Another one bites the dust: Avatar Property & Casualty withdraws from Florida
For AFP, transparency is the key word for property insurance reform.

Property Insurance
More than a half-dozen other insurers pulled out of the Florida market this week.

The property insurance market’s tailspin continued Friday, with yet another insurance company having its financial security rating withdrawn.

Demotech, a consulting company that rates the financial health of insurance companies, pulled its rating for Avatar Property & Casualty Insurance Company, which underwrites thousands of homeowners and commercial property insurance policies in the state.

The fall of another major insurer underscores the dire rhetoric surrounding Florida’s property insurance market. Lawmakers and industry insiders alike have said the state’s property insurance market is in “freefall,” citing frequent and increasingly large rate increase filings from insurers of all sizes.

As a direct consequence, policy counts at Citizens Property Insurance Corp, the state-backed “insurer of last resort” have ballooned.

Last year, during discussions on a Citizens depopulation plan put forward by St. Petersburg Republican Sen. Jeff Brandes, experts warned that the fall of any two traditional property insurers could cause Citizens to cross 1.5 million policies. With that many policies, a major hurricane or natural disaster would tank the state’s finances.

At its current pace, a seven-figure policy count at Citizens is not fear-mongering.

The nonprofit currently has 777,000 policies — up from its 2020 low of 420,000 — and is adding about 5,000 more policies every week. Citizens would surpass 1 million policies by the end of the year if that rate holds.

It is almost certain to accelerate, however. St. John’s Insurance Corp. alone insures 177,000 Floridians. Demotech pulled its rating on Thursday, putting thousands of policyholders out of compliance with their mortgage lender.

In a Friday email to Florida Politics, an OIR spokesperson said the office “is working closely with St. Johns Insurance Company to facilitate options for consumers so they have continuous access to coverage.”

St. John’s Insurance Company, the eighth-largest property insurer in the state, was one of several insurers to go belly up this week. Lighthouse Property Insurance also crumbled Thursday, just days after United Property & Casualty paused policy writing in the state.

The bloodbath comes amid intense debate in the Legislature over how to stabilize the market.

The plan advancing through the Senate (SB 1728) would allow insurers to write policies that cover the cash value of older roofs rather than their replacement cost. Insurers, which are mostly required to write policies covering full replacement cost, claim that a plague of fraudulent and frivolous roof litigation is one of the key drivers of market instability.

Cash value policies aren’t popular in the House, however. House Speaker Chris Sprowls this week said he is not in favor of the strategy because of its potential impact on low- and fixed-income Floridians, many of whom couldn’t afford to cover the gap between the payout for an aging roof and the cost of a new one.

Still, Sprowls has not shut the door on the plan.

“I want to make sure people are compensated,” he told reporters on Wednesday. “If you get a hurricane, and you’ve got a senior citizen on a fixed income, I am cognizant of the fact that they may not be able to go and get a huge roof. I totally understand the arguments, so we’ll see how the conversation goes in the next several weeks.”

But Sen. Jason Brodeur, a Lake Mary Republican, brushed aside that point of view, contending people need to be more “serious” about setting aside money for repairs. He noted that drivers don’t expect their automobile insurance to cover the cost of new tires.

“These are not supposed to be warranties, they are supposed to be insurance policies,” Brodeur said.

Meanwhile, Senate President Wilton Simpson said property insurance remains a top priority for his chamber and that if lawmakers don’t pass legislation this year, then the Legislature will have “failed our citizens.”

___

Florida Politics reporter Christine Jordan Sexton contributed to this post.

Drew Wilson

Drew Wilson covers legislative campaigns and fundraising for Florida Politics. He is a former editor at The Independent Florida Alligator and business correspondent at The Hollywood Reporter. Wilson, a University of Florida alumnus, covered the state economy and Legislature for LobbyTools and The Florida Current prior to joining Florida Politics.


6 comments

  • Roscoe

    February 18, 2022 at 11:46 pm

    This is true situation that the citizens of Florida are facing. However, Greedy Grall, Homeboy Willy Simpson, and Silly Chucky Sprowls are locked in on the non-existent problem they call auto-insurance reform.
    Anyone who owns a home see’s their mortgage increase every year as the result of the home owners insurance crisis in this state.
    These three buffoons need email, fax line and office telephone flooded with messages from Floridians , insisting they tackle the real problems, and stop trying to fix a manufactured problem.

  • Lynda

    February 19, 2022 at 9:26 am

    Good comment.

  • politics

    February 19, 2022 at 9:57 am

    flooding, sinkholes,irmas and michaels and house flipping over the hill with the insurance companies. resilience on go fund me and insurance.600,000 dollar homes at 200 a year insurance.
    not godly.

  • cforest4trees

    February 20, 2022 at 9:41 am

    I bought my first house in 1989 near where I grew up on Long Island. My homeowners insurance was $764 (still have the first documents). Never filed a claim. Moved into a house north of Tampa in 2004 that was twice as big, insurance was $1100. 2 years later, out of the blue without a claim, the insurance company dropped us. New insurance was $1240. Several years later they wanted to raise it to $2100. Found.a new company for $1400. The next year it was $1600, then they wanted to increase it to $2300. Still no claims, no damage & storms had bypassed out subdivision. Got Avatar for $1620. Last year they wanted to increase it to $2200 so I increased deductibles & cut costs elsewhere & it was $1860. All this despite living almost in the middle of the state & without a single claim in 33 years of home ownership, including 17 years in FL. Meantime, 75% of the residents in my subdivision have had their roofs replaced through their insurance the last 2 years. The most damage our subdivision ever had from any 1 storm were 2 large branches that came down near the clubhouse, a bunch of leaves in the street & 1 resident had a small tree that had leaned over near their curb. Insurance fraud & litigation is what’s driving all of this & that’s where politicians need to focus their reform.

    • JC

      February 22, 2022 at 4:28 pm

      These two exact issues (“Fraudulent” Roof Solicitation and one-way attorney fee litigation) were addressed last year in Senate Bill 76. Poorly addressed, but addressed nonetheless.

  • Lee

    February 23, 2022 at 4:32 pm

    It’s time to fire David Altmaier, Florida Commissioner of Insurance Regulation.

    It’s clear to me that all he’s done to help the situation is listen to insurance carriers’ lies and approve rate increases while doing next to nothing to ensure the carriers do their job in the first place so they don’t get sued.

Comments are closed.


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