Frequent hurricanes, carrier losses result in higher premiums for Florida in 2020

Frequent hurricanes weakened the profitability of insurers and reinsurers in Florida, resulting in higher premiums for 2020.

Many insurance companies leave the market due to weather-created catastrophes, Mark Schwartz, CEO of Corporate Insurance Advisors, recently told Miami Today.

Loss creep – the industry term for delayed losses – from 2017’s Hurricane Irma reached $1.29 billion in September 2019. Schwartz said about 2,000 claims remained unpaid then.

“With Hurricane Irma, there were fewer up-front claims but more later,” he said.

While a few positive points may occur with commercial insurance, don’t expect property insurance to be a bright spot. Schwartz said.

Expect rate increases not only for property insurance, he said. Commercial vehicle insurance also will rise.

“There was recently a $280 million verdict for a car accident in Georgia, and that scares carriers,” Scwhartz said.

What he called the Amazon effect – more delivery trucks on the road – leads to more distracted drivers. That’s another worrying factor for carriers.

Employers who kept safe workplaces with fewer accidents will benefit. Worker’s compensation insurance rates dropped by 7.5%, he said.

“Construction companies are paying attention to OSHA, and this is not a one-year phenomenon, but a trend,” Schwartz said.

Bowman Brown, a partner in Shutts & Bowen's Miami office, said South Florida’s commercial insurance market has tightened.

“The risk of sea-level rise due to climate change, and substantial government-mandated flood insurance rate increases, have made commercial insurance, particularly flood insurance, increasingly more expensive,” Brown also told Miami Today.

Ryan Papy, president of Keyes Insurance, said commercial property insurance on large schedules rose at least 20% in 2020. That's a conservative estimate statewide. Most of the increase comes from reinsurance, he said to Miami Today. Carriers buy this to protect themselves against massive losses. But some of the reinsurers also had losses.

A few main players appear less susceptible to reinsurance, Papy said. 

With the rest of the market taking hits, it’s hard to blame them for raising rates in this environment, he said.