It is reported by local media that the changes in property insurance that took place in Florida on a special part of the law in May sometimes have negative consequences, because they lead to ways to reduce coverage, while prices are also rising.
The whole point of the property insurance reform was to provide benefits to Florida residents, but in many cases these changes seem to make the property insurance market more difficult to find at this time.
As we previously reported, one of those changes, the $2 billion Reinsurance to Assist Policyholders (RAP) program, where carriers are supposed to be saving money for consumers, won’t have much of an impact.
We also stated that, to date, there is no evidence at this time of a decrease in litigation in the Florida insurance market.
Any cost savings that insurers benefited from using the RAP fund to recover this year should be passed on to their customers, but it has only resulted in a lower single-digit request from carriers, while the same companies have recently increased. Their prices are 30% and more sometimes.
Now, another change has been reported that will reduce coverage and raise insurance rates for Floridians.
One of the proposed reforms focuses on roof replacement and states that insurers cannot deny coverage due to the age of the roof, if the roof is less than 15 years old.
But a report from ABC Action News shows that this has made insurance carriers less willing to take on the risk of properties with old roofs, as they want to avoid taking on the risk of lawsuits, which they cannot afford. .
As a result, new requirements are placed around the renovation of the roof and renovation, after the renovation is completed, including the limits that are placed on the height of the building, not just the roof.
Insurance Southern Oak is mentioned as an example, because it will protect buildings built in 2022 with a minimum value of $ 250,000.
At the same time, citing additional costs to increase the amount that must be paid, from July 30th Southern Oak insurance is closing a new business in ten states in Florida, including Broward.
Southern Oak said, “The Florida property insurance market is facing many challenges that have resulted in higher rates, lower capacity, and some companies exiting the market. Due to the strong economic growth so far this year, we are exceeding our expected insurance growth and we see that the temporary reduction of our power will help to create the financial responsibility and management of resources that our policyholders and the organizations we work with know and trust.”
Independent consultants say insurers are looking to reduce additional exposure, particularly through methods that have made claims more difficult in recent years, such as roof repairs and replacements.
Other carriers setting new age limits include Olympus, American Traditions, American Integrity, Universal P&C, and Frontline, ABC News reports.
Some of this is said to be related to reinsurance, as Florida insurers have bought more of the minimum required for appraisals and financial adequacy in reinsurance, because of the crisis.
But taking on additional risk and the cases that are now exposed will not be attractive as a result, or their exposure may be limited to the reinsurance platform they bought, he says.
One of the ways to reduce this risk is to impose restrictions and requirements on new policy holders and documents, ensuring that the risk of lawsuits and damages is reduced, which is hurting Florida residents at times and possibly driving higher insurance rates in the future.
It’s yet another sign that Florida’s property reform isn’t working as expected, which is causing pain for some residents of the state.
But, it is also important to consider that this would have been inevitable, as the change is with the insurers meet their new tolerance.
However, reinsurance rates also have their consequences, as carriers are often undervalued, so they have to react to those changes by reducing appetite.
That’s part of the evolution of Florida’s property insurance market and it will take time to find a new deal.
Although we still believe that meaningful change will also be needed to restore confidence in the reinsurance market in countries carrying risks.
Read all of our news and analysis of the Florida insurance and reinsurance market.