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Addressing Florida’s Chaotic, Messy Property Insurance Market

The Florida property insurance market is in free fall, with legislators and insurers looking to enact reforms to keep it from totally hitting rock bottom. Insurers have gone belly up, withdrawn from the state to stop the red ink, or reevaluated their risk appetite to limit their losses. For example, on the homeowners insurance front, many carriers only provide wind coverage to newer and updated homes while requiring increased wind deductibles.

Home owners have also experienced unprecedented rate increases with a rise of 25% to 40% in catastropheprone areas. At the same time, state-run Citizens Property Insurance has written “last-resort” policies for nearly 400,000 property owners over the past two years as insurers leave the Florida market. Governor Ron DeSantis expects Citizens to write one million policies by year’s end. Ironically, amid Florida’s property insurance woes, the real estate market continues to flourish.

On the commercial side, inflation has driven up construction material and labor costs already impacted by supply-chain disruptions, which has resulted in higher claim costs in property losses and increased rates. A legal system characterized by third-party litigation funding, fraudulent claims, aggressive tactics by plaintiff attorneys, and nuclear verdicts also is driving up insurance rates for businesses.

In 2021, a year in which no hurricanes landed on the Sunshine State, insurers operating in Florida reported a collective loss of $1.5 billion of business.

Catastrophes, litigation, and fraud

Catastrophic losses from hurricanes over the years have no doubt contributed to the property insurance market’s unprofitability and rate increases. In 2017, insurers paid out $20.6 billion in losses in the aftermath of Hurricane Irma. Hurricane Michael in 2018 resulted in $9.1 billion in insured losses. About two million single-family homes on Florida’s coast—totaling nearly $600 billion in value—are at risk of hurricane-related storm surge losses, according to property data and analytics provider CoreLogic.

In addition to natural catastrophe losses, part of the insurance market’s problem stems from the excessive litigation in the state. Last year, 116,000 property insurance lawsuits were filed in Florida, as compared to other states, where not one state saw more than 900 lawsuits filed. In fact, although Florida makes up less than 10% of the nationwide homeowners insurance claims, the state is responsible for 76% of all homeowners insurance litigation in the country.

The plethora of lawsuits is due to the unintended consequences of a slew of laws and state Supreme Court decisions that opened the door for contractors and attorneys to inflate the number and value of claims payments. For example, one of these laws, AOB (Assignment of Benefits), in Florida has contributed to the insurance crisis.

The AOB abuse

The AOB law allows a homeowner to turn over an insurance claim to a third party (such as a contractor) instead of negotiating a settlement with the insurer. It gives authority to the contractor, for example, to file a claim, make repair decisions and collect insurance payments without an insured’s involvement. This has unfortunately created an environment in which contractors and attorneys have solicited unwarranted AOBs from thousands of Floridians. Contractors conduct unnecessary or unnecessarily expensive work, then file lawsuits against insurance companies that deny or dispute the claims.

Another state statute, known as “one-way attorney fees,” is intended to protect policyholders from legal fees if they sue insurers for failure to pay claims or for inadequate claims payments. When combined with the AOB, however, this has created a gold mine for both contractors and lawyers.

Rampant roofing fraud is a perfect example of an effect of these laws gone awry. In the aftermath of a storm, roofing contractor scammers comb neighborhoods and promise home owners free roofs if they sign the AOB. Many of the roofing claims are for roofs that should still have long lifespans. Even if there is only minor damage, the roofer will file a claim, which results in insurers paying for the full replacement of roofs that only require repairs, as well as significant legal fees if a lawsuit results due to a claims denial or dispute. The same tactic has also been used on condo associations.

Meaningful reform on its way?

In June 2021, Governor DeSantis signed into law Senate Bill 76, with the intent of reforming residential and commercial property insurance claims in order to reduce the financial burdens placed on both insurers and their insureds. Other bills have been introduced and a legislator scheduled a special session to discuss reforming the property insurance market and reining in costs.

Look to the E&S market for insurance placement

The excess and surplus (E&S) lines market is available for high-risk, high-hazard property locations, including in areas with a high exposure to liability. The key is partnering with a carrier that works with clients and is willing to fight for them in court against plaintiff attorneys who file exaggerated or frivolous lawsuits and demand high settlements.

It’s worth the fight, as continuing to allow excessive and unwarranted litigation ends up costing more in the long run and puts the insurance market in jeopardy, as we have seen in Florida.

An E&S carrier committed to tackling today’s aggressive plaintiff bar and nuclear verdicts, which have contributed to the underwriting unprofitability and carrier exodus in Florida, is able to achieve a strong combined loss ratio and remain in position to meet its clients’ insurance needs. With the right E&S carrier, agents and brokers have an opportunity to find a home for both their personal and commercial clients for hard-to-place risks including in the coastal areas of Florida.

The E&S market can help provide clients with a solution if they have been canceled, denied, or non-renewed insurance coverage in the past or have a claims history.

Related Articles

Check out these recent articles that expand on the current situation of Florida’s property insurance market:

High costs force some homeowners to choose: Drop insurance, sell or leave Florida
Fla. lawmakers force homeowners to buy flood insurance
Florida Homeowners Will Likely Continue to Face Challenging Property Insurance Market in 2023
Fixing Florida property insurance mess a slow process


Authored by Rick J. Lindsey, CEO, President, and Chairman of Prime Insurance Company

rick j lindsey president and ceo of prime insurance company - headshot with white backgroundRick J. Lindsey hails from Salt Lake City, Utah. He began working in the mailroom of his father’s Salt Lake City insurance firm, getting his introduction to the business that became his lifelong career. Lindsey quickly rose through the ranks while working in nearly every imaginable insurance industry job. As an entrepreneur, specialty lines underwriter, claims specialist, risk manager, and a licensed surplus lines broker, Rick J. Lindsey is highly skilled in all levels of leadership and execution. As he progressed on his career path, Rick discovered an urgent need for insurers willing to write policies for high-risk individuals and businesses. He was frequently frustrated that he could not provide the liability protection these entities desperately needed to safeguard their assets. He also formed the belief that insurance companies acted too quickly to settle frivolous claims. Lindsey decided to try a different approach. He started an insurance company and became the newly formed entity’s CEO. This opportunity has enabled Rick to fill a void in the market and provide a valuable service to businesses, individuals, and insurance agents who write high-risk business. Read more…

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