When policyholders sign over their benefits to a third party such as a roofing company, lawsuits over claims have been more expensive for insurers. | Stock image
Rate hikes for Florida homeowners insurance premiums occurred in 2020 because of loss creep, reinsurance rates and expenses for insurers hit by assignment of benefits lawsuits, Mark Friedlander of the Insurance Information Institute said.
The first factor Friedlander described was loss creep coming from Hurricanes Irma and Michael, he said in a Tweet. Insurance carriers also experienced an increase in 2020 in the reinsurance rates they were charged and the thousands of assignment of benefits (AOB) lawsuits filed against insurers caused them to incur significant expenses.
Insurers continue to receive claims from the 2017 and 2018 hurricanes that total billions of dollars, Friedlander told WINK.
Litigation costs have increased for insurance companies.
“There’s been a rash of lawsuits filed against insurers over the past several years for assignment of benefits. Basically, a homeowner turns over the claim to a third-party and the contractor then deals with the insurance company and there’s been a lot of lawsuits related to that,” Friedlander told WINK.
For consumers, their expenses after a named storm could become significant.
“Lack of #flood coverage remains significant #insurancegap as we head toward peak of #HurricaneSeason. In addition to coverage through @Fema #NationalFloodInsuranceProgram, dozens of private insurers offer flood policies,” Friedlander Tweeted.
It’s not always because the homeowner doesn’t want coverage.
“Most homeowners don't realize their property policy doesn't include #floodinsurance,” Friedlander, communications director for the Insurance Information Institute, said on his Twitter account.
That’s a big problem as 90% of all natural disasters involve flooding, he Tweeted.
Four insurance carriers got price hikes approved by the Florida Office of Insurance Regulation. Insurers must take part in a public hearing if they request rate hikes of more than 15%. Until this year, no public hearings had been required since 2013. The rate hikes approved for the four insurance carriers ranged from 21.9% to 33.5%, he told WINK.
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