{"id":9427,"date":"2024-04-09T12:07:18","date_gmt":"2024-04-09T17:07:18","guid":{"rendered":"https:\/\/nwfl4sale.com\/analysts-home-insurance-crisis-may-be-nearing-end\/"},"modified":"2024-04-09T12:07:18","modified_gmt":"2024-04-09T17:07:18","slug":"analysts-home-insurance-crisis-may-be-nearing-end","status":"publish","type":"post","link":"https:\/\/nwfl4sale.com\/analysts-home-insurance-crisis-may-be-nearing-end\/","title":{"rendered":"Analysts: Home Insurance Crisis May Be Nearing End"},"content":{"rendered":"
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Insurance insiders are optimistic about the home insurance market in Fla., saying rates are continuing to stabilize. A major hurricane could change things though. <\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/div>\n FORT LAUDERDALE, Fla. \u2013 Home insurance rates in Florida far outpaced inflation over the 18 months that ended on Dec. 31, but the rate of increase slowed in the fourth quarter of 2023 to its lowest point of the period.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n And many insurance insiders are optimistic that rates will continue to stabilize this year and next, barring a big costly you-know-what.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n According to an analysis by the South Florida Sun Sentinel of publicly released data by the Florida Office of Insurance Regulation, the statewide average premium to insure a single-family house increased by 23.9% \u2013 from $2,798 at the end of June 2022 to $3,466 at the end of December 2023.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n But the quarter-to-quarter growth rate fell to 2.6% in the fourth quarter compared to the third quarter. That\u2019s down from a high of 4.8% between the first and second quarters of last year.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The average statewide premium to insure a condo unit increased by 22.9% over the 18-month period, from $1,343 to $1,650. But the rate of increase similarly fell to 2.1% in the final quarter of last year after peaking at 5.9% between the first and second quarters of 2023.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Over the same 18-month period, the rate of inflation in the United States increased by 4.7%, according to data in the Bureau of Labor Statistics\u2019 Consumer Price Index.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The Office of Insurance Regulation released the statewide quarterly data recently as required by a provision in a package of insurance reforms enacted by the state Legislature and governor in May 2022.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n All Florida-domiciled insurers are required to submit reports that includes total numbers of policies, total premiums paid, and total value of insured property for each type of policy they sell. The data used in the Sun Sentinel analysis was derived by dividing the total number of policies into the total premium for both houses and condos.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n A statewide average premium doesn\u2019t necessarily reflect reality in South Florida, where insurance costs have outpaced the rest of the state for years. And the average premium is likely higher than what homeowners in northern, inland counties pay.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n But it\u2019s the best measure available for comparison, since insurers several years ago began shielding their county-level premium data from public view by declaring it a \u201ctrade secret.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Dulce Suarez-Resnick, vice president of NCF Insurance Associates in Miami, said participants at last month\u2019s Florida Insurance Market Summit in Orlando voiced confidence that we\u2019ve weathered the storm.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n They believe that after increasing slightly this year, rates will begin stabilizing or begin decreasing next year as a result of lower litigation rates, price competition among new carriers entering the Florida market, and lower costs for reinsurance \u2013 that\u2019s insurance that insurers buy to make sure they can pay all claims after a catastrophe.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cWe\u2019re getting really excited about rate relief, but it could all change by one thing \u2013 a major hurricane hitting,\u201d she said.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n As usual, insurers and their customers will approach this summer\u2019s hurricane season with wary eyes. A powerful and destructive storm, if it hit a major population center, would raise insurer costs and make hoped-for rate cuts less likely, Suarez-Resnick said.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Forecasters with Accuweather and Colorado State University are calling for a much-busier-than-normal hurricane season, thanks to record warm sea-surface temperatures in the Atlantic Ocean and a rapidly developing La Ni\u00f1a event, which reduces wind shear and creates favorable conditions for storm development in the Atlantic.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The slowing of the rate increase in the fourth quarter was just one of several developments that have given insurers and consumers reason to be optimistic.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Eight new insurance companies have been approved by the Office of Insurance Regulation to enter the state\u2019s insurance market. They are Ovation Home Insurance Exchange, Manatee Insurance Exchange, Condo Owners Reciprocal Exchange, Orange Insurance Exchange, Orion180 Select Insurance Company, Orion180 Insurance Company, Mainsail Insurance Company, and Tailrow Insurance Company.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Ovation Home Insurance Exchange, the newest company, was created by the same company that owns Florida Peninsula and Edison. It\u2019s being built with \u201cseparate and dedicated capital\u201d says Stacey Giulianti, chief legal officer at Florida Peninsula.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cIt stands on its own, so it\u2019s a separate pool of capital to be put at risk,\u201d Giulianti said. The company will also introduce \u201ca new algorithm to select and rate policies, which is more granular than (what\u2019s used by) Florida Peninsula or Edison.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The new algorithm \u201cwill allow us to more precisely charge customers an appropriate \u2013 and in most cases less expensive \u2013 policy premium,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Florida-domiciled insurers reported making a profit last year for the first time since 2016.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Marketing intelligence company S&P Global announced the result last month, crediting the turnaround to investment income, a mild hurricane year, and tort reforms that took effect in March 2023.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n While the top 50 companies also posted an underwriting loss for the eighth straight year, the combined loss of $190.8 million was much lower than losses of nearly $1.8 billion in 2022 and $1.52 billion in 2021, S&P Global noted.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n State-owned Citizens Property Insurance Corp. posted a net income of $746 million compared to a $2.2 billion loss in 2022, and its combined ratio \u2013 a measure of profitability \u2013 improved from 202.4% to 59.4%. Insurers regard a 100% combined ratio as a break-even point, with profitability improving the further the number declines below 100%.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Citizens has successfully used depopulation to decrease its policy count from 1.4 million in September 2023 to 1.17 million by the end of February.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n A Sun Sentinel analysis in January showed that the number of lawsuits filed against the state\u2019s top 25 insurers fell by 13.2% between 2022 and 2023 \u2013 from 44,550 to 38,678.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nMore insurers enter market<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/h3>\n
Insurers are back in black<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/h3>\n
Reduced litigation costs<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/h3>\n