Commissioner David Altmaier Addresses the Senate Banking and Insurance Committee on the State of the Property Insurance Market in Florida

Sep 17, 2019

By the Colodny Fass Insurance Regulatory Team

Today, Florida Insurance Commissioner David Altmaier made a presentation to the Florida Senate’s Committee on Banking and Insurance on the state of the Florida property insurance market. The Commissioner told the committee that Citizens Property Insurance Corporation amended its expected rate indication and rate requested in its pending filing after the passage of assignment of benefits reform in HB 7065 to reflect a smaller rate increase than it had requested prior to the passage of the act. However, the Commissioner warned the committee that increases in reinsurance costs may limit the ability of private insurers to reduce rates and explained that litigators are engaging in creative practices to avoid the effects of HB 7065. In addition, the Commissioner discussed net underwriting gains and losses in the private market and the progress of closing claims from recent hurricanes.

Impact of AOB Reform

            Prior to the passage of HB 7065, Citizens’ rate indication was 25.60% and the capped rate increase request was 8.70%. The passage of AOB reform in HB 7065 allowed Citizens to reduce the rate increase request to 3.50%. The Commissioner expressed concern that it will take some time to see the effect of AOB reform. He noted that litigators are holding seminars to help each other avoid the effects of AOB reform. There are reports that there are attempts to convince homeowners to sue their insurers directly rather than using assignments. There are also reports of solicitors walking neighborhoods and informing consumers of possible roof damage. The Commissioner also reminded the committee that last session’s legislation did not address AOB reform related to auto glass litigation.

            The Commissioner said that the OIR will do an early data call, due in February 2020, in advance of the data call required by HB 7065 due on January 30, 2022. OIR informational memorandum OIR 19-02M, issued on June 14, 2019, provides further guidance on these data calls. OIR-19-02M can be found here:

Progress on Claims Related to Hurricanes Irma and Michael

            The Commissioner told the committee there was over $11 billion in insured losses caused by hurricane Irma, $6.5 billion caused by hurricane Michael, and $9.6 million by hurricane Dorian. There were one million claims reported due to hurricane Irma, 149,000 due to hurricane Michael, and 2,273 due to hurricane Dorian. Of those claims, 92.4% of Irma claims have been closed, 87.8% of Michael claims have been closed, and 18.8% of Dorian claims have been closed. In response to questions from the committee, the Commissioner explained that claims from Irma and Michael that remain open could be open because of litigation or cases where a claim was re-opened after an initial payment has been made. The Commissioner explained that some claims are closed without payment because a claim was filed that does not meet the deductible or a determination that there was a flood loss rather than a loss due to a peril covered in the policy. The Commissioner told the committee that if a company has a high level of open claims, the OIR may start a market conduct investigation. At this point, the OIR has not seen widespread indications of violations by insurers.

 State of the Florida Insurance Market

            The Commissioner told the committee that over 836,000 policies were removed from Citizens to the private market since 2012. The Commissioner showed a slide that showed the net underwriting gains of the Florida domestic companies. He explained that the market struggles in 2007-2008 were due to hurricanes in 2004 and 2005 and the issues in 2009-2012 were caused in part by sinkhole claims. The market improved from 2013 through 2015 during a time when reinsurance was affordable and available. The market has not been as strong in recent years due to AOB and the impact of hurricanes Matthew, Irma, and Michael. The Commissioner believes the market is not as strong as it was a few years ago but that he does not expect a large number of companies to become insolvent.

            The Commissioner’s PowerPoint presentation can be found here: