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Regulators have ordered the state-backed Citizens Property Insurance Corp. to revamp — and trim — proposed rate increases.
Florida Insurance Commissioner Michael Yaworsky signed an order Friday that took issue with parts of a Citizens rate proposal that included increasing rates by 12 percent for homeowners with the most-common type of policies.
The order, posted on the state Office of Insurance Regulation website, directed Citizens to “calculate new, reduced, overall average statewide rate increases for the rate filings” covered by the order.
“We are reviewing the final order and will submit a revised set of recommendations, as requested, based upon OIR’s findings and directives,” Michael Peltier, a Citizens spokesman, said in an email Monday.
Amid explosive growth in its number of policies, Citizens this year asked the Office of Insurance Regulation for approval of an overall 13.3 percent rate increase, with 12 percent hikes for “multi-peril” policies on primary residences.
A 12 percent increase would be the maximum allowed this year for those policies under a state law that limits how much Citizens can raise premiums.
Citizens officials contend rate increases are needed, in part, because Citizens broadly charges lower rates than private insurers. They say Citizens’ lower rates undercut long-running state efforts to push policies into the private market. Also, they argue higher rates are needed to make Citizens more actuarially sound.
Friday’s order said the Citizens rate proposal emphasized “overall actuarial soundness, instead of individual actuarial soundness.”
The order pointed to questions about whether the proposed increases might not be justified in some areas of the state, saying that the Office of Insurance Regulation “finds that due to the inadequate support as it relates to Citizens being non-competitive (with private insurers) … rates should be subject to a modified policyholder capping methodology.”
That methodology could lead to a range of increases up to 12 percent for multi-peril policies on primary residences — or, possibly for some policyholders, no increases, according to the order. Under a law that passed last year, rates could increase up to 50 percent for homes that are not primary residences.
Citizens originally proposed rate increases to take effect Nov. 1 but later changed the date to Dec. 9. The Office of Insurance Regulation agreed with the change. Friday’s order gave Citizens 30 days to revamp the rate proposal.
Before property owners cast stones, claiming the fault is stingy insurance companies that won't pay claims and keep raising rates or hurricanes that have resulted in widespread property devastation, Friedlander said the blame for Florida's property insurance crisis is much more endemic.
"Long before Hurricane Ian formed in the Atlantic, there were major problems in the Florida insurance marketplace," said Friedlander. "In fact, we considered Florida the most unstable property insurance market in the U.S. in 2022, caused by what we consider to be a man-made crisis. What do I mean by that? Two key factors: roof replacement claims schemes and excessive levels of litigation are why the insurance market in Florida is in such turmoil today and, unfortunately, even more so after the impacts of Hurricane Ian."
While Florida is undoubtedly disaster-prone due to its susceptibility to tropical storms and hurricanes, Friedlander noted that there were no direct hits by hurricanes in 2020 and 2021.
"Yet we saw an average cumulative industry underwriting losses of about $1.6 billion each of those years," he said. "You don't see this in any other states in the country when there are no major catastrophes contributing to these losses."
Instead, he said, the problem is greed.
"Florida has always been known as the capital of insurance fraud, whether it's auto insurance or property insurance fraud," Friedlander said.
These fraudsters take the form of unscrupulous roofing contractors and attorneys, he said. "
"I don't want to put a blanket over all roofing contractors but there are a group of unscrupulous contractors that are taking advantage of loopholes in Florida state regulations to solicit business door to door and basically scam homeowners into thinking they need their roof replaced when it really doesn't need to be replaced," he said. "They promise homeowners a free roof if they just sign over their property insurance claim to them in what's called an assignment of benefits. which is called assignment of benefits."
The contractor will then replace the roof but, with the assignment of benefits in hand, the contractor can go directly to the insurance company for reimbursement, he said.
"They will replace the roof but will charge the property insurance double the market rate," he said. "If the roof costs $20,000, for instance, they'll charge the insurance company $40,000. When the insurer refuses to pay the exorbitant cost, the contractors get together with unscrupulous trial attorneys to fight the property insurers in court."
Friedlander said Florida is famous for its unprincipled litigators.
"Florida leads the nation in unscrupulous trial attorneys that love to sue insurance companies. This is their livelihood. They're making millions and millions on these lawsuits," he said.
He pointed to one South Florida attorney who boasts about suing insurance companies.
"He shows checks he has received from insurance companies. He shows the yachts he's bought with those checks. He shows the private jets he's bought with those checks. It's unbelievable the volume of unethical attorneys in this state," he said.
The proof is in the number of property insurance lawsuits filed in 2021. There were 107,000 property insurance lawsuits filed, making up 81 percent of the total filed in the United States.
"We've looked at all the other states and the next state on the list is California with 3,600 lawsuits and California is double the size of Florida with a 40 million population versus 21 million residents in Florida," he said.
Location: Sarasota/ Bradenton - University Pkwy area
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Florida legislators passed substantial property insurance reforms in December 2022 to help stabilize the insurance market for homeowners and protect them from rampant Assignment Of Benefits (AOB) fraud, the major cause of fraudulent filings.
The new law eliminates legal fee structures that allowed AOB abusers to side step the justice system thru loopholes and forced insurers to pay inflated claims to unscrupulous third parties directly for thousands of questionable claims.
What is AOB insurance fraud? In many cases, it works like this: Contractors promise a free roof to homeowners if they assign the benefits over to the roofing contractor. The contractor then submits an inflated claim to the insurance company on behalf of the home owner. The insurance company objects to the claim, then the contractor has a law firm sue the insurance company. The insurance company eventually settles, losing millions. The costs then get passed down to all homeowners in FL with insurance policies.
Additionally, the legislation set up mechanisms that allow policyholders to dispute any costs they determine to be unfair before a claim is paid out - something they could not do under previous laws.
Further tort reform passed in the Florida Legislature’s regular session in March 2023 will help reduce attorney fee multipliers that courts have been liberally awarding on top of plaintiff verdicts in property claim lawsuits.
As a result of these legislative changes, a large number of law firms have filled lawsuits against the state of FL in court. Obviously they do not want to lose their insurance cash cows.
Insurers were expected to face claims for billions of dollars from Hurricane Idalia which made landfall in Florida on Wednesday, adding to a challenging year for the industry that could result in higher premiums for customers.
Hurricane Idalia plowed into Florida's Gulf Coast with fierce winds, torrential rains and pounding surf before weakening but turning its fury on southeastern Georgia, where floodwaters trapped some residents in their homes.
In Florida, UBS bank estimated average insured losses of $9.36 billion with a 50% chance of losses of over $4.05 billion and a 10% likelihood of losses of $25.6 billion, based on Aug. 28 data. The wide range reflected potential changes in the storm's intensity and path.
At about $10 billion, Idalia would cost insurers less than 10 of the costliest hurricanes to hit the United States.
Global insurers are facing a challenging 2023 as reinsurers hiked rates on key types of coverage by as much as 50% from July 1, blaming sharp losses from the Ukraine war and increasing wildfires and hurricanes in states such as California and Florida.
"Historically, what happens when you have these hurricanes is that everyone gets worried about the liability following the hurricane," said Thomas Hayes, chairman and managing member of Great Hill Capital LLC in New York, adding that insurers typically end up being able to raise prices after such events.
The impact could have a knock-on effect on reinsurers, which insure insurance companies, and have been raising rates in recent years because of steepening losses that industry players partly attribute to the impact of climate change. Higher reinsurance rates can affect the premiums that insurers charge their customers.
Nationally, U.S. reinsurance rates for policies that had claims for natural catastrophes rose 30%-50% during July renewals, while in Florida the increase was 30%-40%, reinsurance broker Gallagher Re said in July.
Insurers were expected to face claims for billions of dollars from Hurricane Idalia which made landfall in Florida on Wednesday, adding to a challenging year for the industry that could result in higher premiums for customers.
Hurricane Idalia plowed into Florida's Gulf Coast with fierce winds, torrential rains and pounding surf before weakening but turning its fury on southeastern Georgia, where floodwaters trapped some residents in their homes.
In Florida, UBS bank estimated average insured losses of $9.36 billion with a 50% chance of losses of over $4.05 billion and a 10% likelihood of losses of $25.6 billion, based on Aug. 28 data. The wide range reflected potential changes in the storm's intensity and path.
At about $10 billion, Idalia would cost insurers less than 10 of the costliest hurricanes to hit the United States.
Global insurers are facing a challenging 2023 as reinsurers hiked rates on key types of coverage by as much as 50% from July 1, blaming sharp losses from the Ukraine war and increasing wildfires and hurricanes in states such as California and Florida.
"Historically, what happens when you have these hurricanes is that everyone gets worried about the liability following the hurricane," said Thomas Hayes, chairman and managing member of Great Hill Capital LLC in New York, adding that insurers typically end up being able to raise prices after such events.
The impact could have a knock-on effect on reinsurers, which insure insurance companies, and have been raising rates in recent years because of steepening losses that industry players partly attribute to the impact of climate change. Higher reinsurance rates can affect the premiums that insurers charge their customers.
Nationally, U.S. reinsurance rates for policies that had claims for natural catastrophes rose 30%-50% during July renewals, while in Florida the increase was 30%-40%, reinsurance broker Gallagher Re said in July.
AccuWeather's damage estimates for Hurricane Idalia are higher than UBS bank. Idalia damage was not nearly as bad as Ian - but nothing to sneeze at either.
Preliminary estimates say Hurricane Idalia could be the 9th costliest storm in Florida
A preliminary estimate of the total damage and economic loss from Hurricane Idalia in the southeastern U.S. is $18-20 billion, according to AccuWeather. If those numbers hold up, Idalia could become the ninth costliest hurricane to impact Florida.
Estimates from risk analysts at UBS, a multinational investment banking company, believe average insured losses are closer to $9.36 billion with a 50% chance of losses of over $4.05 billion and a 10% chance of losses of $25.6 billion, Reuters reported.
10 costliest Florida hurricanes
The National Oceanic and Atmospheric Administration keeps a running list of the costliest U.S. tropical cyclones, which is based on any cyclone that resulted in at least $1 billion in damage costs at the time they occurred. Another list is included to reflect the cost values based on the 2023 Consumer Price Index.
If AccuWeather’s preliminary estimate holds up, Hurricane Idalia will be the ninth costliest Florida hurricane on NOAA’s 60-storm list. If damage costs are closer to UBS’ estimate then it will be closer to the 13th, just above Hurricane Opal.
Here are the 10 costliest Florida hurricanes (with values based on the 2023 Consumer Price Index adjusted cost).
- Katrina (2005) — $125 billion ($193.8 billion)
Hurricane Katrina is included on this list on a technicality. Katrina first made landfall north of Miami as a Category 1 hurricane before moving west over the Florida Peninsula and making a second landfall in Mississippi after rapidly intensifying in the Gulf of Mexico.
- Ian (2022) — $111.8 billion ($115.2 billion)
- Irma (2017) — $50 billion ($62 billion)
- Andrew (1992) — $27 billion ($58.6 billion)
- Ivan (2004) — $20.5 billion ($33 billion)
- Michael (2018) — $25 billion ($30.2 billion)
- Wilma (2005) — $19 billion ($29.1 billion)
- Charley (2004) — $16 billion ($25.8 billion)
- Frances (2004) — $9.8 billion ($15.8 billion)
- Agnes (1972) — $2.1 billion ($15.4 billion)
Last edited by wondermint2; 09-01-2023 at 02:17 PM..
AccuWeather's damage estimates for Hurricane Idalia are higher than UBS bank. Idalia damage was not nearly as bad as Ian - but nothing to sneeze at either.
Preliminary estimates say Hurricane Idalia could be the 9th costliest storm in Florida
A preliminary estimate of the total damage and economic loss from Hurricane Idalia in the southeastern U.S. is $18-20 billion, according to AccuWeather. If those numbers hold up, Idalia could become the ninth costliest hurricane to impact Florida.
Estimates from risk analysts at UBS, a multinational investment banking company, believe average insured losses are closer to $9.36 billion with a 50% chance of losses of over $4.05 billion and a 10% chance of losses of $25.6 billion, Reuters reported.
10 costliest Florida hurricanes
The National Oceanic and Atmospheric Administration keeps a running list of the costliest U.S. tropical cyclones, which is based on any cyclone that resulted in at least $1 billion in damage costs at the time they occurred. Another list is included to reflect the cost values based on the 2023 Consumer Price Index.
If AccuWeather’s preliminary estimate holds up, Hurricane Idalia will be the ninth costliest Florida hurricane on NOAA’s 60-storm list. If damage costs are closer to UBS’ estimate then it will be closer to the 13th, just above Hurricane Opal.
Here are the 10 costliest Florida hurricanes (with values based on the 2023 Consumer Price Index adjusted cost).
- Katrina (2005) — $125 billion ($193.8 billion)
Hurricane Katrina is included on this list on a technicality. Katrina first made landfall north of Miami as a Category 1 hurricane before moving west over the Florida Peninsula and making a second landfall in Mississippi after rapidly intensifying in the Gulf of Mexico.
- Ian (2022) — $111.8 billion ($115.2 billion)
- Irma (2017) — $50 billion ($62 billion)
- Andrew (1992) — $27 billion ($58.6 billion)
- Ivan (2004) — $20.5 billion ($33 billion)
- Michael (2018) — $25 billion ($30.2 billion)
- Wilma (2005) — $19 billion ($29.1 billion)
- Charley (2004) — $16 billion ($25.8 billion)
- Frances (2004) — $9.8 billion ($15.8 billion)
- Agnes (1972) — $2.1 billion ($15.4 billion)
You know why Ian was so expensive right ? The wealthy got hit and costs went way more than even Andrew. It will continue to be that way if hurricanes hit these pricey areas. We will all pay the dam ins hikes.
You know why Ian was so expensive right ? The wealthy got hit and costs went way more than even Andrew. It will continue to be that way if hurricanes hit these pricey areas. We will all pay the dam ins hikes.
Not shocking. Like with irma, had it been a bit stronger and went just 10 miles west would have been worse than ian! Naples and places like Port Royal would have been like ft. Myers beach. All those houses in Port Royal, The Moorings, Park Shore area would been smacked! Probably would been a 150 to 175 billion dollar storm.
A hurricane like Andrew today and just 5 to 10 miles north would be 200 billion due to the build up in dade county!
Not shocking. Like with irma, had it been a bit stronger and went just 10 miles west would have been worse than ian! Naples and places like Port Royal would have been like ft. Myers beach. All those houses in Port Royal, The Moorings, Park Shore area would been smacked! Probably would been a 150 to 175 billion dollar storm.
A hurricane like Andrew today and just 5 to 10 miles north would be 200 billion due to the build up in dade county!
If the damage costs for Andrew were estimated to be around 16 billion at the time. They said at that time that those costs THEN would have been much higher had Andrew made landfall north of where it did and hit in downtown Miami, or points north, along the very crowded coasts of north Miami or Broward counties.
If the damage costs for Andrew were estimated to be around 16 billion at the time. They said at that time that those costs THEN would have been much higher had Andrew made landfall north of where it did and hit in downtown Miami, or points north, along the very crowded coasts of north Miami or Broward counties.
A lot of high rises in Miami now. A lot more than the early 90s!
Another town that would take a hard hit is if Houston got hit by a strong cat4 or cat5. It would weaken some as it moves inland but would still be a major hurricane over downtown Houston. That would inflict massive damage amounts. Along with a bad storm surge up Galveston bay. If it's fast moving and still a cat4, it would be much worse than if a hurricane hit Tampa or Miami possibly due to being so densly populated.
Houston would be the worst city to get a major hurricane, probably more than Miami dollar wise. More industry and the oil industry. Also more storm surge prone Galveston bay is than Miami area due to shallow waters.
I think Houston would be the worst place to have a cat4 hit due to the wind with high rises and the surge especially in the suburbs closer to the Bay.
NYC bad too but hard to get anything stronger than a 2 up there.
Hurricanae Ike almost did that to Houston had it another 12 hours over water. Would been a cat4 instead of a cat2! Ike was ready to ramp up right when it was making landfall.
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