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5 Trends to Watch in 2022: Florida Insurance

  1. Potential rate increases: There isn't much good news ahead on homeowners’ insurance rates. Excess losses driven by unscrupulous claims practices have caused some private carriers to seek double digit rate increases from the Florida Office of Insurance Regulation to maintain the financial health of the companies. The board of Citizens Property Insurance Corp., Florida's state-run home insurer, also approved two successive rate increases – an average 11 percent rate increase in 2022, followed by another 12 percent the following year. These rate hikes reflect the increased statutory rate cap adopted by the Legislature in 2021. The rate increases at Citizens are considered critical to maintaining solvency and attempting to properly reposition Citizens as the property insurer of last resort in Florida.

  2. Fraudulent claims: Insurers that do business in Florida face continuing financial challenges and potential losses in part due to the wave of fraudulent claims and associated frivolous lawsuits that have plagued insurance companies, especially small ones. Industry leaders are calling for more legislative reforms in Florida and beyond. The property insurance bill passed in Florida’s 2021 session, SB 76, contained several provisions to reign in litigation costs for insurers, including a prohibition on roofing contractors soliciting homeowners, which many insurers say is a source of fraudulent claims and frivolous lawsuits. However, a U.S. District judge blocked that provision, saying it infringed on the contractors’ free speech rights. The case is still pending. With continued rate increases again this year, expect further property insurance reforms to be considered in Florida.

  3. Auto insurance reform: In June, Florida Gov. Ron DeSantis vetoed a bill that would have eliminated the state's no-fault auto insurance system. Opponents of that bill feared it could result in higher auto insurance rates and many more uninsured drivers. But there is some talk in Tallahassee that lawmakers may attempt to put auto insurance reform on the table again in the 2022 session.

  4. Waterfront blues: This year the National Flood Insurance Program introduced a new risk evaluation system -- Risk Rating 2.0 -- which aims to eliminate some of the inequities in its old method for calculating risk and setting rates. The new system uses a more in-depth risk profile for each home including cost, property elevation, and likelihood of multiple floods in one year given the property location. NFIP said last year flood insurance rates increased an average of 11.3 percent nationally. According to FEMA, which administers the flood insurance program, 68 percent of Florida homeowners could see an average rate increase of up to $120 per year in 2022 under the new rating system, while 20 percent could see a small rate decrease. FEMA projects that only 12 percent of homeowners could see bigger rate hikes, averaging as much as $240 per year. But there’s a small silver lining: Flood insurance rate increases are capped at a max of 18 percent per year. Florida U.S. Sen. Marco Rubio and U.S. Rep. Carlos Giménez are supporting a bill in Congress that would cap flood insurance rate increases at 9 percent annually.

  5. Citizens "depopulation": Citizens Property Insurance has seen its policy count swell more than 40 percent since November 2020 and is pushing for some legislative changes in the coming session that could compel homeowners to switch back to private insurers. Higher rates would be one deterrent to keep homeowners from seeking coverage from Citizens. Another proposal would make a homeowner ineligible for Citizens coverage if they received an offer from a private insurer that would cost less than 20 percent more than a policy via the state insurer.

About the Authors

Fred E. Karlinsky, who is co-chair of Greenberg Traurig’s Insurance Regulatory and Transactions Practice Group, has nearly 30 years of experience representing insurance companies, reinsurers, and a wide array of related entities on regulatory, transactional, corporate and governmental affairs matters. He is also a recognized authority on national insurance regulatory and compliance issues.

Timothy F. Stanfield, Of Counsel with the Florida Government Law & Policy Practice, represents a wide number of private and public-sector clients before the Florida legislature, cabinet, and state agencies. Tim’s practice is largely focused on regulated industries, including insurance, land use, and alcoholic beverages, including addressing ‘tied house evil’ issues. He also represents local governments, trade associations, and clients participating in Florida’s procurement process.

Christian Brito is an associate who focuses his practice on national insurance regulatory and compliance matters. He represents a wide variety of entities in the insurance industry, including insurers, reinsurers, managing general agencies, producers, third-party administrators, and claims companies, with regulatory, transactional, corporate, and governmental affairs matters.