Florida has survived some of the biggest hurricanes in U.S. history, but this year marks a record eight hurricane-free seasons. No one seems to be enjoying this good fortune more than Florida property insurance carriers.
Despite escaping payment for hurricane claims for the last eight years and a 20 percent reduction in the cost of reinsurance this year, 69 percent of the rate requests that insurance companies filed with Florida Office of Insurance Regulation (OIR) were for rate increases.
State Farm, for one, hiked its rates by 6.3 percent in October although in the third quarter it reported $126 million in underwriting profits. State Farm says it uses its rate increases to purchase additional reinsurance. According to state regulators, Florida insurance companies must maintain all appropriate insolvency standards. Why continue to raise premiums to cushion reinsurance reserves that already exist instead of passing on savings to policyholders?
Florida’s Chief Financial Officer, Jeff Atwater, requested answers from state Insurance Commissioner, Kevin McCarty on why homeowner insurance rates have not seen a reduction, generally, when costs to insurance companies have gone down. McCarty’s report was due to be released on Dec. 18, but he asked for an extension until Jan. 15.
Not only are Floridians paying more in premiums when there have been no major storms, they are paying the highest rates in the country. A recent report by the National Associate of Insurance Commissioners (NAIC) showed that the average rate for a Florida homeowner’s insurance policy is $1,933. Louisiana is the second-highest, with an average $1,672. The national average rate is $978.
The NAIC’s annual report contains insurance rates from 2011, which was the most recent year with data available. Notably, the average rates do not reflect the more recent insurance increases Floridians faced in the last two years. The trend of state regulators consistently approving rate hikes does not show signs of slowing down.