Lawmakers Seek to Improve Florida’s Collapsing Insurance Market
The 2022 hurricane season starts on June 1st, and scientists predict an above-average number of storms in the Atlantic. Researchers from the Colorado State University Tropical Meteorology Project forecast nineteen named storms and nine hurricanes. This is troubling news for state lawmakers, insurance companies, and affiliated organizations, including public adjusters in Florida. Florida’s property insurance market is dysfunctional. Floridians have seen double-digit rate increases, canceled policies, and strict new requirements, such as paying out of pocket for a new roof before their homes are covered.
State lawmakers are meeting soon to discuss ways to improve Florida’s collapsing insurance market, but as the Tampa Bay Times reports, lessons from failed insurance companies are not being learned. In fact, even after the Florida Department of Financial Services completes an investigation as to why an insurance company fails, the report is “effectively shoved in a drawer.”
Palm trees and a home destroyed by a hurricane
Florida Insurance Companies Going Bankrupt
Since 2018, seven property insurance companies have gone bankrupt, and over half of those occurred in the last 13 months. Under Florida law, an investigation as to why a bankruptcy occurred is supposed to happen to prevent future insolvencies. However, when asked about the reports, government officials have claimed ignorance.
The Tampa Bay Times decided to investigate what was happening with these “financial autopsies.” They requested a copy of all reports filed on insolvent insurance companies with the Department of Financial Services from 2014 until now. They found only one report had been completed since that time: a 73-page report on the Sunshine State Insurance Company based out of Jacksonville.
Insurance companies say that the problem is due to rising reinsurance rates and payouts from more litigation. But, the report from the 2014 insolvency of Sunshine State Insurance found that part of the reason the company went under was because it paid millions in fees to affiliated companies–parent and sister companies that did not even operate in Florida. These companies were not approved by the Office of Insurance Regulation. Florida law states that all payments of this kind must be approved by the Office of Financial Regulation. Yet, sunshine State Insurance executives never contacted the office or asked for approval of the payments. Furthermore, the agreements for payment were not recorded in writing but instead based on “verbal agreements.” At the very least, these are poor practices, if not illegal operations.
Insurance is a highly complex topic, and it is made even more challenging to understand by insurance companies, attorneys, and special interest groups. For example, the year before they went bankrupt, Sunshine State Insurance spent between $20,000 and $40,000 on lobbying.
State Representative Jeff Brandes of St. Petersburg is working on an amendment that would require the board of directors of insolvent insurance companies to appear at a public hearing within three months of bankruptcy. Brandes believes that the insurance market in Florida is in dire straits. He went so far as to compare the state’s oversight of the market to a “race car driver that’s driving a 1979 pinto and the engine is three squirrels.”
Call Pinnacle Claim Services, Inc. Public Adjusters
If your home has been damaged, call Pinnacle Claim Services, Inc. and a professional public adjuster will come to you and assess your situation. Our goal is to assist you in filing your claim and seeking out all the benefits you need to get your life back to normal. Call us today at 877-70-CLAIM for a free inspection or contact us online.