State’s largest insurer raising rates 9.9% in S. Fla.
MIAMI – Call it a one-two gut punch for South Florida homeowners. The state’s largest property insurer, Universal Property & Casualty, has received approval from Florida insurance regulators to increase its rates an average 9.9 percent for a majority of the company’s single-family homeowners in Broward, Palm Beach and Miami-Dade counties.
Of 10 South Florida rate territories, only non-coastal areas of Palm Beach County will see increases averaging less than 9.9 percent. The increase in that territory is 5.5 percent.
The increase takes effect today for new policies and Jan. 26 for renewals.
On Wednesday, state-run Citizens Property Insurance Corp. announced it secured state approval to increase its rates about 10 percent throughout the region.
Universal, headquartered in Fort Lauderdale, insures 120,625 single-family homes in the tri-county region – most of any home insurer. Citizens, the second largest, insures 92,891 single family homes.
The overall average rate change approved for Universal was 6 percent, reflecting smaller rate increases or even decreases for many homeowners outside of South Florida, as well as a 2.2 percent statewide decrease for condo owners and a 0.3 percent increase for renters policies.
For Citizens’ South Florida customers, 2018 will mark the second straight rate hike near 10 percent. But unlike Citizens, Universal did not increase its rates last year. The company filed for an 8.1 percent increase throughout the region last year, then withdrew its request after state regulators questioned whether it was “unfairly discriminatory” by seeking identical increases across 10 underwriting territories.
No such objections were raised for Universal’s current filing.
Explanations included with the rate filing included a comparison of property claims, water damage claims and lawsuits between the tri-county region and the rest of the state between 2012 and 2016.
Total property claims increased from 7,917 to 10,763 in the tri-county region compared to decreasing from 11,202 to 10,021 in the rest of the state.
The number of lawsuits increased from 223 to 1,066 in the tri-county region and from 105 to 193 in the rest of the state.
Water damage claims increased from 1,490 to 4,620 in the tri-county region and from 241 to 785 in the rest of the state.
Meanwhile, the percentage of claims submitted with representation by an attorney or public adjuster increased from 19 percent to 43 percent in the tri-county region and from 2 percent to 8 percent in the rest of the state.
Insurers have for several years lobbied the Legislature – unsuccessfully – for reforms to restrict the ability of policyholders to sign over claims benefits to third-party water damage restoration companies. They say vendors submit inflated invoices, then work with plaintiffs’ attorneys to file suit when the insurer denies or fails to pay the full invoice.
Attorneys encourage “assignment of benefits” so they can collect legal fees when insurers lose in court or decide to settle lawsuits, insurers say.
But unlike Citizens’ approved rate filings, which imposed large increases in only a handful territories outside of South Florida and decreases most everywhere else, Universal’s rate changes vary widely in the rest of the state.
They range from 9.9 percent increases in parts of Duval, Martin, Orange, Polk, Osceola, Okeechobee, Jackson, Highlands, Citrus, Dixie and Leon counties, and 9.9 percent rate decreases in parts of Pinellas, Okaloosa and Bay counties and a 6.5 percent decrease in a large part of Sarasota County.
Justifying those rate changes are a large and complicated set of documents showing risk factors, loss trends and expenses that only trained insurance actuaries can comprehend.
Asked by email late Thursday if he could explain why so many territories outside South Florida were being hit with 9.9 percent rate hikes, Universal spokesman Travis Miller, an attorney with Radey Law Firm, declined to offer specifics.
“Losses associated with the Assignment of Benefits issue adversely affect rates due to their impact on an insurer’s loss experience,” Miller said. “However, numerous other factors also are evaluated in developing rates. The rate development and review process involves a detailed analysis of all of the relevant factors, as seen in the lengthy filing supporting [Universal’s] recently approved rates.”
Nancy Dominguez, managing director of the Florida Association of Public Insurance Adjusters, said claims rates are likely higher in other heavily populated regions where Universal is imposing steep rate increases.
Where claims rates are higher, policyholders are more likely to seek representation “because it typically results in a higher, more fair and complete payment to the policyholder,” driving insurance costs – and rates – higher, she said.
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