09/09/2021
FAIA
Mixed Messages from the Market?
By Kyle Ulrich posted 13 hours ago
Agents know all too well how difficult the homeowners market is in Florida. Especially those who represented Gulfstream P&C and had to replace their entire book over the last few months. As companies continue to tighten underwriting guidelines and reduce commissions, FAIA and our members are looking for any information that might point to improvements on the horizon. Unfortunately, the data available at this moment shows some mixed messages.
Company financial results continue to paint a troubling picture. Recently released 2021 Q2 results compiled by Guy Carpenter show the industry had another $692.66 million in underwriting losses, increasing $269.55 million from Q2 of 2020. It also indicates that Citizens, rather than being the insurer of last resort, has become the largest insurer in Florida, based on direct written premium. Adding to the bad news is Citizens' most recent litigation report that shows industry-wide litigation is UP year over year by 51 percent, and AOB lawsuits are increasing at a rate higher than non-AOB. Also, Citizens is getting about 900 new litigated cases per month, with 50 percent of those coming from hurricanes Irma and Michael.
Given the underwriting losses sustained by companies over the past couple of years, subsequent exposure management plans, and a company insolvency, it would be safe to assume that Citizens' policy count would be exploding. Citizens' policy count is growing, but not nearly as rapidly as the information above might suggest or as some would expect. In August, Citizens wrote approximately 37,000 policies, an average of 7,500 per week, including Gulfstream business. In fact, during a similar time frame, Citizens had 13,2000 policies cancel or non-renew and either going back to the voluntary market or without coverage at all.
More data to consider: Gulfstream P&C had 32,324 policies in Florida at the time of their insolvency, and only 14.9 percent, or 4,801, found their way to Citizens. Also, only about 20 percent of the 50,000 Gulfstream, Southern Fidelity, and Universal North America policies that were non-renewed with 45 days' notice went to Citizens. With everything we hear and agents know about the state of the market, how does that happen? Obviously, independent agents have done a remarkable job keeping business in the voluntary market, but where is the capacity coming from?
As we have reported in the past couple of months, there is hope that recently enacted legislative changes will positively impact claims and litigation. Still, the effectiveness and timing of those reforms remain unknown. There is no question that the market is in bad shape and on an unsustainable trajectory. As we look towards the next legislative session and the prospect of additional reforms, it's important to understand that policymakers will consider ALL available data, including Citizens policy count that suggests additional capacity being extended by private insurers. Lawmakers who may already be skeptical of the insurance industry will use this data to oppose additional reforms, so we must be prepared to make a strong case.
This year, as in years past, it will be essential to have agents involved in the conversations taking place in Tallahassee. While data can be compelling, so too are the stories you have to share about the difficult conversations you have every day with consumers all over the state.
