Florida personal lines coverage reaches crisis levels — Part 2
Insurance agents and policyholders in the Sunshine State are suffering.
Editor’s note: Part one of “Florida personal lines coverage reaches crisis levels” was featured on PropertyCasualty360.com Tuesday, December 28, 2021.
As a result of multiple forms of losses, Florida agents currently find themselves with fewer options when placing residential property coverage. A few major carriers like CNA, Travelers and Chubb still write homeowners, but restrictions are tightening around wind, and a property policy in Florida without wind coverage is next to useless.
Much of the property cover to be found these days is secured through specialty/excess & surplus insurers like Scottsdale (who recently took a rate increase ranging from 12% to 70%), and those have to be accessed through wholesale brokers such as Amwins, Johnson & Johnson, RT Specialty, RPS and XS Brokers. By the time those brokers’ own fees and commissions (around 5%) are factored in, property insurance yields less and less profit for local agents, even if the premiums are high.
It has been very difficult to have renewal conversations with insureds, some still recovering financially from the pandemic, and explain to them why they are seeing double-digit increases across the board — even for the best of clients. As carriers quickly tighten their underwriting guidelines or pull out of large swaths of the state, some clients are unable to make certain updates quickly enough to gain eligibility for alternate quotes. One homeowners renewal increase of approximately 30% with Scottsdale resulted in the client opting to completely remove contents coverage and increase deductibles just to make ends meet.
Partly sunny
Still, all is not completely lost. On June 11, 2021, Gov. Ron DeSantis signed Senate Bill 76, which decreases the time limit to file insurance claims, introduces a pre-suit notice requirement, provides limitations on attorney’s fees and permits the consolidation of related lawsuits.
It also prevents contractors, public adjusters and companies from using predatory advertisements that encourage Florida residents to make insurance claims for roof damage and imposes a fine of up to $10,000 when companies violate the law. One of the bill’s provisions makes it illegal for contractors to canvass neighborhoods with door hangers, business cards, magnets, flyers and other marketing materials encouraging consumers to contact a contractor or public adjuster to file an insurance claim on their behalf for residential roof damage.
Just weeks after the bill was signed into law, however, a federal judge granted an emergency injunction disallowing the portion of SB 76 that outlawed certain types of contractor advertising. Gale Force Roofing & Restoration, a Tampa Bay-area contractor, filed for the injunction, claiming a provision within the law violates its First Amendment rights to commercial free speech.
It’s still too early to see what the impact of SB 76 (which only came into effect on July 1, 2021) will ultimately be, but at least it’s a step in the right direction.
I can tell you firsthand that while this practice is now (somewhat) illegal in neighborhoods, that doesn’t mean it has stopped. I attended a recent remodeling show in Miami, and the three types of vendors with the biggest presence there were, in this order: Impact-window installers, mattress sellers and — you guessed it — public adjusters, who were offering sign-ups for free estimates to have their homes fixed on their insurer’s dime. One such public adjuster’s entire display consisted of the phrase “#GetPaid” largely splashed on all visual angles.
The courts are also worth watching. In October, three more appeals in assignment-of-benefits cases went in favor of Florida property insurers, proving those carriers did not owe payment to restoration contractors because the insurance policy requirements weren’t strictly adhered to (mostly involving the required signatures of both spouses). Two of those lawsuits were brought by Union Restoration, which has filed at least 36 lawsuits against property insurers since 2015.
Agents’ options
So in this environment, what’s an agent to do/? Mostly, they have to weather the storm, and being part of a network can help.
Citizens Property Insurance Corp., Florida’s state insurer of last resort, is currently adding about 4,500 policies each week and is projected to hit around 700,000 policies by the end of this year. That number is not sustainable, and Citizens may reach a breaking point where it will have to alter its eligibility requirements to shed some of those policies. Those homeowners will have to find coverage somewhere, and Florida’s independent agents will be the ones they look to for guidance.
Oscar Miniet is Regional Executive Vice President at Renaissance Alliance. He can be reached at Oscar.Miniet@Renaissanceins.com.
Reprinted with permission from Renaissance Alliance. https://www.renaissanceins.com/how-it-works/