Florida’s property insurance market posted one of its worst financial performances in 2020, even without a hurricane making landfall in the Sunshine State, and policyholders are starting to pay the price.
Experts say there is no quick fix to the challenges buffeting the industry.
Fifty-six Florida insurers reported a combined $1.57 billion in underwriting losses, according to financial data obtained by the Tampa Bay Times, spending more on claims and expenses than they brought in through premiums. The figure marks the industry’s fifth consecutive year of losses in the state and is more than two-and-a-half times what those companies lost in 2019.
“Florida is clearly a deteriorating market,” said Mark Friedlander, the state’s representative for the Insurance Information Institute, an industry trade association. “You’re seeing almost every company going (in) the wrong direction.”
Among the main contributors, insurers say, are spiking reinsurance rates, claims getting filed up to three years after Hurricanes Irma (2017) and Michael (2018) and ballooning costs from litigated claims. To handle these expenses, insurers have won approval for sharp rate hikes and are shifting thousands of policies considered too risky or costly to state-run Citizens Property Insurance Co.
Insurers say legislation introduced this session is needed to rein in the worst of their costs. But some experts say many of the companies would be in better shape had they built up their savings during the relatively storm-free decade that preceded the last few active seasons..
Now, proposals before lawmakers and other potential solutions can’t take place quickly enough to avert what are likely to be further rate hikes and worsening finances.
The financial data was contained in a report industry analyst and reinsurance broker Guy Carpenter & Co. distributes to its clients and is originally from sworn reports companies submit to the National Association of Insurance Commissioners each year. It captures all but seven Florida insurers, which had not reported their year-end financials as of early March.
Universal Property and Casualty Insurance Co., the state’s No. 1 residential property insurer, had the largest underwriting loss of the year at $212 million, up from an $82 million loss in 2019. It had about 714,500 policies in September 2020, the most recent count available, and wrote the largest amount in premiums of the 63 insurers listed — $1.5 billion.
“When there are challenging conditions, you see less availability (of coverage) for consumers and you see increasing prices,” said Travis Miller, a lawyer with Universal.