Florida homeowners insurers face multiple crises
ST. JOHNS, Florida., August 9, 2022 /PRNewswire/ — Turmoil in florida The home insurance market is caused primarily by the state’s inordinate number of lawsuits and its common fraud schemes, according to a note released today by the Insurance Information Institute (Triple-I).
“Floridians are seeing homeowners insurance becoming more expensive and scarcer because for years the state has been home to too much litigation and too many fraudulent roof replacement plans,” said Sean Kevelighan, CEO, Triple-I. “These two factors contributed enormously to the net technical losses florida cumulative home insurers between 2017 and 2021.” Florida homeowners pay the highest average homeowners insurance premium in the United States at $4,231nearly three times the US average of $1,544according to Triple-I’s analysis.
The net technical losses for Florida national real estate companies have exceeded $1 billion in 2020 and 2021 noted the record of Triple-I problems, leading to insurer insolvencies and rating downgrades. Some insurers that have weathered these negative financial trends have reduced their exposure to florida homeowners market by issuing non-renewal notices to existing policyholders or limiting the writing of new business in the state.
Two major hurricanes made landfall in the state in 2017 (Category 4 Irma) and 2018 (Category 5 Michael). The last three hurricane seasons (2019-2021) have, however, been relatively calm for Florida. Insurers incur net underwriting losses largely because Florida is the site of 79% of all home insurance lawsuits involving claims filed nationwide, while florida According to the National Association of Insurance Commissioners, homeowners insurers only receive 9% of all property insurance claims from homeowners in the United States. Floridians For Lawsuit Reform estimates that 130,000 real estate claims lawsuits will be filed in 2022, largely due to florida favorable litigation environment.
“Florida has one of the most generous attorney fee schemes in the country, which sometimes results in the insurer paying plaintiff attorney fees well in excess of the damages awarded to policyholders who are the plaintiffs themselves. same,” explained the Triple-I’s Issues Brief. The 2017 state Supreme Court ruling allows courts to award plaintiffs’ attorneys 2 to 2.5 times their hourly billing rate when courts find in favor of policyholders. These “contingent fee multipliers” can result in attorneys receiving several hundred thousand dollars for a single trial. of the policyholder.
Triple-I’s trouble file also highlights actions taken by unethical roofing contractors, who ask homeowners’ policyholders to sign Assignment of Benefits (AOB) forms or payment instructions. , giving the contractor the right to collect claim payments directly from the insurer and to file a lawsuit without the knowledge or consent of the policyholder. These lawsuits force insurers to allocate resources to defend themselves in court, with the policyholder often unaware that the signed AOB form has triggered a potential dispute.
“As insurers fail or leave, Citizens Property Insurance Corp. – the state-run home insurer of last resort – is swelling with business. Citizens had 931,357 policies in force as of June 30, 2022against 638,263 policies in June 2021 and 474,630 fonts in June 2020. Citizens could spend up to $100 million this year on legal costs,” reported Triple-I’s Issues Brief.
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SOURCE Insurance Information Institute