this by comparing the Advantage plans’ claims data with the insurers’ own filings with the Centers for Medicare and Medicaid Services, the court opinion explained.

The U.S. District Court for the Southern District of Florida in 2020 found that MSP Recovery had not proved its case, largely because the specific instances of non-payments by auto insurers were listed in an exhibit, not in the actual lawsuit complaint. Metropolitan’s attorneys also argued that the insurance policies, contractual obligations and settlements were insufficient to demonstrate that the insurers had a responsibility to pay first.

Judge Lagoa and the other judges in the three-judge panel disagreed, noting that MSP said the examples were too numerous to allege in the complaint.

“We concluded that the district court erred in failing to consider whether the complaint and Exhibit A, taken together, plausibly allege that defendants’ responsibilty to pay had been demonstrated,” the court wrote.

Quoting from its own 2019 decision in another MSP case, the court noted that the Medicare Secondary Payer Act “as a whole is remarkably abstruse, (but) the private cause of action is remarkably simple.”

TOPICS CARRIERS AUTO

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July 14, 2022

With hurricane-related cases making up more than one-quarter of all insurance cases filed in federal district court last year, overall case counts neared 14,800.

The number was 14,793, according to a tally in the 2022 Insurance Litigation Report published by Lex Machina, a LexisNexis company, on Thursday.

That is the most case filings of any year in the Lex Machina database, which goes back to 2009, the company said in a media statement. The figure also represents a 47 percent jump in case filings over 2017.

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In addition to reporting that 3,800 hurricane-related cases made up 26 percent of all litigation in federal district courts in 2021, Lex Machina said that business interruption cases peaked a year earlier, in 2020, but continued to come in significant numbers in 2021.

Over the five-year period from 2017-2021, the Southern District of Florida heard the highest number of insurance case filings with 4,084 cases.

The report also provides information on the most active defendants and law firms.

Source: Lex Machina

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a Nina will probably stick around for at least several more months, potentially leading to more hurricanes and tropical storms across the Atlantic during the heart of the season.

There’s now a 62 percent chance of cool waters across the equatorial Pacific Ocean from August through October, according to the U.S. Climate Prediction Center. Last month the agency estimated a 54 percent chance of La Nina for the same period.

La Nina in the Pacific typically cuts down on the amount of wind shear across the western Atlantic, which can let tropical storms and hurricanes grow stronger. Shear, when winds at different altitudes blow in varying directions or speed, can tear at the structure of a tropical system weakening it or completely destroying it.

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Hurricanes in the Atlantic are closely watched by energy and agriculture markets because of their potential impact on orange juice production in Florida and natural gas and oil extraction and refining in the Gulf Coast region.

La Nina in the winter can also disrupt storm patterns across the U.S. leaving California drier, increasing the chances the years long drought there will continue. It can also lead to parched conditions across crop growing areas of Brazil and Argentina.

If La Nina lasts into the Northern Hemisphere’s winter it will be the third straight year the phenomenon has occurred. Three-year La Ninas have only occurred two other times since 1950.

Photo: In this satellite image provided by the National Aeronatics and Space Administration (NASA) and European Space Agency (ESA), Hurricane Florence churns through the Atlantic Ocean toward the U.S. East Coast on September 12, 2018. (ESA/NASA via Getty Images)

Copyright 2022 Bloomberg.

By William Rabb 

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 833-USAssure 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

Goodbye Courtroom? Florida Citizens Wants Claims Disputes Heard by Admin Judges

By William Rabb | July 14, 2022

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By this time next year, Citizens Property Insurance policyholders and assignees of benefits could see their claims disputes decided, not in county or circuit courts, but by administrative judges who work for a Florida state agency.

The Citizens Board of Governors on Wednesday voted to move ahead with a policy endorsement that would allow the insurer or the insured to send claims disputes to the state Division of Administrative Hearings, known as DOAH. Both parties would not need to agree to the DOAH venue.

The 30 judges at DOAH now handle a range of issues, including child support cases, mental health hearings, and disputes brought by businesses over state agency rules or over penalties assessed for violating regulations.

Cerio

The Citizens’ plan would allow for faster resolution of claims disputes, which would benefit Citizens as well as policyholders, Citizens’ general counsel, Tim Cerio, told board members. Crucially, the endorsement also would cap plaintiffs’ attorney fees at about $200 an hour, with no fee multipliers, which ultimately could save the insurer thousands of dollars each year in legal costs.

Citizens will file for the endorsement soon, officials said. The Florida Office of Insurance Regulation will decide if it should be approved.

It’s all part of Citizen’s effort to reduce litigation expenses, which are spiraling as the carrier’s policies continue to soar – topping 1.2 million policies in force by year’s end, officials said. Citizens has about 19,000 claims lawsuits pending and is planning on spending as much as $100 million on legal defense costs this year.

Some Florida plaintiffs’ lawyers quickly questioned the wisdom of utilizing administrative judges to handle insurance claims disputes.

“I don’t see the upside on this for policyholders, unless they’re offered some type of exchange,” such as higher coverage limits or reduced premiums, said attorney Michael Redondo, of Miami, who said he has about 100 cases pending against Citizens.

Redondo (Linkedin)

Limiting attorney fees will reduce the number of lawyers who are willing to take on Citizens cases, which could hurt policyholders’ ability to obtain a fair judgment or settlement, he said.

He argued that Citizens could save much more by avoiding unnecessary litigation and accepting reasonable settlement offers more often. He noted that in one South Florida claim, he has repeatedly offered to settle for about $5,000. His fee would have been about $1,500. But Citizens would not settle and is going to trial next week on a relatively minor issue..

The litigation could ultimately cost Citizens more than $40,000 in defense fees and perhaps more in plaintiffs’ fees, he said.

Citizens spokesman Michael Peltier said that claimants’ lawyers often argue that the insurer should settle sooner or pay claims faster. But many claims in Florida have been proven to be fraudulent or exaggerated and have to be litigated.

“We have an obligation to policyholders to pay the ones that need to be paid but to investigate those that don’t,” he said.

Moving cases to the administrative arena would reduce the resolution time frame, from an average of about 430 days in the court system to 100 or so days at DOAH, partly because DOAH does not face a backlog of lawsuits, Cerio said.

The agency may have plenty of bandwidth: A state government website notes that in fiscal year 2019-20, the division saw some 6,300 requests, an 11% decrease from the previous year. And many DOAH requests are referred to mediation. Florida’s court system, on the other hand, has seen more than 4,500 lawsuits filed per month against the largest 16 insurance carriers, according to CaseGlide, a litigation management software firm.

But the perceived efficiency of the Division of Administrative Hearings could change quickly, Redondo countered.

“Trust me, if they dump 60,000 claims disputes into DOAH, DOAH’s resolution time will go up – way up,” the attorney said.

And DOAH decisions, in most cases, could still be appealed to an appeals court.

Newman

DOAH officials appear to be on board with the idea.

“The Division of Administrative Hearings will fairly and quickly resolve legal disputes for Citizens Property Insurance and its insureds—whatever form that dispute may take—as it does for countless other governmental entities in Florida,” reads an email from the acting head of DOAH, Judge Brian Newman.

Cerio told the Citizens board that DOAH officials said the agency could set aside some judges to hear only insurance claims and it has the statutory flexibility to hire more if the need arises. The Legislature at some point could also be asked to provide funding for more administrative judges and staff, Citizens’ Board Chairman Carlos Beruff said.

Because Citizens is a quasi-government entity that was created by the Florida Legislature, it likely has the legal standing to move claims cases to DOAH, said Stephen Rosen, a retired administrative law judge for DOAH who handled workers’ compensation disputes. Adjustments to state law and funding could easily be made by lawmakers, if needed, he said.

Other Florida insurers, as private companies not chartered by the state, would not have the DOAH-litigation option. Some carriers have taken other steps to avoid the court system. At least have begun offering binding arbitration in claims disputes in exchange for lower premiums.

DOAH is in something of a state of flux at the moment. Peter Antonacci was chief judge and administrator of the division for less than 18 months before Gov. Ron DeSantis last week named him to head the new Office of Election Crimes and Security. Newman was named acting chief of DOAH, but it’s not certain he will remain in the position.

The administrative law judges are all lawyers but some may have little experience in insurance matters. Rosen suggested that an expanded roster should include judges with expertise in claims disputes.

Legal costs have become one of the biggest issues, not just for Citizens but for most carriers in Florida’s distressed property insurance market, helping to drive several insurers into insolvency.

Gilway

At the board meeting Wednesday, Citizens’ President Barry Gilway reviewed the dire state of the market, due in part to litigation expenses. He noted that in the first quarter of 2022, Florida’s 52 property insurance companies posted $154 million in losses. That followed a combined $1.2 billion negative net income for 2021 and negative $1.8 billion for 2020.

Gilway said those numbers should be looked at against the Florida private insurance market’s total surplus of about $4 billion, based on reports from Standard & Poor’s, a financial rating firm.

“The market is really losing 25% to 35% of its surplus every single year,” he told the board.

The losses have caused not only insolvencies, but have prompted a number of insurers to stop writing in Florida, to drastically reduce coverage areas, and to limit the age of roofs they’ll cover. It’s all led to “incomprehensible” growth rates for the insurer of last resort, Gilway noted. “The company is three times the size it was 28 months ago.”

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United Property & Casualty Says It Is Exploring Potential Sale or Merger

July 14, 2022

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United Insurance Holdings Corp., parent company of one of Florida’s largest property insurers – and one that has seen heavy losses in the last two years – announced that its board of directors is now exploring a range of options to raise capital, including the sale of the company or merger with another.

Other options include “subsidiary divestiture, formation of a new Florida-domiciled reciprocal exchange, as well as the sale of equity, surplus notes or other financing or strategic transactions,” UPC Insurance said in a news release posted Wednesday.

The company also said it has retained Insurance Advisory Partners, an investment banking and consulting firm as its financial advisor, and Debevoise & Plimpton, an international law firm, as its legal counsel to assist in the review process.

The announcements fueled speculation that the insurer, which until recently held more than 180,000 policies in Florida, is in worse financial shape than expected, despite significant steps that company leaders have taken in the last year. A sale or merger could bring millions of dollars in fresh capital, similar to the restructuring measures followed by Florida-based FedNat Insurance Co. in May.

FedNat, after large storm losses in Louisiana, agreed to a restructuring consent order with Florida regulators, moving thousands of policies to a subsidiary, Monarch National Insurance. Hale Partnership Capital Management then took a majority stake in Monarch and invested $15 million into it.

The publicly traded UPC reported a $33 million loss for the first quarter of 2022, on the heels of $60 million in negative net income for 2021 and $95 million in losses for the year before, thanks in part to big weather damage in Louisiana. UPC’s combined ratio topped 120 last year, down slightly from the previous year, but considerably higher than in 2017.

Dan Peed, chairman of UPC (UPC)

In the last nine months, the St. Petersburg-based insurer has undertaken some major efforts to stem the losses. In December, UPC agreed to sell its personal lines in Georgia, North Carolina and South Carolina to HCI Group Inc. In January, UPC stopped writing new homeowner business in Florida while asking for a rate increase for some types of policies.

In April, the company said it was merging two subsidiaries, Journey Insurance Co. and American Coastal, and would distribute much of Journey’s capital to other subsidiaries.

In June, Wright National Flood Insurance said it will take over UPC’s flood insurance book of business.

UPC company officials could not be reached for comment Wednesday evening and Thursday morning. The company’s news release notes that it was founded in 1999 and continues to write some policies in Florida, Louisiana, New York and Texas. It also wrote in Georgia, South Carolina, and North Carolina, but renewal rights there have been sold and all premiums and losses are ceded, the company said.

The Thursday news release suggested that further details about a potential sale may not be available anytime soon.

“There can be no assurance that this process will result in the company pursuing a particular transaction and the company does not intend to disclose further developments unless and until it determines that further disclosure is appropriate or necessary,” UPC said.

United Insurance Holdings stock was selling for $1.37 a share Thursday morning, up slightly from the day before, but considerably lower than a year ago.

TOPICS MERGERS & ACQUISITIONS PROPERTY CASUALTY PROPERTY CASUALTY

By Michael A. Mora

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The calendar year 2021 was a record-breaker for insurance lawsuit frequency, according to recent research released by Lex Machina Inc., the Silicon Valley-based SAAS company that helps lawyers pinpoint litigation trends.

The company’s Insurance Litigation Report 2022 includes analysis of federal district and appellate court data and highlights several trends that should be of concern to insurers and their attorneys.

Ron Porter, a legal data expert in product liability at Lex Machina, said in a recent interview that the report spotlights five years of litigation data, from 2017 to 2021. During that period, 2021 accounted for the most federal case filings, nearly 14,800, of any year since 2009, when Lex Machina began tracking the data.

“Overall, insurance litigation is up 47% from 2017 to 2021, which is a substantial increase,” Porter said.

He noted one key caveat about the data: The coronavirus pandemic impacted the data, particularly in business interruption. For example, business interruption cases peaked in 2020, and were 370% higher than the previous high in 2014.

But Porter said there are still long-term trends in hurricane and automotive insurance, for instance, that would affect the bottom line of litigation attorneys. In 2021, 26% of all insurance litigation in federal district courts was hurricane-related, arising from over 3,800 lawsuits. Porter asserted in the report that the filings of these lawsuits were the highest of any year since 2009.

The slideshow above illustrates some of the insurance litigation trends uncovered in Lex Machina’s recent report.

Advice for insurers

“Insurers need to be prepared by increasing resources both in-house and outside counsel to be ready for hurricane season,” Porter said. “The weather is increasingly unpredictable.”

Regarding automotive insurance, there has been a steady increase in cases filed from 2012 to 2021, totaling close to 65%. The report showed that the amount in controversy increasingly met the $75,000 threshold for diversity jurisdiction, explaining, in part, the rise in federal court filings.

State Farm kept busy despite breaking apart its automotive coverage and fire and casualty coverage into two different companies. Both companies were the most active defendants, with over 1,000 cases more than the next most active defendant.

Noteworthy lawsuit trends

Beyond hurricane and automotive litigation, the report showed that the Southern District of Florida had the highest number of insurance case filings with more than 4,080. And juries awarded plaintiff attorneys nationally across all U.S. district courts over $157 million in damages in 123 cases in 2021.

But during the five-year period, approved class action settlements carried most of the damage awards with $657 million, followed by contract damages of $509 million and, later on, attorney fees and costs of $58 million, according to the Lex Machina data.

Meanwhile, federal appellate judges in California had their work cut out for them. The U.S. Court of Appeals for the Ninth Circuit heard the highest number of cases on appeal, with 647 docketed. Nationally, insurance cases that were appealed and received a decision on the merits of the appeal were reversed by federal judges 25% of the time.

The report also included a shoutout that the most active plaintiffs’ law firm was Pandit Law in New Orleans, Louisiana. In contrast, the most active defendants’ law firm was Butler Weihmuller Katz Craig located in Tampa, Florida.

Scott Katz, the managing partner at Butler Weihmuller, Katz Craig, said his law firm was fortunate to hold the accolade. “We appreciate our clients,” Katz said.

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According to analysis by insurtech Policygenius, home insurance premiums are rising faster than inflation

From May 2021 to May 2022, the price of goods and services increased 8.6% in the U.S. In the same time period, home insurance costs outpaced inflation in all but one of the states Policygenius analyzed, with 13 states seeing average premium increases more than 50% higher than the current inflation rate.

During the same period, 90% of homeowners saw annual premiums increases, which average 12.1% compared to a year ago. The average increase was $134, according to the Policygenius Home Insurance Pricing Report. The study was limited to the 25 states for which Policygenius had a statistically significant number of policies. In all, it looked at 8,698 active home insurance policies quoted for renewal from May 2021 to May 2022.

“Home insurance coverage and premium amounts are based on the cost to rebuild, which takes into account the price of lumber, roofing, contractors, and anything else that goes into building a home. As home construction costs continue to outpace the overall rate of inflation due to supply-chain disruptions, unprecedented labor shortages, and frequent natural disasters, home insurance prices have followed suit,” said Pat Howard, a licensed P/C insurance expert at Policygenius.

Howard said consumers should shop around, bundle policies, and install smart home devices to lower premiums.

Key findings:

  • In multiple states, home insurance costs have increased at more than double the rate of inflation. Over the past 12 months, home insurance premiums are up as much as 18.5% in Arkansas, 18.1% in Washington, and 17.5% in Colorado.
  • New York was the only state in Policygenius’ analysis with a premium increase lower than the inflation rate, at 8%. Homeowners in New York saw the lowest increases at renewal since last year, with an average premium hike of $56.
  • Oklahoma saw the largest premium increases, with policyholders seeing their premiums go up $257 on average.

TOPICS TRENDS PRICING TRENDS HOMEOWNERS

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By William Rabb 

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Dan Alexander has seen the worst of the Florida property insurance market from the inside-out – from agents who’ve quit to carriers that have gone insolvent or stopped writing new business, to having to manage policyholders that are mad at the world over soaring premiums.

“We’re working harder now than at any time I can remember,” said Alexander, vice president of Thompson Baker Agency in St. Augustine, one of Florida’s oldest agencies. “Anytime you have all that’s going on in Florida now, it creates a workload on staff that’s unbelievable.”

In the last six months, Alexander has had three commercial lines producers and one personal lines agent resign due to the workload and the constantly shifting property insurance landscape. As Florida carriers have gone out of business or have drastically curtailed the types of properties they’ll write, it’s meant a mad scramble at times. For one $80 million commercial site, for example, Alexander for years was able to secure coverage with only two carriers.

Alexander (FAIA)

“This year, it took eight carriers to cover the whole property,” said Alexander, who has been in the business for 31 years. “One would write one building but not the others and so on.” On top of that, the total premium jumped by 50%.

Alexander’s agency is not alone.

Other Florida agency heads said that the turbulence in the Sunshine State, along with the nationwide retirement of older staff, plus mergers and acquisitions and the challenges of having more people work from home, has made for an insurance environment unlike any other.

“I’m doing all I can just to keep people on board now,” said Tim Castle, president of Mynatt Insurance in Sarasota. “The turnover has been terrible, so I really kiss my people’s butts now.”

When one new staff member complained that she couldn’t keep up with the increasing load, GreatFlorida Insurance agency owner Gordon Gillespie had little sympathy.

“I said, ‘Yes, you can, because I’ve been having to do it all by myself for months,’” he said.

For many agencies in Florida, the challenge of keeping producers and staff on board has been aggravated by the continued growth of Citizens Property Insurance, the state-created insurer of last resort. Thanks to Citizens’ lower rates in many parts of the state, policyholders have flocked there. The corporation reports that it is picking up almost 30,000 policies per month and will top 1 million policies in force in just a few months.

But Citizens’ commissions paid to agents are usually 5.5%, compared to as much as 10% for other property insurers. That’s little incentive to keep overworked producers in the industry, agency heads said.

The Florida Association of Insurance Agents did not have data on the number of agents and staff that have left the insurance business in the last year. But the Florida Department of Financial Services’ licensee search page shows that so far this year, most numbers are down: The number of agencies licensed from Jan. 1 to July 10 this year was 2,551, down from 2,562 for the same period in 2021.

The number of licenses issued in the property/casualty business dropped, from 14,672 to 14,093. And the tally of customer representatives licensed so far this year is slightly less than the same time frame in 2021.

And it’s not just Florida that’s feeling the heat.

Big I, the national association of independent agents, said its nationwide survey of employment trends, done every two years, won’t be published until later this year. But anecdotally, some agencies around the country appear to be struggling to keep staffers on board.

“Nearly every agency I hear from tells us they need new employees, from customer service reps to producers,” said Chris Boggs, vice president of agent development, research and education at Big I.

The effects of the so-called Great Resignation, an employee exodus brought on in part by the coronavirus pandemic, may not have had the impact on insurance agencies that many feared it would. Retirements, along with mergers and acquisitions, seem to have had more effect, paring down the workforce for some. And some remaining employees don’t like being owned by a large corporation, Boggs said.

“There is an incredible need for new talent in the agency market,” he said. “I don’t credit the Great Resignation for this because the warning about the coming ‘talent hole’ existed long before COVID and current market conditions.”

All of the changes have forced agencies to focus more on recruiting and retention.

Boggs (Linkedin)

“Talent recruitment has been a priority for independent agencies for many years prior to the pandemic primarily due to retirements in the independent agent system, M&A activity, and competition for top talent from colleges, community colleges, and high schools,” said Bob Rusbuldt, president of Big I. “Much of the flight in the IA system appears to be within it, not from it – agency to agency, not from an agency to another industry. Remote work and technology have been a catalyst for personnel moving one from agency to another.”

The shortage of talent has prompted some agencies to go with the flow and hire people from out of state, Alexander said. But the virtual reality has created other headaches because it appears to have made it harder to reach some carriers’ representatives in a timely manner.

“On umbrella policies, we used to get a quote back in 24 hours, every time,” said Alexander, a former chairman at FAIA. “Now, a lot of times, you can’t get a phone call returned or an email answered for a couple of days it seems like.”

Relief may not come any time soon. Four Florida property carriers in 2022 have been declared insolvent and 12 have stopped writing new business in the state, forcing agents to find new carriers for thousands of customers. Other carrier insolvencies and pullbacks are expected this year and next, despite new Florida laws adopted in May that aimed to reduce reinsurance costs for some carriers, curtail fraudulent roof claims and limit claims litigation.

“It’s going to be a tough business for a while, I’m afraid,” Alexander said.

TOPICS FLORIDA AGENCIES

By William Rabb

Please call  Lee from  USAsurance Powered by WeInsure & Calle Financial. 954-270-7966 or 833-USAssure 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

AM Best has withdrawn its financial strength rating for Sunrise, Florida-based Capacity Insurance, and the company has stopped writing new business.

“Due to a variety of circumstances, the Florida market has undergone tremendous changes over the last year. As a result, we halted binding new business effective June 21, 2022,” the Capacity website reads.

Trimble (Linkedin)

Capacity President Linc Trimble and other company officials could not be reached for comment Friday. The insurer since 1989 has provided property-casualty coverage for light mercantile, offices, lessor’s risk, gas stations, houses of worship, trade contractors, funeral homes and other small-to-mid-sized businesses.

Capacity in 2009 was acquired by Team Focus Insurance Group, which was acquired by Peak6 insurtech and investment firm one year ago. Capacity’s affiliate and managing general agency, MacNeill Group, continues to work with other carriers, the company’s website noted.

AM Best announced Thursday that it withdrawn Capacity’s financial ratings after the company said it no longer wished to participate in the rating process. The rating firm had just downgraded Capacity’s financial strength rating to “C++ marginal” and said the outlook for the company is negative.

The downgrades reflect Capacity’s balance sheet and “an unfavorable shift” in its capitalization, as well as erosion of its surplus.

“Furthermore, the company’s capital structure is dependent on a $7 million surplus note (due in 2029) that was issued in early 2022,” AM Best wrote in the news release. “The company has continued to report adverse loss reserve development stemming primarily from management’s efforts to correct current reserves and subdue future deficiencies.”

Recent corrective actions taken by the company did not solve the problem, AM Best noted.

The rating firm did not indicate Capacity’s number of policies in force. In 2019, it had about $17 million in direct written premium, or less than 0.1% of the Florida market, according to a report from consultant Guy Fraker.

TOPICS FLORIDA

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