Insurance Claims And Issues

"Fay, You Are No Hurricane" -- So, No Effect on Premiums?

    Hurricanes caused hidden damage in Florida in 2004 and 2005.  They caused Premiums to rise because they caused the Florida Hurricane Catastrophe Fund and Citizens Property Insurance, for example, to require higher assessments.  See Tom Zucco, "Fay Unlikely to Cause Havoc With Insurance" (St. Petersburg Times Online, Monday, August 18, 2008).

    Fay is a Tropical Storm and not a Hurricane as this post is written.  Presumably, Fay will not cause charges to be imposed which can cause Insurance Premiums to rise accordingly.  Presumably.

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Florida Office of Insurance Regulation Putins Allstate Insurance.

    For nearly a year, Allstate Insurance Company and its subsidiaries resisted investigations by the Florida Insurance Commissioner into its Reinsurance arrangements, its unauthorized Catastrophe Models that consistently predicted greater damage -- and thus the 'need' for greater Premiums -- than was predicted by the Catastrophe Models that have long been used in the industry and in Florida, and Allstate's relationships with raters and trade associations.  As readers of this web log know, many posts here have followed the developments during that time, until Allstate exhausted its appeals and Courts overruled its objections to the Insurance Commissioner's investigations.  Now, what the Florida Insurance Commissioner calls "'drastic actions'" have been agreed to by Allstate.  Tom Zucco, "Deal Cuts Allstate's Rates" (St. Petersburg Times Online, Friday, August 15, 2008).

    The capitulation to which Allstate has been forced to consent is as overwhelming in its own way, as the recent invasion of Georgia by the Russian Army.  Allstate's "agreeement" was released on Friday, August 15, 2008, the traditional day of the week to release bad news to the public and press.  The agreement includes these terms:

Allstate will pay a $5,000,0000.00 fine to the Florida Insurance Regulatory Trust Fund under its agreement with the Florida Office of Insurance Regulation, which is the Florida Insurance Commissioner's Office;

Allstate will write 100,000 new Insurance Policies in Florida over the next three years, breaking down into 50,000 new "basic" Homeowner's Insurance Policies and 50,000 new Condominium, Renters and other residential Property Insurance Policies;

Allstate will lower Premiums on its existing "Florida policies" by 5.6 %, it is reported in the linked article, although what kind of Insurance Policies they are is not reported;

Allstate will not seek a Premium Rate Increase for at least a year, although again, the linked article does not identify for what kind of Insurance Policies;

Allstate will continue to 'cooperate' with the Florida O.I.R. investigations; and

Allstate waives its rights to challenge this agreement in Court.

    Allstate is reportedly the Number 2 Automobile Insurance Company in Florida, writing an average of some $564,000.00 in new Premiums a month in that line of business.  It is also reportedly the Number 4 Property Insurance Company in Florida.

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Premiums Rise for Long-Term Insurance.

    John Hancock is reportedly joining Genworth in seeking Premium Rate Increases for some existing Long-Term Insurance Policies.  Kimberly Lankford, Kiplinger's Personal Finance, published as "Long-Term-Care Insurance Rates Are Set to Increase" at washingtonpost.com, Sunday, August 17, 2008.  Where the companies have filed their Rate Increase Requests is not reported in the linked newspaper article.

    For John Hancock, apparently this raise in rates for Long-Term Insurance is a first.  Recommendations and suggestions are provided in the linked newspaper report, including if you currently hold a Long-Term Insurance Policy you may wish to hold on to it regardless of Premium Rate Increases, because new Policyholders face higher Premiums anyway; switching Long-Term Insurance Companies at this time is not a very attractive option.

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Rate Rejection Redux.

 This Updates a Previous Post.

    Florida Farm Bureau's 2007 Premium Rate Increase was rejected in 2008.  FFB's 2007 Premium Rate Hike Request was for a 26.8 % increase.

    FFB also requested a Premium Rate Increase in 2008, upping the ante so to speak to 28.4%.  It was recently rejected by the Florida Office of Insurance Regulation.  FFB may now request an Administrative Hearing with a Florida Administrative Law Judge, or Hearing Officer.  Florida Farm Bureau has reportedly issued some 100,000 Homeowner's Insurance Policies in Florida.  Tom Zucco, "Farm Bureau Rate Hike is Rejected" (St. Petersburg Times Online, Tuesday, August 5, 2008).

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FFB Raises Rejected Rate Request.

     In 2007, Florida Farm Bureau requested a Premium Rate Increase of 26.8% in Florida.

     In early July, 2008, FFB exhausted its appeals of the Florida Office of Insurance Regulation's denial of that request.

     In late July, 2008, FFB asked for a Premium Rate Increase of 28.4% in Florida.  Tom Zucco, "Insurer Still Seeks Rate Hike" (St. Petersburg Times Online, Wed., July 30, 2008).  FFB reportedly has 100,000 Florida Policyholders.

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Thanks for the Insurance and Your Service, Citizen Douglas!

     Thursday, July 31, 2008 is the last day that Mr. Bruce Douglas will serve as the Chair of Citizens Property Insurance Corporation.  Reportedly, Citizens is the largest Homeowner's Insurance Company in the United States that operates as an arm of State Government, and in this case, the State is Florida.

     Citizens also reportedly has 1,200,000 or 1.2 Million Policyholders.  In the 6 years that Mr. Bruce Douglas has been the Citzens Chair, "its exposure to storm damage" has more than doubled, "to $425-billion, but reserves have been rising, thanks to no recent storms."  Mr. Douglas is virtually everyone's dictionary definition of a fine human being.  His public service has been performed with honor.  Consistent peformance of his duties with honor, and a good sense of humor rarely found in those in modern public life, are both on display in this interview by Tom Zucco, "He Leaves Citizens More Stable" (St. Petersburg Times Online, Friday, July 25, 2008).

     Thank you, Bruce Douglas.

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Catastrophe Claims Strip Homeowner's Insurance Coverage, Lift Premiums.

     Since about the time of Hurricane Andrew in 1992, Homeowner's Insurance Policies and other kinds of Property Insurance Policies have been adversely affected by Catastrophe Claims.  Coverage provisions have been narrowed and new Exclusions have been added.  A director of consumer services at Florida's Department of Financial Services is quoted on these issues, for example, by Jeff Plungis, "Homeowners May be Twice Burned as Insurers Cap Policy Coverage" (Bloomberg.com, Wed., July 16, 2008).  "Policies are written annually so insurers can add exclusions."  Id.  (This last observation makes sense, but it applies to virtually all Insurance Policies.)

     One transformation of Coverage has been the nearly uniform refusal to provide "guaranteed replacement cost" Coverage, with Property Insurance Companies instead offering Coverage with a cap called "extended replacement cost" which by any name does not cover the actual cost of replacing a home totally destroyed by a Catastrophe.  These developments over the last 15+ years, which have been chronicled in many places including in previous posts here, for example, lead to the newspaper article's wise advice that "people should review their homeowners' coverage to make sure dollar amounts keep pace with currrent construction expenses."  Id.

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Florida's Largest Property Insurance Company Requests 47.1 Percent Rate Hike.

     State Farm is reportedly Florida's largest insurer of private property.  As such, it has faced many more Catastrophe and other Property Insurance Claims than it could have anticipated.  On account of such Claims, It has reportedly requested a Premium Rate Increase of 47.1% on the Homeowner's Insurance Policies it issues in Florida.  In 2006, State Farm was allowed to raise its Premium Rates by 52%, which it reportedly did.  In 2007, State Farm lowered those rates by 9%.  See this report written by Julie Patel, "State Farm Seeks 47.1 Percent Rate Increase in Florida" (South Florida Sun-Sentinel.com, Wed., July 16, 2008).  Mathematics is not otherwise included in the newspaper report of these things, but basic calculations reflect that since 2006 State Farm's Premium Rate Hike Requests amount to something on the order of 103% or more than double the amount of the Premiums it was collecting from Policyholders in Florida before 2006.  Such is the current state of Property Insurance in the State of Florida in 2008.

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Property Insurance Premium Florida Price Comparisons.

     Courtesy of the South Florida Sun-Sentinel, here is a computer-assisted comparison of Property Insurance Premium Rates for different Counties in Florida.  This is a public service.  Feel free to use it and use it and use it again.

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Flip-Flopping Premium Hikes Rejected in Florida.

     Hartford reportedly at first "voted" against Premium Rate Hikes by announcing it would reduce Premiums by 13.6% effective 06.01.08, then it "voted" for Premium Rate Hikes by asking for a 39.6% Premium Rate Hike effective in 09.08.  Following a new procedure in Florida, the Hartford first presented its request to an Adminstrative Law Judge.  The Florida Judge denied Hartford's Rate Hike request.  Then Hartford took an appeal to the Florida Office of Insurance Regulation.  The O.I.R. affirmed the Judge's decision.  See Anika Myers Palm, "State Curbs Hartford Rate Hike," p. C2, col. 2 (Orlando Sentinel, Tuesday, June 3, 2008), available online at www.orlandosentinel.com.

     It is also re-reported in the newspaper article that in February, 2007, Hartford announced that it was not renewing 40,000 Homeowner's Insurance Policies in Florida.

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