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Insurance giant Allstate has stopped writing new policies
Looks like Florida is on the chopping block too. But only because it's inhabited by ignorant right wing scumbags who rape their own kin when
they're not stealing money and sending it to the fat deviant pervert child molester DeSantis or felony defendant Trump.
Can lawmakers save the collapsing Florida home insurance market?
The Florida home insurance market has spent most of 2022 tumbling toward collapse, but recent legislation just might avert disaster. Bankrate dug
deep into the Florida insurance industry to discover the cause of the
problem and to report on the proposed solutions. We can help you
understand why the Florida home insurance crisis is happening and your
options if you receive a cancellation or nonrenewal notice on your
homeowners insurance policy.
The crisis in the Florida insurance market
Florida has always been a complex home insurance market, but recent issues
are pushing the state’s market to the point of collapse. Since 2017, six property and casualty companies that offered homeowners insurance in
Florida liquidated. Five more are in the liquidation process in 2022.
Other insurance companies are voluntarily leaving the state. Even more are choosing to nonrenew swaths of home insurance policies, drastically
tighten their policy eligibility requirements or request substantial rate increases.
For Florida homeowners, this is resulting in fewer home insurance
companies and increased premiums. When a company goes insolvent, the
Florida Insurance Guaranty Association (FIGA) takes on any claims that
still need to be paid by that company. In late August, FIGA’s board and
the Florida Office of Insurance Regulation (OIR) approved a .7 percent assessment to help cover the costs of open claims associated with the liquidated companies. That’s the second assessment this year, with a 1.3 percent assessment approved in March. Homeowners will pay these fees
regardless of the insurance company they are with.
According to Logan McFaddin, Vice President of State Government Relations
at the American Property Casualty Insurance Association,
Florida’s Insurance Consumer Advocate (ICA) Tasha Carter agrees, saying, “Homeowners insurance options in Florida have become more and more
limited, and consumers are facing dire consequences.”
Why are home insurance companies leaving Florida?
Florida insurers are canceling policies, leaving the state or liquidating
at a rapid pace. Why? What is behind these companies’ aversion to insuring Florida homes?
Florida has always presented a risky market to home insurance companies
due to the high threat of widespread weather-related damage, but the
current crisis is caused by a number of factors reaching a boiling point
at the same time.
Insurance fraud in Florida
The biggest issue right now in Florida is home insurance fraud, driven by fraudulent roofing claims. A proclamation from the office of Governor Ron DeSantis notes that, although Florida only accounts for 9 percent of the country’s home insurance claims, it is home to 79 percent of the country’s
home insurance lawsuits. Many of these lawsuits are fraudulent. ICA Carter explains how the scams generally work:
First, roofers canvas neighborhoods and offer inspections to
unsuspecting homeowners. These contractors inevitably “find damage” on the
roof and often promise a “free roof” to the homeowner, claiming they can
have the home insurance deductible waived.
Homeowners are pressured to sign an assignment of benefits form,
giving contractors the right to file an insurance claim on their behalf.
A claims adjuster from the insurance company inspects the alleged
damage. The adjuster either finds no damage or far more minimal damage
than the contractor found, and the claim payout is less than what the contractor demanded.
The contractor brings legal action against the insurance company,
demanding a claim payout for the contractor’s original quote. Remember,
the homeowner signed the benefits of the policy to the contractor, so the contractor doesn’t need the homeowner’s permission to do this.
The insurance company now has a choice: it can pay the legal costs to
fight the lawsuit or pay the costs to settle out of court. Either way, the insurance company loses money due to the legal action.
ICA Carter notes that “these schemes are real and are happening more frequently,” which puts more and more financial pressure on insurance companies, especially in a state with high claims costs due to weather-
related events.
According to Mark Friedlander, Director of Corporate Communications at the Insurance Information Institute, “Florida property insurers are projected
to post a cumulative underwriting loss of $1.7 billion for 2021” due to
these runaway litigation costs. The governor’s office reports that, for
two consecutive years, net underwriting losses have exceeded $1 billion.
It’s no wonder that so many companies are going insolvent or leaving the
state before they reach that point.
On top of that, Florida also previously had a “one-way attorney fee”
system. This meant that, when a court ruled in favor of the plaintiff (in
this case, a home insurance policyholder or the third-party contractor who filed the claim), the defendant (in this case, the insurance company) was responsible for paying the plaintiff’s attorney fees. So not only were
insurers paying for fraudulent lawsuits, they were also paying for the fraudster’s legal costs. Friedlander notes that the insurance reform bill passed in December 2022 “addresses the two root causes of Florida’s
residential insurance crisis — litigation abuse and assignment of benefits (AOB) abuse…Eliminating both is necessary to slow down the mass volume of lawsuits being filed against Florida insurers.” Going forward, assignment
of benefits forms are banned for home insurance losses and Florida will no longer operate a one-way attorney fee system.
Roof age
Instead of leaving altogether, some companies are tightening their
underwriting restrictions to lessen the risk of these scams. This may be
the reason why several companies — including Southern Fidelity,
Progressive and Universal — have chosen to continue operations in Florida
but have nonrenewed tens of thousands of policies.
However, companies are now prohibited from denying coverage solely based
on roof age if the roof is fewer than 15 years old and has a life
expectancy of five years at the time the policy is issued. That said,
insurers will have to decide if they are comfortable with these
restrictions or if they will continue leaving Florida.
Storm risk
Risk will always be a consideration for home insurance companies in
Florida. The state’s shape and geographic location mean that it could get
hit from either side by a hurricane. Because the peninsula is so thin,
even homes in the interior counties aren’t entirely protected.
To make matters worse, fraudulent claims may be more common after severe
storms — and storms are not uncommon in the state. Hurricane Ian made
landfall on September 28 as a powerful Category 4 storm, causing
widespread damage. The damage and financial fallout could push the already-teetering home insurance market into collapse due to increased
home repair expenses, including the potential of fraudulent roof claims.
However, although the risk of hurricane damage complicates things, it
isn’t what’s driving the market to the brink of collapse. After all, other risky states don’t have this problem. A high likelihood of damage
generally means paying a higher premium to offset that risk, but coverage
is usually still available. Oklahoma, for example, has the highest average
cost of home insurance in the nation at $3,593 per year for $250K dwelling coverage due to the likelihood of tornado damage, but homeowners in the
state don’t face the same difficulty finding coverage that Floridians do.
Is anything being done to curb the crisis?
Yes, although the full effects of the measures have yet to be seen. Senate
Bill 76 went into effect in July 2021 and included several provisions to
curb fraudulent claims causing insurers so much strain. One such provision
is aimed at reducing the solicitation tactics that fraudulent contractors
often use at the start of a scam. While this legal measure may help solve
the problem, Sean Harper, CEO of Kin Insurance, warns that “there will
need to be additional action taken to restore the market to health.”
Florida lawmakers met for a special session from May 23 through May 27.
The Legislature passed an insurance reform bill that includes several provisions to help slow the spiral of the market. The provisions included setting up the My Safe Florida Home Program, which provides grants to help Florida homeowners strengthen their homes against damage. Additionally,
home insurance companies will not be able to deny coverage for homes
solely based on roof age if a roof is less than 15 years old and still has
five years of useful life left (older roofs may still be denied as they
present a high risk of damage). Finally, lawyers will be restricted in the rates they can charge for property insurance claims cases, hopefully discouraging fraudulent lawsuits and decreasing litigation costs.
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