The upward spiral of Florida’s Citizens Property Insurance Corporation continues, with the insurer’s last reported claims on the rise, as a state senator reported that Florida’s insurance industry has “collapsed”.
The people of Florida held their latest meeting of the Governing Board yesterday, revealing the continued growth of the policy calculation and demonstration and drawing strong words from President Barry Gilway, as well as legislators from the state.
Discussing the continuous growth of Florida citizens, Gilway explained that, “This clearly shows that Citizens has been moving around since it was created in 2002. The number of customers increases or decreases according to the profit of the local market.
“In fact, in fact, the slow rise has been the result of economic failure over time due to the unprofitability of companies. Companies become bankrupt and business enters into Citizens to stabilize the market.”
He provided stark statistics on how many Florida property insurance carriers have been failing over the years.
Between 1984 and 2021, 370 different companies listed the real estate business in Florida, but on average, in each year, only 103 companies compete for the business in the state.
Surprisingly, only 8 of these companies were still writing homeowner’s insurance business in Florida as of 2021, indicating that many companies have failed over the years and that market continuity has been very limited for policyholders.
“This speaks to the volatility of the market, not today but over time,” Gilway said.
Adding, “We are now a market dominated by home insurers who are small companies that rely on reinsurance and capital markets.”
Those companies tend to be unstable, Gilway continued to explain.
In addition, “The lack of stability and reliance on reinsurance clearly has a significant impact on the number of Citizens who drive customer reviews,” he said.
He said prices are driven to a large extent by recycling fees, which make up 40% to 50% of every first dollar. But he added that “the possibility of retribution is not only driven by the storm but by the litigation and the loss due to the number of cases.”
The Florida native passed 1 million points and his exposure reached $360 billion.
Gilway also said, “Although the growth rate is increasing, the recent crisis has affected the growth, but you can’t ignore that the new business per month has been over 60,000 in the last few months. .”
Florida Citizens’ market share is 13% across Florida and is expected to hit 15% by the end of the year, but in counties like Miami Dade it is much higher at 39% and in Monroe 71%.
Citizens at the peak, back in 2011, saw the insurance of the last resort to be the insurance of 23% of the claims related policies, so it is still another way to be a secret to the Florida property insurance market, but with the current trajectory and there is no sign of any changes that stabilize the market, it must be seen if possible (no major changes).
Gilway believes the recent changes to property insurance will have a positive impact, but how hard it is to judge.
“I believe that SB76 and the Special Session Legislation, especially the changes to the AOB, will have an effect in the long run. But as you can see in the following show, the combined numbers of cases in the industry and for the Citizen have not yet received the benefits of the proposed legislation, especially the driver of the increase continues to be the AOB,” he told the Council. .
He said property insurance in Florida is headed for another bad year, “expected to exceed $1 billion by the end of the year when insurance returns are considered.”
“If these figures were to remain in the Red, then Investors and Reinsurers would be careful not to jump into the market to provide leverage,” Gilway warned.
Gilway went on to highlight the potential opportunities for investors, which perhaps speaks to the demographics we can expect to see, and for citizens using capital to invest from multiple sources.
Gilway said “As Citizens is growing, the book is going well. We have been adding policies that we like, which are not left behind, an example would be 4% of our rules and houses less than 10 years old.
“This provides a great opportunity to attract investors and attract companies with capital to write more businesses.
“To attract investors, residential rates should not be more competitive than private market rates and the Legislature should address this ongoing challenge.”
Better management of financial risk for Florida Citizens can also be a factor in obtaining greater insurance premiums, including through disaster bonds.
It should be an interesting part of the book, that the risk becomes stable when the highest quality goods are insured, as other carriers failed.
If Citizens can attract money on both the foreign side of reinsurance, as well as public reinsurance, we may see a decline in Florida citizens in the future.
But for this to be meaningful, we need to see more changes to the Florida property insurance market first, it seems, to make this risk attractive again.
Florida Senator Jeff Brandes said yesterday, “This is an industry that’s going down. Citizens are getting more and more.”
He also said, “Until we fix the common market, people will continue to enter the Citizens.”
He went on to characterize this as a “legal problem,” saying that Florida Citizens staff is doing everything they can to address the issue.
Taking to Twitter, Brandes also said, “Citizens is growing at 8000 policies per week. By December 2023 Citizens will return to its 1.5 million points. Unlike private insurance, Citizens’ rates are not clear and are now ~50% below the private market in many areas in the government.
“In addition, the last Insurance was issued 5,907 cases in the first half of 2022, for 985 new cases per month. The monthly average is 10% higher compared to the same period in 2021. As of June 30, pending cases = 19,139.
“Bottom line – The state has been vulnerable behind the backs of Floridians.
“It will be very difficult politically to change what is needed to solve this problem and by the time it comes to the parliament, there will be more than 2 million citizens. Let’s believe that I am wrong.”
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