Roof-damage claims. Lawsuits. Reinsurance costs.
For tens of thousands of homeowners, those issues could add up to large property-insurance rate increases if state regulators sign off on proposals presented Tuesday.
The Florida Office of Insurance Regulation held three hearings as it weighs rate proposals by Kin Interninsurance Network, First Floridian Auto and Home Insurance Co. and Florida Farm Bureau General Insurance Co. and Florida Farm Bureau Casualty Insurance Co.
The Farm Bureau companies are seeking a statewide average rate increase of 48.7 percent, while Kin is seeking an average increase of 25.1 percent and First Floridian is seeking an average increase of 23 percent.
“But it is across the board. It isn’t just these three companies. It is every single company in Florida. ... Twenty to 30 percent is actually low,” said Brightway Insurance agent Joe Carlucci. “The rest of the prices are going up by 300 percent.”
And Carlucci said even that’s better than being dropped.
“The fact that you’re able to keep your policy and have less than a 50 percent rate increase, it’s shocking, but that right now, you’re in a much better position than a lot of other people,” he said.
The proposals are the latest evidence of problems in the state’s property-insurance system, as lawmakers prepare to return to Tallahassee next week for a special session to try to shore up the market.
The hearings also gave a preview of some of the issues that likely will be prominent during the session, including calls by insurers to address large numbers of roof-damage claims and lawsuits that the companies say are driving up costs.
“We do not want to nonrenewal, but we cannot continue forward at this unsustainable rate level,” First Floridian Vice President Robert Aaron said to regulators about the current insurance market.
Angel Conlin, CEO of Kin, told regulators that her company sees litigation costs as the “ultimate driver” that needs to be addressed during the session.
“We do believe the true fix is to tackle the litigation issues,” Conlin said.
Another issue affecting rates are increased costs for reinsurance, which is critical backup coverage that insurers buy to help with such things as hurricane claims.
Along with the proposals to raise rates, Tuesday’s hearings also gave a glimpse of steps insurers are taking to try to curb financial losses, particularly by dropping customers who have older roofs on their homes. That stems from what the companies say has been a surge in recent years in roof-damage claims and higher repair costs.
Farm Bureau, for example, has decided to not renew policies for homeowners who have shingle roofs that are at least 20 years old and tile roofs that are at least 25 years old, President and CEO Steven Murray said. That will ultimately lead to about 7,600 customers losing coverage.
Kin plans to be even stricter, limiting coverage to homes with shingle roofs up to 10 years old and metal and tile roofs up to 20 years old — a move that will lead to about 5,000 policies not being renewed, said Dan Ajun, the insurer’s chief actuary.
Gov. Ron DeSantis called the special session, which will start Monday, after the House and Senate did not reach agreement on a property-insurance bill during this year’s regular session. Three property insurers in recent months have been placed into receivership and declared insolvent, while a group of affiliated companies — FedNat Insurance Co., Maison Insurance Co. and Monarch National Insurance Co. — reached an agreement Friday with regulators that will lead to 68,200 policies being canceled.
“The insurance industry is a patient on life support. They’re trying to stabilize the patient basically,” Carlucci said.
Carlucci said insurance companies have no choice but to raise rates or drop customers to stay afloat.
“Everyone keeps saying, ‘The insurance companies are making so much, why am I getting dropped and why are they doing this?’” Carlucci said. “I think that’s kind of a false sense of reality. The insurance companies are not making a lot of money.”
He added he’s cautiously optimistic about the outcome of the special session.
Meanwhile, other insurers have dropped customers, stopped writing new policies and sought hefty rate hikes as they grapple with financial losses. Also, thousands of policies a week are pouring into the state-backed Citizens Property Insurance Corp., which was created as an insurer of last resort but had more than 850,000 customers as of the end of April.
Murray on Tuesday called Citizens a “barometer” of the health of the property-insurance market.
It remains unclear when regulators will decide whether to approve the rate increases sought by Kin, First Floridian and the Farm Bureau companies. Each received a rate increase last year of at least 14 percent.
It also remained unclear Tuesday what steps lawmakers will take to try to bolster the system. But it is clear that the problems are affecting the pocketbooks of homeowners: Farm Bureau said, for example, that its proposed rate hikes would lead to customers paying an average of $1,032 more a year.