OUR POSITION: New legislation passed last year has failed so far to put the brakes on homeowners insurance costs which are rising with no end in sight.
There were no Hurricane Irmas. No Hurricane Michaels hitting Florida this past year. Only Hurricane Dorian, a category 5, was a threat, and it stayed offshore.
“The 2019 Hurricane Season gave Florida a much needed break from major hurricane impacts,” said Florida Division of Emergency Management Director Jared Moskowitz.
So, we had no hurricane damage to siphon insurance companies' profits. And, on top of that, the Florida Legislature approved a bill last year that was supposed to help protect homeowners from a cause of inflated premiums. That bill was to put a stop to costly demands and lawsuits from third-party lawyers after homeowners were persuaded to sign over the right to negotiate with insurance companies over damage to their homes.
That law, however, will not impact companies' profits for another couple of years, according to Jim Nolan, owner of Nolan Family Insurance with offices in Punta Gorda.
"Any lawsuits in the pipeline before (the bill became law) are still in play," Nolan said. "We have to let those lawsuits run their course before we see any relief from that law."
The Sun Sentinel reported that lawsuits filed against insurance companies were up almost 17 percent over the first 10 months of 2019 compared to the same period in 2018 according to the state's Legal Service of Process database. There were 260,810 lawsuits filed through October in 2018 which more than doubled the 126,011 filed in 2015 according to analysis of the database.
But that's far from the only reason insurance rates are climbing.
Federal Emergency Management Assistance is working to release final versions of new flood maps that will more than likely re-label homeowners who are not currently in a flood zone. It could mean tens of thousands of homeowners with a mortgage who are not now required to buy flood insurance to search for a policy.
And, there is even more bad news according to another Sun Sentinel story by Ron Hurtbise.
It seems there is such a thing as financial strength ratings for insurance companies that operate in the Sunshine State. According to Hurtbise, as many as 18 Florida insurance companies are facing rating downgrades. If that happens, thousands of customers might have to look for a new company because federally backed mortgage lenders only accept companies with "A" ratings.
A drop in ratings can be caused, among other reasons, when a company takes on too much debt or a state's carriers lose investors. Severe weather events are another issue, and it can impact Florida companies even if storms pass us by. That's because re-insurance companies — those that insure insurance companies — are taking big hits from storms and other catastrophes like wildfires and floods while at the same time continuing to deal with claims from past storms.
"People are still filing claims from Hurricane Irma," Nolan said.
Nolan added that Florida relies heavily on re-insurers so the lack of storm damage in any one year here is not necessarily a relief for most insurance companies.
In short, we are experiencing a perfect storm of challenges to insurance carriers. And, unfortunately, homeowners will eventually have to pay the price.