As another hurricane season bears down on the state, more than 50,000 Florida home insurance customers will soon receive notices that their policies have been canceled or won’t be renewed.
State insurance regulators recently authorized “extraordinary” terminations of thousands of policies of Florida-based insurers Universal Insurance of North America, Gulfstream Property & Casualty, and Southern Fidelity.
And the bloodletting will likely continue over the coming months with other insurers seeking to shed risky or unprofitable policies while refusing to insure older homes with roofs, electrical systems and plumbing that have not been upgraded to comply with current building codes, said Paul Handerhan, president of the consumer-focused Federal Association for Insurance Reform.
“For the average consumer, the outlook is not bright,” he said. “There will be less options at higher price points.”
The consent orders by the state Office of Insurance Regulation authorizing the early cancellations did not specify locations of affected policyholders, and officials of the companies did not respond to requests for information. But if recent history is any guide, affected consumers are likely disproportionately located in Broward, Miami-Dade and Palm Beach counties, as well as in the Orlando metro area.
Insurers have been reducing their exposure in the three South Florida counties for several years, saying they are the source of inflated damage claims, excessive litigation and outright fraud. The trend recently has spread to Orange, Seminole, Osceola and Lake counties in Central Florida, insurers contend.
The consent orders, signed by Insurance Commissioner David Altmaier, said approval of the cancellations and nonrenewals “is an extraordinary statutory remedy reserved to address insurers which [otherwise] are or may be in hazardous financial condition.”
Many, though not all, Florida-based insurers have been reporting operating losses over the past five years as a result of rising claims costs, more frequent severe weather events, increased lawsuits and higher costs of reinsurance — insurance that insurers buy to guarantee they can pay all claims after a catastrophe.
Here are details of what Altmaier authorized in the consent orders:
—Gulfstream Property and Casualty — The Sarasota-based company, which reported a net loss of $22.6 million in 2020, may cancel 20,311 policies before their terms expire with 45 days’ notice. They include 932 condominium owner policies and 47 tenant policies. Refunds for the balance of those policies’ terms must be sent to policyholders by June 1.