As another hurricane season looms in the Sunshine State, Florida regulators have paved the way for three insurance companies to cancel or reject policies for more than 50,000 homeowners who companies believe are too risky.
State approval of the terminations came at the request of three insurers – Gulfstream Property and Casualty, Universal Insurance Company of North of America, and Southern Fidelity Insurance – who argued that compliance with the contracts would put them in bankruptcy under the decrees of consent issued earlier this month from the Florida Office of Insurance Regulation.
The companies did not respond to requests for comments.
“It is a reaction to the underwriting losses of the past five years,” said Paul Handerhan, President of the German Insurance Reform Association.
Several factors play a role, including the increasing frequency and severity of catastrophic weather events, the rising cost of litigation, and insurers’ own reinsurance costs to cover major losses, Handerhan said.
“From a consumer perspective, the outlook is not good. You will have less choice if it is higher,” he said.
“Vulnerable population groups”
The limited options for homeowners are likely to worsen as insurers across Florida re-evaluate their business and underwriting criteria, which Handerhan says have become more restrictive. “If your house is more than 40 years old and has not been brought up to the code, there is a high chance you will not be renewed,” he said.
“The unfortunate truth is that many of these older homes affect vulnerable populations such as the elderly and those on fixed incomes,” without the means to repair or upgrade homes, he added.
With their insurance coverage no longer available, many affected homeowners can turn to Florida’s Citizens Property Insurance Corp. instead. Contact, a government agency that limits personal liability insurance and places surcharges on all policyholders if claims are too high after a disaster.
Citizens added thousands of customers each week and approached 600,000 policies in late April as private insurers drained customers and sought large rate increases. That could put taxpayers at risk for losses, said Handerhan.
Efforts to discharge policies that are considered potential liabilities by insurers are made less than two weeks before the start of hurricane season, which begins June 1 in Florida and typically lasts five months.hit the state in November, causing wind damage and flooding along the west coast of Florida. In 2017, Hurricane Irma caused an estimated $ 50 billion property damage in Florida.
“Florida definitely has one of the highest disaster risks in the country, but also in the world,” said Handerhan, describing the state as a “hurricane-prone peninsula protruding into the Atlantic Ocean.”