TALLAHASSEE (CBSMiami/NSF) – Florida regulators have scheduled three hearings next week on property insurers’ proposals to raise homeowners’ rates by more than 20% as the state weighs a plan for another insurer that dropped its policies amid financial losses.
The Florida Office of Insurance Regulation will hold hearings May 17 on rate hikes proposed by First Floridian Auto and Home Insurance Co., Kin Interinsurance Network and Florida Farm Bureau General Insurance Co. and Florida Farm Bureau Casualty Insurance Co.
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Notices published Tuesday in Florida’s Administrative Register said First Floridian was seeking approval for a 22.9% aggregate increase for homeowners’ “comprehensive” policies; Kin Interinsurance Seeks Approval of Overall Increase of 25.1%; and Farm Bureau companies are seeking approval for an overall 48.7% increase. Farm Bureau companies are also seeking approval for a 31.7% aggregate increase for so-called “residential fire” policies, according to one of the notices.
The hearings will take place less than a week before the May 23 start of a special legislative session Governor Ron DeSantis has called to address widespread problems in the insurance market. The session’s main issues could include trying to help companies secure reinsurance, which is crucial relief coverage for Florida carriers.
Three Florida property insurers — Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co. — have been declared insolvent since February.
Meanwhile, policies poured into the state-backed Citizens Property Insurance Corp., which was set up as an insurer of last resort. Citizens surpassed 850,000 policies last week and are expected to reach 1 million policies by the end of the year, officials said.
Insurance regulators are also weighing a plan that will affect the future of FedNat Holding Co., which includes subsidiaries FedNat Insurance Co. and Monarch National Insurance Co., and had about 152,000 policies in Florida as of March 31.
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The holding company said in a federal Securities and Exchange Commission filing on Monday that it submitted the plan to regulators after ratings agency Demotech downgraded FedNat Insurance last month. As part of its strategy, FedNat is exiting other states and focusing on Florida, where its March policy count is down 23% from a year earlier and has seen significant rate increases these last years.
“FedNat has submitted a proposed action plan to the Office of Insurance Regulation (OIR), which, if approved by them and other relevant state regulators, should result in the reduction in the size of the business, with far fewer policies in force, and potentially result in additional capital in the holding company or in our insurance companies,” FedNat chief executive Michael Braun said in the filing. “If approved , the proposed action plan should allow the company to obtain excess loss reinsurance on a smaller volume of business, only in Florida. Our action plan is currently being reviewed by the RIO and we will provide an update on the results of their review when available.
In a call Tuesday with analysts on the company’s first-quarter financial results, Braun said it was too early to know what changes to the property insurance system might arise from the special session.
“Obviously the Florida real estate market has been very tough over the past few years,” Braun said.
He said the market problems had far-reaching effects.
“It’s very difficult for the insured, it’s very difficult for the agents, it’s very disturbing. People have a hard time finding cover. Citizens (Property Insurance) is growing exponentially,” Braun said.
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