Insurance Agents on the Front Line of Florida’s Mounting Property Market Problems

As carriers continue to suffer financial losses in Florida’s distressed property insurance market, insurance agents are on the front lines trying to help their customers faced with double-digit rate increases, non-renewals, coverage restrictions, or rejections from the approved market.

The situation has become unsustainable, Florida officials say, and they hope that state lawmakers will take action during the current legislature so that Florida policyholders can access the insurance they need.

“We stand up for Floridians. I want a healthy, stable insurance market because a stable insurance market is critical to a healthy economy, “said Mary Katharine Lawler, president of Doug Croley Insurance Services in Tallahassee, Florida.

Agents like Lawler have worked not only to educate their customers about Florida’s market issues and the issues they need to fix, but also lawmakers.

“Our customers are our neighbors and our parishioners and your constituents, and we are the ones who deal with them every day,” Lawler testified to lawmakers at a House Committee meeting in January. “You can’t buy a house, you can’t buy a car, you can’t run a business if you don’t have insurance. It’s a critical part of our economy … that affects all Floridians. “

The agents told the Insurance Journal what they are seeing in the current market and how frustrated they are with their customers, and they fear lawmakers do not understand the severity of the problems in the Florida insurance market.

“We are seeing a rate increase of over 30% in both private and business areas. Of course, we either call our policyholders or they call us as soon as they receive their extension offers, ”said Alicia Rosier Stevens, agency development director at Rosier Insurance in Southwest Florida. “Florida needs real reform. We have tried for years to get our elected officials to pass good laws. We told them that if they didn’t do anything, this would happen – interest rates would go up, markets would go. We want our customers to have options. We don’t want them to pay more for less coverage. “

“Every single call from every customer complains about their tariff and coverage availability,” said Robert Norberg, president of Arden Insurance in Lantana, Florida. “It’s a big crisis here in Tri County.”

“We have seen approved markets in our South Florida area (Broward County) close. The age of the house was a big criterion and now it’s lack of availability which is really sad. Our customers are very upset about this and we hope we get some relief from lawmakers, ”said Randy Iten, president of the Iten Agency in Davie, Florida.

The worsening financial health of Florida-based companies has been attributed to several factors: excessive litigation, contractor regulations, multiple years of consecutive major disasters, and the rising cost of reinsurance. The combination of these factors resulted in $ 1 billion in losses for Florida domestic companies in the first three quarters of 2020, more than double the 2019 underwriting losses, according to Insurance Commissioner David Altmaier.

This has resulted in significant rate hikes for policyholders and there does not seem to be any sign of relief. The Florida Office of Insurance Regulation approved 105 rate changes last year, 90 of which were for rate increases, 55 of which were for rate increases greater than 10%.

Rate increases are just one of many steps carriers are taking to contain losses. Lawler told lawmakers it was dealing with a lack of market availability, especially with older homes, short-term rentals and small business policies, and policy non-renewals and cancellations. Air carriers across the state issue guidelines with water damage limits, water exclusions, and actual present value (ACV) on rooftops. A freight forwarder, she said, will now only write ACV-based homes that are 40+ years old unless the policyholder replaces the home’s roof, plumbing, and HVAC systems.

Customers get less coverage at a higher cost. “This is poor value for customers,” Lawler said.

The agents agree that unchecked third party litigation and contractor plans are behind the market issues and, without reform, market conditions will worsen. Lawler said policyholders are used as a “channel to extract money from insurance companies”.

“Third parties are aimed at consumers who are either knowingly or unknowingly involved in insurance fraud and fraud, even with valid claims,” ​​Lawler told lawmakers. “Third parties take advantage of the policyholder’s ignorance in the claims process.”

Kyle Ulrich, president of the Florida Association of Insurance Agents, said third parties who shouldn’t be involved in the claims process, be it a lawyer, a building contractor, a roofer or a water remediation company, “don’t skinn the game” are convincing homeowners across the state to file claims and lawsuits promising a new roof or other unnecessary repairs to homes.

“There are currently financial incentives in our system that allow someone else to make money on this transaction,” he said.

Agents have been working to educate customers about these systems and asking them not to sign anything before talking to their agent or carrier, Lawler said in an interview with the Insurance Journal. At the same time, however, Floridians are bombarded with advertisements that “falsely portray the insurance industry as evil and mislead consumers because they do not fully understand the insurance process and do not understand that ultimately all policyholders pay the premiums. ”

Often times, the insurance industry as a whole – not just Florida – is unable to educate consumers about these issues, and the company can lack customer service and claims handling, according to Lawler. However, she added that this worsened as companies scrutinize claims and put coverage restrictions in place.

“If we had more [company] We could offer our customers better service and better policy forms, ”she said.

The FAIA has urged lawmakers to implement property reforms, particularly in line with Senate Law 76, which aims to combat roofing claims abuse and attorney fee multipliers, and has shortened the current deadline for new, supplementary and reopened property claims from three to two years . The bill also requires a 60-day notice period on a property insurance claim before a lawsuit can be filed against an insurer and, among other things, gives insurers 30 days to inspect a property.

Bill sponsor Senator Jim Boyd, who also works as an insurance broker, said the legislation would benefit both insurers and policyholders by encouraging insurers not to underpay valid claims while encouraging applicants to make reasonable claims to deliver. The bill would provide both insurers and insured parties with “fair access and reasonable guidelines” during the claims process, and the changes to the roofing guidelines would prevent abuse of claims by predatory lawyers and contractors. However, the bill has been pushed back by groups of lawyers and contractors who claim it restricts consumer rights.

To encourage agents to get involved in the legislative process this year, the FAIA has changed its annual “Capitol Days” event to a virtual “Political Engagement Month” in February due to the pandemic. The FAIA hosted numerous online forums to educate agents about the state of the market and insurance-related bills, and provided opportunities to meet with lawmakers.

According to Ulrich, agents have a unique perspective that lawmakers need to hear because they are working with consumers who are affected by developments in the market, many of which cannot afford such steep rate increases.

“Many of our members have realized that they know that they have to be part of the solution,” said Ulrich. “It is in the best interests of both agents and consumers that there is a stable market where both shape and price are highly competitive.”

Lawler said she expects more from customers as those unaware of the issues in the market will receive renewal notifications in the coming months. She urged other agents to speak to their lawmakers and encourage their clients to do the same in order for lawmakers to act this year.

“This is not a situation where you can just sit back and leave it to someone else,” she said. “Take five minutes to call your local officials.”

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