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Florida will consider property insurers' requests to raise homeowner rates

house damaged by a storm
Volusia Sheriff's Office
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Florida regulators have scheduled three hearings next week on proposals by property insurers to raise homeowners’ rates more than 20%, while the state weighs a plan by another insurer that has shed policies amid financial losses.

The hearings will come less than a week before the May 23 start of a special legislative session that Gov. Ron DeSantis called to grapple with widespread problems in the insurance market.

Florida regulators have scheduled three hearings next week on proposals by property insurers to raise homeowners’ rates more than 20%, while the state weighs a plan by another insurer that has shed policies amid financial losses.

The Florida Office of Insurance Regulation will hold hearings May 17 on proposed rate hikes 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.

Notices published Tuesday in the Florida Administrative Register said First Floridian is seeking approval of an overall 22.9% increase for homeowners “multi-peril” policies; Kin Interinsurance is seeking approval of an overall 25.1% increase; and the Farm Bureau companies are seeking approval of an overall 48.7% increase. The Farm Bureau companies are also seeking approval of an overall 31.7% increase for what are known as “dwelling fire” policies, according to one of the notices.

The hearings will come less than a week before the May 23 start of a special legislative session that Gov. Ron DeSantis called to grapple with widespread problems in the insurance market. Key issues during the session could include trying to help companies obtain reinsurance, which is backup coverage that is crucial 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 have poured into the state-backed Citizens Property Insurance Corp., which was created as an insurer of last resort. Citizens topped 850,000 policies last week and is expected to hit 1 million policies by the end of the year, officials have said.

Insurance regulators also are 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.

The holding company said in a federal Securities and Exchange Commission filing Monday that it submitted the plan to regulators after the rating agency Demotech downgraded FedNat Insurance last month. As part of its strategy, FedNat is leaving other states and focusing on Florida, where its March policy count was down 23% from a year earlier and where it has had large rate increases in recent years.

“FedNat has submitted a proposed action plan to the OIR (Office of Insurance Regulation), which, if approved by them and regulators in other impacted states, would be expected to result in the company becoming much smaller, with significantly fewer policies in force, and potentially result in additional capital coming into the holding company or into our insurance carriers,” Michael Braun, FedNat's chief executive officer, said in the filing. “If approved, the proposed action plan would be expected to enable the company to obtain excess-of-loss reinsurance on a smaller, Florida-only book of business. Our action plan is currently being reviewed by the OIR and we will provide an update on the outcome of their review when available.”

During a call Tuesday with analysts about the company’s first-quarter financial results, Braun said it is too early to know what changes in the property-insurance system could result from the special session.

“Clearly the Florida property market has been very challenging for the last number of years,” Braun said.

He said the problems in the market are having wide-ranging effects.

“It’s very difficult on the policyholders, it’s very difficult on the agents, it’s very disruptive. People are having a lot of trouble finding coverage. Citizens (Property Insurance) is growing exponentially,” Braun said.

Jim Saunders is the Executive Editor of The News Service Of Florida.
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