Recently in Property Insurance Rates Category

November 4, 2013

Citizens Homeowners Rates are Going to Increase by 6.3%

ins rates go up.jpgFlorida homeowners insured by Citizens will see their premiums increase. Citizens Homeowners rates are going to increase by 6.3%. State regulators approved an increase in homeowner's rates that followed the statewide average. Homeowners with multiperil policies will see a 4.4% increase, which amount to around one hundred and eleven dollars ($111) per policy. Those homeowners that have wind-only policies will see a 10.5% increase on average, which amount to around two-hundred and sixty-five dollars ($265) per policy holder.

Citizens maintained that exposure to hurricanes and sinkholes were the "major drivers" behind the need for the rate hikes this year.

These rate changes will take effect in January, 2014, although the wind-only policy homeowner's rates will change come February, 2014. These rates are increasing for the fourth consecutive year.

The good news for some homeowners with regards to higher rates is that your policy may never see the rate increase. By the end of November, which also happens to be the end of hurricane season Citizens will remove 400,000 policies to ten different insurers. On top of these 400,000 policy holders, Citizens is now in the process of getting rid of another 200,000 policy holders this December between eight separate insurers. This means that 600,000 policies will be unloaded before the New Year, and the policy holders will not be affected by the rate increase to these homeowner's policies.

On top of all these changes, Citizens is establishing a clearinghouse, which will allow for policies to be shopped to the private market rather than given away like they are now. This is supposed to be better for homeowners as it will allow them a chance to pick which private insurance company they choose. This is in the hopes that Citizens will be able to unload a more significant amount of policies in their attempt to downsize. All homeowners with a Citizens policy should be aware of the ongoing changes with Citizens and be on the look out for all notices regarding your home insurance policy.

Continue reading "Citizens Homeowners Rates are Going to Increase by 6.3%" »

June 6, 2013

Is a smaller Citizens Insurance Company better for the Florida Homeowner?

Ins Image.pngCitizens Property Insurance is aggressively downsizing, which has caused many smaller insurers to take on their policies. They have been downsizing because Gov. Scott believes they need to lower risks. To the average person this seems like a good thing as smaller companies will continue to grow. However, the smaller insurers' success when taking over the insurance policies from Citizens has proved otherwise. The companies who receive these policies from Citizens are considered to be "Takeout" firms.

Takeout firms receive policies from Citizens usually in agreement to receive money along with the policies. Once the policies are removed from citizens then the policy holder's agent is notified of an offer to accept the takeout deal. If the agent denies the offer then the same offer will be made to the policy holder, who may refuse to allow the policy to be removed from Citizens.

What does all of this mean? Basically Citizens is paying lots of money to relatively new and small insurers who are not always equipped enough to handle this quantity of policies. This is why it is incumbent upon all Florida policy holders to check the financial strength of their insurance company.

For instance, Citizens agreed to pay Heritage Property and Casual Insurance, a nine month old company, $52 million to take over 60,000 policies. As a result of this homeowners will receive letters from Heritage and have 30 days to opt out before they are automatically removed from Citizens.

Many believe that companies such as Heritage are not capable of taking on such policies, especially in the event of a hurricane. There is evidence to back this belief as many companies who have taken over policies from Citizens have become insolvent.

The negative effective of these companies becoming insolvent is tax payers coming out of pocket for more then $400 million. This is not a good sign as Citizens is starting to intensify its effort to turn over policies to smaller insurers.

It seems as though Citizens intended purpose of lowering risk by removing these policies is actually causing more risk as smaller firms are becoming insolvent and tax payers are taking on the cost.

February 10, 2013

Insurance Premiums are Poised to Increase Again Despite Florida Not Being Hit Again by any Major Storms

MIP.pngMany Florida policyholders can expect to see yet another spike in their already high insurance rates at their next renewal. This rate increase is expected to take place even though a major hurricane hasn't made a direct hit with the state in over seven years.

Yet despite our good fortune, statistics show the average Florida homeowner is paying twice the rates they were charged six years ago, and some are paying even more than that. Many in the industry place the blame on the number of claims submitted to the insurance companies; claims are up 17% over the past ten years, most due to non-catastrophic water damage like leaky toilets, and broken water heaters.

Others are blaming the increase on a lack of competition in the insurance business in Florida. The largest provider in the state, Citizens Property Insurance Corporation is often the only option for many homeowners who can't obtain policies through private companies.

Citizen's policyholders have seen an increase of 8.1% statewide in their rates over the last four years, and that trend doesn't seem to be ending anytime soon.

Yet others argue simple greed is the root of the problem.

Some argue that insurance companies are all to quick to accept insurance premiums, but often times they are just as quick to deny legitimate claims in an effort to potentially maximize profits.

Citizen's new President argues the company would have to increase rates on all its products by 16.4% to be comparable with the market rates a private company would charge. One Citizens' board member blames the number of policies and the low rates, calling it a "competitive drag" for the state. Governor Scott agrees that more private companies may be willing to provide coverage if Citizens was reduced in size. Because private companies know they can't compete with government, no matter what they're selling. Even so, many homeowners currently insured by Citizens are being shifted to private companies as the corporation attempts to downsize, and many are left to wonder what kind of coverage they can expect from these private companies.

However, rates and coverage don't seem to be the only issues. Some Citizen's policyholders are apprehensive about switching to a private company because they believe that there's more money available to Citizens so they're more likely to receive a payout if a claim is necessary.

Until there is real meaningful reform this problem will continue to exist in Florida. And Floridians may not be so lucky when the next "big one" hits Florida. Please read our proposed list of reforms that we feel will only help to strengthen the insurance market as a whole.

December 21, 2012

Time to Reform the Homeowners Insurance Market to Make Purchasing Insurance More Transparent and Encourage More Insurance Companies to Enter the Market

homeowners-insurance.jpgWith the 2013 Florida legislative session about to begin, it is time to start talking about potential reforms to help consumers understand what home insurance products they are in fact purchasing. Florida continues to be plagued by scandal to Citizens insurance, coupled with sky rocketing insurance rates. Not only that, but too often Florida homeowners are not properly advised of the scope of insurance coverages that they are in fact purchasing.

As we head into the next legislative session, here are some thoughts on how we can help make the insurance market more transparent for both insurance companies and homeowners alike:

(1) Push for a single policy that serves as a minimum baseline of coverage. Too often we see insurance companies writing different coverages and different exclusions. Here is a NY Times article discussing this very issue in great detail. Promulgate a single policy that everyone must use and adopt, and this will make it much easier for everyone to understand exactly what is being purchased.

(2) For a consumer to understand what they are buying they really need to rely on their insurance agent. The insurance agent needs to understand the difference between say an HO3 policy v. a HO6 policy. And if they do understand the difference, the actual coverage purchased may be watered down by certain exclusion or cap on damages (see no. 1 above). To correct this issue, Florida should adopt some type of graph that makes it easy for the consumer to grasp what they are in fact purchasing. A "nutritional label" or pyramid scheme of coverages would help the unsuspecting consumer understand what they are purchasing. So we should not only make the policies consistent, but we should make it easier for the consumer to understand what they are purchasing too by providing some form of graph or pyramid so they could actually see the scope of coverages being provided.

(3) Everyone likes disclosure. And with insurance, the old adage is important - you don't need it until you need it. But too often there are some insurance companies that are simply too quick to deny a claim. But those are often the insurance companies that offer the best rates. So consumers should understand what they are purchasing, and from whom. The consumer should be provided with the variables regarding that insurance company. In other words, the consumer should not only be provided with information regarding the financial strength of the company in the event of a catastrophic loss, but the consumer should also be provided information regarding information pertaining to (a) the percentage of claims denied, (b) the average time within which claims are paid, and (c) the frequency of non-renewal or cancellation within a year of a claim being submitted.

(4) In an effort to promote more competition in the market, and encourage more insurers to enter the market, there should be goals that are established that would permit the complete abandonment (or loosening) of price regulation designed to suppress insurance rates so long as a certain number of companies are in the state of Florida providing insurance coverage. By the same token, extreme pressure should be put on those companies that want to offer insurance for all of our cars (and boats) to make sure that they also offer homeowners policies too. Possibly providing some form of financial incentives to enter the market may also be useful to get the insurance companies to do this too.

(5) Insurance agents should receive the same amount of compensation regardless of the carrier with which they place consumers. Too often insurance agents may attempt to steer a consumer to insurance company A because the financial incentives may be better than if insurance company B were selected by the consumer. But that also assumes that there is/was a choice for the homeowner/consumer - something many of us don't have given how restrictive the market is currently.

January 10, 2012

Home Insurance Prices Keep Going Up Despite the Decline in Property Values

3220915274_man20handing20money20to20you_xlarge.jpegThe past few years has seen the real estate market collapse. Home values have declined by greater than 50% in many markets throughout Florida, and especially here in South Florida.

Yet despite those declining values, many home owners have seen their home insurance rates rise in recent years. Despite the decrease in home values, many insurance companies are requiring homeowners to carry greater values in home insurance than the home is actually worth in today's market.

For instance, a home may be worth say $200,000 in today's market. But many insurance companies, including Citizens, may require that homeowner to purchase insurance regarding the replacement value of that home that is far greater than the home is worth. Such values may even be as high as $300,000 despite the fact that the home is only worth say $200,000 in today's market.

It seems that the insurance companies are greatly exaggerating the cost to replace a home following a disaster. Especially in light of our declining real market.

The only conclusion that can be reached is that insurance companies are using the increased replacement costs values as a back door method to secure greater rate increases above and beyond the rate increases that were already approved just a few months ago. The below news report video discusses that in greater detail.

Not surprisingly, the insurance companies see nothing wrong with requiring home owners to purchase the replacement value coverage for their homes at values that are in some instances twice as much as what the home is actually worth. They deem such rate increases as "necessary and proper."

Of course, the fact that Florida has not been hit by a hurricane in a record 6 straight years did not lessen the need for insurance companies to further raise insurance rates. Their reserves are teetering on dangerously low levels that could spill heartache and frustration for many homeowners should Florida experience another hurricane season like the ones in 2004 and 2005.

Continue reading "Home Insurance Prices Keep Going Up Despite the Decline in Property Values" »

December 8, 2011

Home Insurance Rates are Rising Despite a Record 6 Hurricane Free Years and Recently Enacted Legislation that was Supposed to Make Insurance More Affordable for Floridians

Landlord-Insurance-Florida.jpgAs we noted in this blog, Governor Rick Scott signed into law a piece of legislation that changes many aspects of property damage claims, and that also makes it easier for insurance companies to raise your property insurance rates in the years to come.

Well, the time has come. Insurance companies are raising your rates.

The rates are going up despite the insurance companies getting their wish list enacted by an insurance friendly Governor to help them make consumer claims more difficult to make, but yet those same insurance companies reap the benefits of higher insurance premiums.

State insurance regulators approved more than two dozen home insurance rate hikes ranging from 6 to 34 percent.

American Integrity Insurance Co. of Florida, which has 102,091 home insurance policies statewide and 13,575 in Broward, Palm Beach and Miami-Dade counties, received 14 percent increases for two types of homeowner insurance policies it offers. Security First Insurance, with 119,205 policies statewide and 21,025 in South Florida, received a 9 percent increase for its homeowners multi-peril policies. And Universal Insurance Co. of North America, which has 81,834 policies statewide and 11,420 in South Florida, received a 12 percent increase for its homeowner property insurance policies.

And then there is Citizens. The sate's insurer of last resort. State regulators approved an average 6 percent statewide rate hike for Citizens Property Insurance's homeowners policies - which include coverage for homes, condominiums and renters - and 9 percent for rental and vacation home policies.

Premiums for most parts of South Florida will increase next year by up to 10 percent. Fortunately, this is significantly lower than the proposed 25% rate increase Citizens was hoping to get.

Why Are Insurance Rates Going Up?

Despite a record 6 straight years without a hurricane strike in Florida, and the passing of sweeping insurance reforms, insurance companies are still raising rates at a blistering pace.

Insurance companies are of course companies driven by profit. They also have to manage their books to ensure that enough money is in reserve in the event a major hurricane does strike Florida.

However, regulators and consumer advocates have said that Florida insurers could bolster their claims-paying reserves during hurricane-free years if they spent less of the premiums they collect on contractors, sometimes affiliated companies, to manage daily operations; if they lowered other overhead costs such as advertising; or issued smaller dividends.

Continue reading "Home Insurance Rates are Rising Despite a Record 6 Hurricane Free Years and Recently Enacted Legislation that was Supposed to Make Insurance More Affordable for Floridians" »

October 12, 2011

Thirty Five Florida Property Insurers are Given a Low Grade as Insurance Rates Continue to Increase

images.jpgAccording to recent news reports, the number of troubled property and casualty insurers in Florida is growing.

Thirty Five (35) insurers in Florida were given a grade of D or F. That is up from 29 with poor grades on December 31. And one of those companies - Argus Fire and Casualty Insurance Company - has since closed its doors for business by Florida regulators.

Surprisingly, State Farm Florida Insurance Company had a D rating. It is surprising because State Farm is one of the largest insurers in the State of Florida. Also, and despite not having a storm hit Florida in over 5 years, and having $221 million in net premiums, State Farm lost $27 million.

Universal Property & Casualty Insurance was the largest insurer rated E+. It had $18.1 million in net premiums in the second quarter and earned $3.4 million. Meanwhile, Sunshine State Insurance Company was the only insurer in Florida that earned an E rating.

On the other end of the spectrum, Citizens earned an A+ rating. American Family Home Insurance Company and American Strategic Insurance Co. each earned B+ ratings.

These figures are surprising since Florida has not experienced a direct hit by a hurricane in years, and Florida has dodged a major loss event in the past few years as well. Yet despite years of dodging a major hurricane, few insurance companies have managed to build up sizeable reserves.

It is very concerning that in the wake of record increases to homeowners's insurance rates throughout the State of Florida, coupled with the lack of a significant event in the past several years, that so many insurance companies are still not financially healthy. Indeed, Allstate was requesting rate hikes in excess of 30%. Should Florida be hit with a major storm it may result in many insurance companies going out of business.

Additionally, the many changes that were recently passed into law with the promise of lowering insurance rates and strengthening the insurance companies have not come to fruition.

Continue reading "Thirty Five Florida Property Insurers are Given a Low Grade as Insurance Rates Continue to Increase" »

July 26, 2011

Allstate Proposes Rate Increase in Excess of 30% for Florida Homeowners Insurance Polices

61841920_25ce9a2deb.jpgTwo Florida insurance companies are seeking large rate increases for many already cash strapped Florida homeowners. Allstate's Castle Key Insurance Company is seeking to raise insurance rates by as much as 31% for Florida homeowners, while its sister company, Castle Key Indemnity is seeking a rate increase as high as 36%.

Castle Key Insurance has close to 140,000 insurance policies statewide as of the end of last year, including close to 32,000 in Broward, Palm Beach and Miami Dade County. Castle Key indemnity has close to 126,000 insurance policies, including 21,000 in South Florida.

While the two companies have close to the same number of policies, Castle Key Insurance reported a claim paying reserve of 136 million at the end of last year while Castle Key Indemnity reported less than 15 million.

The insurance companies claim that the cost of reinsurance is rapidly rising and its losses and expenses have so far exceeded the premiums it collects and that it's projected to increase with out a rate hike.

State regulators have until August to reject the increase, approve it, or approve a smaller increase.

This premium increase comes after six years of no hurricanes and when the property and casualty insurance industry has record profits. Profits for U.S. property and casualty insurers rose 63 percent to $27 billion for the first nine months of 2010.

Consider Your Options. Contact Us Today.

Before opening our law firm in 2006, our attorneys worked for some of the state's, and nation's, largest law firms, and worked representing the insurance companies for years. Our attorneys are now uniquely positioned to use that experience to assist individuals and businesses alike throughout Florida with their insurance claims. As a result, our attorneys are well versed in the impact insurance has on businesses, condominiums, and individuals alike. Our insurance litigation practice group is prepared to tackle your insurance claim.

Given our extensive experience litigating for, and against, insurance companies, our insurance litigation practice group is prepared to provide aggressive, efficient and effective representation on a broad spectrum of insurance claims in Florida for local, national, and international clients. We are prepared to advocate insurance claims at the pre-suit stage, trial, appellate and arbitration levels.

If you are facing a dispute over an insurance claim in Florida, contact Alvarez & Barbara, LLP, for a free and confidential consultation to discuss your rights.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

May 19, 2011

Florida's Governor Signs Into Law a Bill that Aids Property Insurers and Permits Insurance Companies to Raise Insurance Rates

cott-signing.jpgThis legislative session we've been telling you about the bill that would change Florida's property insurance landscape. The proposed bill was pushed through by lawmakers despite the fact that Florida has not been hit by a hurricane since 2005. Well, that bill has now become a law.

Essentially, the new law was created so it could strengthen property insurance companies that cover damages from hurricanes, fires, and other losses. It is also designed to curb a recent surge in sinkhole claims which insurers believe are purely fraudulent. The sponsor of the new law stated it would "promote a competitive market with solvent companies that our policyholders can rely on."

However, the law does have its critics. Detractors of the law state the law would lead to higher premiums for all property owners. Additionally, the law also imposes new restrictions on public adjusters, and sinkhole claims, as well.

Specifically, this law also allows annual rate increases of up to 15 percent to cover higher reinsurance costs. This provides insurance companies with yet another excuse to cash in while making consumers vulnerable to serial premium hikes -- without fixing the underlying problems plaguing Florida's property insurance system.

Florida's property insurance system has been an almost annual legislative headache since shortly after Hurricane Andrew struck South Florida in 1992 -- the Category 5 storm killed caused about $16 billion in insured damage. Indeed, former Gov. Charlie Crist last year vetoed a bill that was similar except for the sinkhole provisions. However, back in 2007 legislators tried to protect consumers from crippling rate increases, thinking that was the best way to go. But the law signed by Gov. Scott did away with many of those consumer friendly protections and enhanced the insurance companies to ability to fight against insurance claims.

The law signed by Gov. Scott will also allow insurance companies to justify a new round of rate hikes for all of the hard working Floridians. This is so because the higher reinsurance rates will be an invitation to let insurance companies raise rates.

The new law also tightens restrictions on sinkhole claims, which the insurance companies say are costing them $500 million annually, and allows insurers to hold back part of a claims settlement until repairs are completed.

But that is not all that this law does. The law caps public adjuster compensation to 20 percent of the claim payment (10 percent for Citizens claims). The law also requires public adjusters to provide additional disclosure statements and notices.

These changes come as no surprise as the insurance lobby was able to convince our elected representatives that public adjusters spearhead the filing of allegedly fraudulent claims such as sinkhole claims. However, any move that restricts public adjusters is a restriction on the average Floridian because these individuals represent people who are having difficulties with their insurance claims. Their role is vital to a fair claims system as they have the knowledge and experience to navigate the complex claims process.

Insurers have become stronger. Accordingly, the public has become weaker. This fact highlights the reason why its important to hire a firm with the experience necessary to compete against Goliath insurance companies. At Alvarez & Barbara, LLP, we have this experience and the proven track record to compete in this new climate. Contact us today to discuss your claim.

May 15, 2011

Get Ready to Have Your Property Insurance Rates Increased by at least 15% while Insurance Companies Make it Harder to Bring a Claim to Recover for Damages to Your Property

6a00d8341c64d253ef00e54f69334b8834-800wi.jpgThe legislative session in Tallahassee has ended. During this past legislative session lawmakers in Tallahassee had an objective of reforming Florida's property insurance system. Consequently, property insurance was a big priority during the legislative session. Unfortunately, insurance companies, and not policyholders, are the big winners.

Our lawmakers passed Senate Bill 408 and now its up to Governor Rick Scott to decide whether the bill should become law.

Senate Bill 408, virtually guarantees a 15 percent premium "reinsurance" increase for Florida policyholders who have no choice but to buy property insurance on their homes if they have an outstanding mortgage. This is a backdoor tax and fee increase that will hurt most homeowners, consumers and small business owners at a time with very high foreclosure and unemployment rates, and a fragile economic recovery under way.

Moreover, homeowners who have no choice but to buy property insurance from Citizens Property Insurance Corp. will likely get the annual 10 percent increase, which continues to be authorized by law.

This premium increase comes after six years of no hurricanes and when the property and casualty insurance industry has record profits. Profits for U.S. property and casualty insurers rose 63 percent to $27 billion for the first nine months of 2010.

Senate Bill 408 also contains many other provisions that are anti-consumer as well. The reason being is that, for instance, the insurance lobby was able to convince our lawmakers that they needed to shorten the time in which hurricane and sinkhole claims could be brought. Insurers have been dealing with a large amount of claims that date back as far as 2005 in the aftermath of Wilma and also a recent rise in sinkhole claims. Instead of five years to file a windstorm claim, the bill proposes a 3 year limitation.

If this bill becomes law, policyholders are certainly going to be affected. Not only will their insurance rates go up, but many legitimate claims are going to be denied because of this restrictive time period. Water and mold damage often take a few years to present itself. Under the new law, someone who notices mold damage 3.5 years after the date of loss is out of luck. This provision does not take into account the fact that it can some time for damages to become evident. According to insurers, this provision is needed to curb fraud.

The bill also allows insurers to provide "additional or supplementary" information to the state without requiring top officers to certify that the data backing up their claim for a rate increase is truthful. Basically, this provision enables insurance companies to freely commit a fraud while they argue that time periods need to be shortened because of fraud. This is certainly a double standard.

Another troublesome provision of this bill is the fact that for people who pay for replacement cost insurance, in cases of hurricane repairs, homeowners will have to pay for some repairs in advance and hope to be reimbursed by the insurance companies. Many families simply can't afford this burden, or wait for the insurance companies to "drag their feet" to pay these claims.

Times are tough enough as it is for many in Florida. This bill only makes it tougher on all hard working Floridians and helps insurance companies raise are rates without any oversight and with reckless abandon to Florida as a whole.

At Alvarez & Barbara, LLP, we have considerable experience dealing with insurance companies and claims. If you're having difficulty with an insurance claim, contact Alvarez & Barbara, LLP to discuss your claim in greater detail today.

February 6, 2011

State Farm's Request for a Rate Increase Does Not Add Up for Hard Working Floridians

state farm-thumb-225x357-13776.jpgAs we have discussed previously on this blog, State Farm Florida Insurance, the state's largest private property insurer, wants to raise rates by a statewide average of 28 percent.

Although Florida has dodged a direct hit by hurricanes the past five years, State Farm claims that the increase is required to cover rising losses for claims unrelated to storms such as sinkholes. The increase comes after the company received approval in 2009 to raise average statewide rates by 28 percent and approval in November to raise them again by 6.6 percent.

State Farm had 678,849 residential property insurance policies in the state as of late last year, including 128,506 in Broward, Palm Beach and Miami-Dade counties and 175,084 in the Orlando area.

Some perspective based on the numbers....

Let's say that the average homeowner's insurance policy premium each month in Florida is $128/month.

State Farm has 678,849 residential property insurance policies.

That equals about $86,892,672.00 that State Farm collects each month in Florida from homeowners.

That is $1,042,712,064.00 that State Farm collects for the year.

Rather than pumping that money out of the country to overseas reinsurers to help them pay for opulent conferences in Monte Carlo, let's say State Farm opted invest that money. And with that investment let's say State Farm secures a modest average return of 10% per year (the stock market average return is 12% in the long run). This means that State Farm makes $104,271,206.40.

Keep in mind that insurance companies are required to keep reserves which they invest. These reserves are in the BILLIONS of dollars. However, forget about that now and focus solely on what State Farm receives in premiums from homeowners.

State Farm claims that they need to increase rates because of an increase in sinkhole hole claims over the past few years that are related to the recent rise in housing starts and the real estate meltdown. The recent rise in sinkhole claims is due in large part to the recent explosion in real estate development throughout Florida, and especially in South Florida. Over development has left the ground susceptible to sinkholes. Plus, while sinkholes occur in other U.S. states, Florida is more prone to sinkhole related problems because of underground limestone that dissolves under certain conditions, especially in areas that have been over developed, according to many leading geologists.

Nonetheless, let's do some math. State Farm's spokesman claims that sinkholes were responsible for State Farm spending $351 million over the last three years. That is $117 million for one year.

If State Farm gets a 10% return from the investment of the money it receives from homeowners insurance premiums, then they will only be short $12,728,794.00 for the year. Now, remember the BILLIONS of dollars that State Farm is required to hold in reserves and think about the money received on the investment of those reserves. $12 million is pocket change to State Farm, and they aren't really losing anything. Especially if you consider all the money that is shipped overseas by State Farm and others.

However, if State Farm increases rates by 28%, then the average premium in Florida goes from $128/month to $163.84/month. That's an extra $291,959,377.92 that State Farm will receive when they claim only "need" an extra $12,728,794.00.

It sure sounds, and looks, like State Farm is trying to take many hard working Floridians for granted.

Continue reading "State Farm's Request for a Rate Increase Does Not Add Up for Hard Working Floridians" »

January 12, 2011

Computer Models May Be to Blame for Higher Insurance Rates

HurricaneAndrew1.jpgWe've been discussing the coming insurance rate hikes the past few weeks on this blog. The news tells us that the hikes are due to legislative changes and increased scrutiny over sinkhole claims. Also, insurers would like to make coastal property owners take on more of a financial burden due to their increased risks. Now, we may also thank a computer for the coming hikes as well.

A new computer model showing the possible risks of a hurricane demonstrates that the storms may cause more damage than previously expected, especially further inland. The model was created by Risk Management Solutions, a producer of hurricane computer models used by insurers to set rates.

The belief is that hurricanes break up after reaching land. However, the model shows it could take longer for that to happen. This has the effect of increasing damage projections inland. This is the company's first update of the model since 2003 and that there have been significant improvements in research since then. Hurricane Charley was closely examined and used to justify the model's findings. In 2005, Hurricane Charley caused damage as far inland as Orlando.

The Florida Consumer Action Network (FCAN) believes insurance companies will use the model to justify property rate hikes. An executive from Standard and Poors agreed with this assessment. FCAN does not trust the findings and believes the model's data does not have to be justified publicly because the data is allowed to remain confidential.

Despite FCAN's position, its reported that the Florida Commission on Hurricane Loss Projection Methodology has access to that data. Further, this panel is supposed to review the model before it is approved for use by insurers.

Continue reading "Computer Models May Be to Blame for Higher Insurance Rates" »

December 21, 2010

Insurance Companies are Gearing Up to Push Through Legislation That Will Result in Insurance Companies Paying Florida Homeowners Less Money on Sinkhole Claims and Making it Harder for Homeowners to Bring a Claim Against Their Insurance Company

sinkhole-2.jpgIn an effort to reduce costs for insurance companies, the State senate is pushing forward a bill which addresses sinkhole damage claims, as well as other claims.

The new bill is expected to contain many of the provisions found in a bill which was vetoed by Governor Charlie Crist. One of these provisions includes a time limit on filing claims after a hurricane and one which will make the rate approval process easier to navigate. It is also expected to address other cost drivers such as fraud.

The new bill will include provisions targeted at reducing what insurance companies are paying out for sinkhole claims. The insurance industry claims that many sinkhole claims are not legitimate. However, part of the reason for the surge in sinkhole claims is due in large part to the recent explosion in real estate development throughout Florida, especially in South Florida. Over development has left the ground susceptible to sinkholes. Plus, while sinkholes occur in other U.S. states, Florida is more prone to sinkhole related problems because of underground limestone that dissolves under certain conditions, especially in areas that have never been over developed, according to many leading geologists.

The state Senate's Banking and Insurance Committee is expected to release an interim study on the state's sinkhole insurance climate. Between 2006 and 2010, $2 billion in claims have been paid out. This payout amount nears the amount paid out in a small hurricane.

Insurance companies are concerned about these costs due to the large number of claims for foundation cracks that are attributed to sinkholes. However, the insurance industry states that these claims may not be sinkhole related. Because insurance companies contend that they cannot often rule out that the damage was caused by a sinkhole, especially in light of all the over development that has taken place over the past few years, tens of thousands of dollars are being paid out by the insurance companies to resolve these claims.

Our Miami insurance dispute lawyers handle sinkhole claims for homeowners. Our attorneys represented insurance companies before 2006, when we opened a firm dedicated to fighting for the rights of consumers. We understand how insurance companies work. And we have the knowledge and experience necessary to represent homeowners in disputes over an insurance claim.

The new bill is expected to contain language which will define structural damage from a sinkhole. It is also expected to contain language on what is and what is not covered by insurance policies. Governor-elect Rick Scott is expected to support this bill which may further regulate public adjusters.

Continue reading "Insurance Companies are Gearing Up to Push Through Legislation That Will Result in Insurance Companies Paying Florida Homeowners Less Money on Sinkhole Claims and Making it Harder for Homeowners to Bring a Claim Against Their Insurance Company" »

September 23, 2010

Florida Hurricane Damages Costs Millions of Dollars to Insurance Companies

hurricane damage.jpgThe USA TODAY reports that if a major hurricane were to hit coastal communities, its devastating financial effects could reach far beyond those who actually incur damages.

After Hurricane Katrina, private insurers fled coastal areas, including Florida, which caused many states to expand their own insurance companies. For instance, in Florida we have seen the recent expansion of Citizens Insurance despite the legislative's mandate that it be the insurer of last resort. Nonetheless, much of the legislation that either created or expanded these state-owned insurance companies, such as Citizens herein Florida, contain provisions allowing states to enforce large surcharges on other insurance companies and on other policyholders.

But why would the State of Florida need to enforce such a surcharge? Here are some facts: Citizens, Florida's insurance plan, currently insures property worth $433 billion. However, Citizens only has $10.5 billion in cash reserves and reinsurance, which in simple terms is insurance for insurance companies whenever they have to make a big payout.

Simple math tells us Florida's insurance plan is vastly underfunded. If a large hurricane were to hit Florida, surcharges are almost a certainty. Plus, these surcharges can be levied on almost any insurance policy, including auto, property, and liability insurance.

According to FEMA Administrator, Craig Fugate, "If [Florida] [has] a major hurricane such as Andrew, they're going to be in a lot of trouble."

Therefore, it is important that you check the financial strength of your insurance companies, especially now during the height of hurricane season.

Continue reading "Florida Hurricane Damages Costs Millions of Dollars to Insurance Companies" »

July 28, 2010

Miami Homeowner's Insurance Premiums Could Rise Dramatically if Lawmakers Pass Deregulation

The insurance industry hopes to gain enough support to pass a new law that will make it easier to hike property insurance rates, according to media reports.

Last week, our Florida Insurance Lawyer Blog reported a request by Citizens Property Insurance for a double-digit rate increase. And Allstate is requesting regulators to permit rate hikes by an average of 18 to 33 percent, the Sun-Sentinel reported.

But the real goal is to do away with the regulatory process that requires the companies to go through the Office of Insurance Regulation when requesting rate hikes. Gov. Charlie Crist vetoed a bill that would have permitted property insurance companies to raise rates up to a certain percentage without a full review by the Office of Insurance Regulation.

With Crist running for the U.S. Senate, Florida will have a new governor in January.

"The governor that vetoed the measure won't be here next year, so I think that we have a good shot," Sen. Garrett Richter, R-Naples, said Tuesday. He sponsored the bill last session and will likely again carry the proposal.

This legislation would be a major win for insurance companies and a major slap in the face for homeowners. As our Miami insurance dispute attorneys have reported, property insurance companies are already pushing double-digit increases past regulators, despite no major storm damage in the last five years and plummeting property values. Still, companies are claiming rates are not high enough to match risk and pay claims.

Only the governor's veto prevented the measure from becoming law; it actually had the support of Insurance Commissioner Kevin McCarty. Of the current candidates for governor, only Alex Sink is on the record as likely opposing the idea. "We should not have deregulation in the insurance market, the role of the insurance commissioner is critical," Sink has said.

Neither Rick Scott nor Bill McCollum has addressed the issue.

Perhaps you are thinking that our representatives would no more pass such a law than they would limit the number of hours of care nursing homes are required to provide. Or limit the ability of customers to collect damages when injured by negligent conditions at big box stores and other accidents on business property.

In fact lawmakers passed both those measures during the last legislative session.

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