The legacy that resulted from Hurricane Andrew’s landfall in Florida is now being strained by the effects of man-made crises, according to a new report.
The report, It’s not just the weather: Man-made crises are disrupting property insurance marketsposits that there are new, growing crises in many U.S. states resulting from man-made events such as abuse of the legal system, government interference, and fraud.
This comes in a context, the authors say, after Hurricane Andrew finally paved the way for positive innovations in community safety through modern building codes and improved regional mitigation initiatives. The new report was produced by the American Property Casualty Insurance Association (APCIA), the Reinsurance Association of America (RAA), the Association of Bermuda Insurers and Reinsurers (ABIR) and Robert Hartwig, PhD, CPCU.
David A. Sampson, president and CEO of APCIA, says there is “major disaster” and “major disaster” in states like Florida, California and Louisiana.
He added: “Unchecked plaintiff bar tactics, abuse of the legal system, fraud and flawed government policies have a significant impact on the availability and affordability of insurance for families, individuals and businesses. Americans. For example, collectively, these factors have driven the average Florida homeowners insurance policy to nearly $3,000 in 2022, about double the annual US average.
A statement from the report’s authors said that according to the Florida Office of Insurance Regulation, over the past 10 years, $51 billion was paid in insurance claims and of that amount, 71% went to attorneys’ fees. and public experts while only 8% went to claimants.
Frank Nutter, president of the RAA, alluded to the struggling insurance market in Florida. Recently, the Insurance Information Institute declared that the market in this state was “on the brink of failure”. He noted that re/insurers are facing a glut of unnecessary new roofs on homes and massive claims settlements, which means the average Florida homeowner’s insurance policy is expected to be nearly three times larger. to the national average at $4,231 this year.
A week later, that same body went further and said Florida homeowners’ insurers were facing multiple crises. He said net underwriting losses for Florida’s national real estate companies exceeded $1 billion in 2020 and 2020. Triple-I’s briefing note said it was leading to insurer insolvencies and downgrades. rating.
Problems within the state insurance market have been long-standing, with legislative changes in May by state governor Ron DeSantis aimed at stabilizing the troubled property reinsurance market. These reforms included a $2 billion reinsurance fund and new rules on denial of coverage and attorney fees that aimed to enact consumer-friendly measures that help mitigate rising insurance costs, increase insurance claims transparency and cracking down on frivolous lawsuits that have driven up prices. during the last years. Specific provisions included $2 billion in reinsurance relief through the Reinsurance to Assist Policy (RAP) program to help policyholders over the next two years. Other measures under the measures were $150 million for hurricane renovation, as well as rules that require insurers to provide a reasonable explanation for denying coverage, and that prohibit insurers from denying a coverage based on factors such as the age of a home’s roof. Other rules have limited the awarding of attorneys’ fees in property insurance cases and mandate stricter structural inspections of properties.
Despite all this, a note from ALIRT Insurance Research in July said home insurance markets were still in “some kind of free fall”. The memo, an update on the national market for insurers in the US state, says several factors support the ongoing narrative that is the decline of the market in recent years. This came after AM Best said in June that property insurers in Florida would continue to face difficulties in the near future, despite legislative reform.
Now Nutter said: “Unfortunately, all of this happened even though Florida has not been directly affected by a hurricane since 2018, underscoring the impact of the disruptions these man-made forces are having on the market. In Florida alone, seven insurers have become insolvent in the past two years and 14 other companies have stopped writing new policies to avoid similar stability risks, according to a report from the insurance regulator Florida. state, Florida accounted for 79% of the nation’s homeowners insurance claims lawsuits, while accounting for only 9% of the nation’s homeowners insurance claims. implemented positive reforms at a special session earlier this year which are a step in the right direction, it will take time and additional reforms to stabilize the volatile market of property insurance in Florida.
He added: “Property insurance claims fraud is another issue costing policyholders and impacting the market. According to data from the Federal Bureau of Investigation, the cost of non-health insurance fraud is estimated to be more than $40 billion per year, which can result in additional insurance premiums of $400 to $700 a year for the average American family. ”