AM Best Analysts: Florida Has the Most Premiums in Homeowner Insurance Lines
According to an AM Best analysis, Florida is the state with the most premiums in homeowner insurance lines. While Florida is the third most populous state in the country, it generated a whopping $12.4 billion of homeowners direct premiums in 2021 which is more than the most populous state, California. The Golden State generated $11.2 billion in homeowners premium and Texas, the second most populous state in the country managed $11.9 billion in premiums.
Analysts with AM Best pointed out that Florida is prone to severe weather and comes with a very challenging litigation environment.
According to AM Best, “Total direct premium for homeowners’ carriers in Florida continues to grow, rising 11.7% from 2020 to 2021. Florida’s rise was the fourth-largest one-year percentage increase in 2021, behind California and fast-growing Idaho and Montana. Direct premium for homeowners carriers, total United States, reached $119.7 billion in 2021, an 8.4% rise from 2020.”
Analysts claim that as market dynamics change, some insurers are re-evaluating their approach to the Florida market.
As an example, in July of this year, Bankers Insurance Group announced that it was leaving the homeowners market in Florida. One of the main reasons they are choosing to depart the Florida market is their concerns about being able to meet Government-Sponsored Enterprise requirements, as an example, Fannie Mae and Freddie Mac.
Freddie Mac has a requirement that AM Best-rated insurers and reinsurers must have a Financial Strength Rating of B+ or better, and non-admitted insurers must hold a minimum rating of A which is an Excellent rating. Fannie Mae requires AM Best-rated insurers and reinsurers hold an FSR of B (Fair) or better.
According to Mark Friedlander of the Insurance Information Institute, Bankers Insurance Group is not alone when it comes to leaving the Florida homeowner market. A shocking 13 other companies have stopped writing home insurance in the Sunshine state this year,
Three of these comes went insolvent, and of the remaining 10 companies, three indicated that they were voluntarily leaving the homeowner insurance market in Florida. The other seven insurers have said they are temporarily leaving the market but have given no indication when they will resume writing policies in the state. Numerous companies have cited the fact that the state legislature has failed to disincentivize trial attorneys from filing suit against property carriers, according to Friedlander.
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