Seeking rate hikes, insurers say roofs, reinsurance and lawsuits are pushing costs up

Democratic lawmakers are hosting a webinar for homeowners. Image via Adobe.

Three different property insurance companies asking state regulators to approve rate increases cited similar reasons during hearings Tuesday: more roof claims, higher reinsurance costs and the threat of more lawsuits related to the jump in claims.

“We’ve seen many more roof claims with much higher costs,” said Florida Farm Bureau Insurance Company vice president Ben Kimmons.

Florida Farm Bureau is asking the Office of Insurance Regulation to approve a 48.7% rate increase for its 63,135 residential property insurance policies. The vast majority of those policies, 62,169, are homeowners policies.

The company has two types of coverages, standard and preferred. If regulators approve the request, the 23,906 standard policies would see a statewide average increase of $1,200 per year in their premium, up to $3,701. The 38,263 preferred policies would see an average annual increase of $952, to $2,867.

Kimmons said the company is planning to cancel 7,600 policies with roofs older than 20 years as roof-related claims have soared in the last three years.

The complaint is a familiar one for lawmakers, who are poised to return to the Capitol next week for a Special Session aimed at stabilizing the property insurance market. Two companies have gone bankrupt, four have announced plans to cancel more than 120,000 policies, other insurers are seeking large rate hikes and one ratings agency has said downgrades are possible for some companies if lawmakers don’t take action this summer.

Gov. Ron DeSantis called lawmakers back to address some of the issues affecting insurers, including roof claims and litigation expenses.

But previous attempts by the Legislature to solve issues driving up claims and costs might not be having the intended effect.

Regulators asked executives with some of the companies to explain how legislation passed two years ago attempting to reduce the practice of assignment of benefits, or AOB, where a homeowner will sign their claim benefits over to a contractor who will do the repairs and work the claim with the insurer, is affecting their rates.

Many said the law is having little effect or it’s too early to say.

Bob Aaron, vice president of personal insurance product management at First Floridian Auto and Home Insurance Company, said lawyers and roof contractors are finding ways to get around the AOB law. That means they’re unlikely to take advantage of a provision allowing companies to offer lower rates to customers who take policies prohibiting the assignment of benefits.

“It may just wind up in a premium drain as you will have similar sets of customers being represented,” Aaron said.

First Floridian is seeking a rate increase of 23% for its homeowners policies. For its 10,180 customers with preferred policies, they’ll see an average $352 rate increase, to $1,913, if the rate hike is approved. The 3,097 homeowners with standard policies will receive an average rate hike of $440, to $2,258.

Another factor in higher rates is reinsurance.

Angel Conlin, Chief Insurance Officer for KIN Interinsurance Network, said many reinsurers simply don’t want to enter the Florida market.

“Many of the concerns we’re hearing is, frankly, the litigation landscape in Florida is making it untenable for some of these investors to agree to allocate capacity to Florida,” Conlin said.

KIN is seeking a $452 average rate increase, to $2,260, for its 62,000 homeowners’ policies.

Regulators will review the requests further and make a decision in the coming weeks, but likely not until after the Special Session.