Florida Homeowners Insurance Rates Will Continue to Rise Next Year

07 Nov

Homeowner insurance rates for many Florida homeowners will continue to rise next year, despite the fact that reforms were put in place last spring to help curtail Assignment of Benefits (AOB) lawsuits brought by contractors and their attorney partners. 

Unfortunately, instead of heading down, the number of lawsuits filed against insurance companies has actually increased in 2019 over the same period in 2018. Lawsuits have increased 16.8 percent this year according to an analysis of lawsuit notices in the state’s Legal Service of Process database. 

The total number of lawsuits filed in 2019 is 260,810 so far which is over double the 126,011 lawsuits filed in 2015.

The cost to fight these lawsuits, along with the expenses related to recent hurricanes combined with the increasing cost of reinsurance means that it is unlikely that homeowners will see a drop in insurance costs any time soon. Reinsurance is insurance that insurance companies purchase to ensure they can cover all of their claims after a major disaster. 

Rates Are Headed Up

According to Barry Gilway, president and CEO of state-owned Citizens Property Insurance Corp, state insurance regulators have approved rate hikes for 29 insurance companies and are reviewing rate increase requests for 27 more insurers. 

Rate increases will vary by insurance company and where your home is located but these insurers (this is just a small sample) have already been approved for a rate increase:

  • Heritage Property & Casualty (statewide average 13.4%)
  • Florida Peninsula (Elite, 7%; Preferred, 8.2%)
  • Castle Key (4.1%)
  • Omega (9.5%)
  • Tower Hill Select (4.8%).

These insurers rate increase requests are still under review:

  • Southern Fidelity (8.6%)
  • Anchor (8.8%)
  • Edison (22.4%)
  • Capitol Preferred (15.3%)

Some insurers have requested very small increases, no increase or in some cases a decrease. State Farm was recently approved for an average 14.4 percent decrease which will impact almost 300,000 Florida policyholders. 

Citizens Property, which is the state run insurer of last resort is required to lower its requested rate hike under the terms of the reform passed this Spring. They have requested a statewide average increase of just 2.6 percent but some areas will see a much larger increase. As an example, Broward County residents will see an average 9.6% increase while homeowners in Palm Beach County could see a 4 percent increase. 

This means that homeowners in Broward will, on average, see their premiums go from $3,057 to $3,351 while Palm Beach County policyholder rates will jump up from $2,901 to $3,016.

Lawsuits and Storms Push Up Rates

The increase in lawsuits combined with payouts from major storms have put financial pressure on insurers in the Sunshine State. 

Claims from hurricanes Irma and Michael have driven combined net operating losses among Florida-based private-market insurers of $244 million in 2017 and $254 million in 2018 according to Gilway. Insurance companies have reported net losses of $48 million so far this year. 

There have been a number of lawsuits that are related to disputed claims over Irma. Hurricane Irma caused an estimated $11 billion in insured losses in Florida. Hurricane Michael, generated about $7.2 billion in insured losses.

While the AOB reforms that took effect on July 1, have made it harder for contractors to sue on the behalf of policyholders, lawsuits can still be filed under the old rules if it is based on a claim that took place before July 1st.

Gilway has warned that attorneys are getting creative and looking for ways to sidestep the reforms that were meant to lower the number of lawsuits being filed. Lawyers have started suing on behalf of policyholders themselves instead of the third-party contractors targeted by the reforms.

The number of lawsuits being filed have increased every month since July 1stcompared to the same month in 2018. As an example, 23,739 suits were filed in September, compared to 20,708 in September 2018.

While contractors and attorneys have been blamed for the homeowners insurance increases over the years in South Florida, the number of lawsuits is actually increasing at a higher rate in more northern counties such as Orange, Duval, Volusia, Lee, Pinellas.

Tags: , , , , ,