Florida property insurance problems continue to be very political, and the candidates for Governor position in the state are now blasting each other’s ideas to improve the insurance market and its reinsurance opportunities.
Florida Commissioner of Agriculture and Consumer Services, Nikki Fried, who is a Democratic candidate for Governor of Florida, has written to Florida Governor Ron DeSantis, who is hoping to become a candidate for the President, calling for changes to the recently announced plan that considers Florida’s actions. Citizens Property Insurance Corporation is taking steps to insure homeowners’ claims for coverage, but at low and no-carry rates.
The Florida Office of Insurance Regulation (OIR) has recently established a temporary market stabilization, or insurance guaranty, arrangement through the Citizens Property Insurance Corporation to support any discounted, but reliable, carriers.
We explained more about the plan with Citizens here, explaining that it’s more of an insurance plan, than reinsurance, and provides a way for claims above FIGA’s caps to be met, allowing policy carriers to remain in effect even after they expire. had been taken down.
Florida Commissioner of Agriculture and Consumer Services, Nikki Fried, said that what has been done so far to try to solve the state’s property insurance problem is “a way to help a big wound.”
In addition, he said the government appears to be taking a wait-and-see approach, which aside from what has happened is “too little, too late.”
The average cost of home insurance has risen from $1,989 to $3,585 since DeSantis took office, Fried said, leaving homeowners facing a “perfect financial storm” as insurance rates rise, while insurers fail or downsize in Florida.
Fried has called for the plan to use Florida residents to be banned, saying, “The state will only use the Florida Hurricane Catastrophe Fund, that’s what it was designed for.”
He added that the Citizens are also “underfunded and underfunded to deal with a major storm, due to over-development.”
“Adding more unfunded mandates to Citizens would result in every Florida homeowner paying more to recover lost property,” Fried said.
To explain that the FHCF, or the cat fund as it is known, receives a lot of money and has a high level of income, and a total of 12.8 billion dollars is expected to be “banked” by the cat fund by the end of the year.
In addition, FHCF is “recognized around the world as Florida’s premier insurance company,” Fried said.
To revitalize Florida’s property insurance market, Fried wants the FHCF to be reformed.
The Cat Fund should allow smaller carriers to join, Fried said, because this is “cost-effective because of the private reimbursement by the Cat Fund and unnecessary additional costs.”
Limiting the reservation to companies that use the FHCF in the past, or small companies to do so, would cost the government more.
But as Fried said the FHCF is in financial trouble and it is also important to remember that the FHCF can also buy back the private market.
On top of this, Fried wants the number of people who have recently been approved to be removed, to ensure that the coverage remains sufficient for homeowners who have to order the rest of the policy market.
Neither homeowners nor insurers in Florida can wait for the crisis to end, Fried said, urging the Governor to act quickly.
“To just wait and pray until the end of the hurricane season, or wait and see if the policies that you and the Legislature have put in place have positive results, it’s more than a day late and a few dollars – it’s coming because of the money. The citizens of Florida.”
“Critical” calls for immediate action, Fried explained.
There is a lot to be said for expanding the FHCF into a Cat Fund for more insurance carriers and being able to help those who are struggling.
The availability of insurance for the most vulnerable would have helped them to be saved, in some cases, perhaps negating the need for a citizen guarantee system.
However, it seems unlikely that the revised FHCF will change much now, but it could be a big help in the next season of insurance reform, in June 2023.
The FHCF’s ability to tap into the private equity markets, to provide more loss-making power, could be very beneficial, as this would see more risk flowing to the private markets and priced accordingly, sending the right signal to the market. also.
The FHCF held back insurance until the 2020 renewal, when it said the market volume and rates made it unattractive.
Given the tough and tough market we’re seeing right now, who’s to say FHCF can afford reinsurance?
A reformed FHCF could be a long-term solution to some of Florida’s problems, including price matching and risk in the larger market, but the Citizens Guarantee may be a better way to end this year, perhaps.
However, the business market must see that risk is being bought in a transparent and fair manner, and the significant reduction in the number of cases and the cost to the people in Florida, is the most important part of the reform that is needed now.
The CEO of RenaissanceRe commented on the FHCF and said that the reduction in reserves will not help his company recover the risk in Florida.
The fact that the market reached the point where the citizen’s guarantee was required and we are discussing other ways to strengthen it, shows how the Florida property insurance sector is not working well, and how the last change announced in May was ineffective.
Read all of our news and analysis of the Florida insurance and reinsurance market.