Southern Fidelity Insurance Company said the biggest loss driver has been non-catastrophe flooding and the damage it causes. | By Marvin Nauman/FEMA
Rate increases imposed on Southern Fidelity Insurance Company policyholders even before their Aug. 7 hearing with the Florida Office of Insurance Regulation (OIR) had at least one policyholder upset enough to speak against the request.
Southern Fidelity appeared before the Florida OIR in the state agency’s first virtual rate hearing to request an average 31.1% increase in its homeowners multi-peril rate filing.
Jesse Rehberg, actuarial manager for the insurance carrier, told the panel the actual need was 40%, and suggested amending the rate request to that higher amount.
Susanne Murphy the deputy commissioner for property and casualty at Florida OIR, rejected that request during the hearing.
“To be clear, the office will not consider a request for an amendment to increase the rate,” Murphy said in the hearing.
Non-catastrophe water losses, such as those caused by leaking pipes and the damages they cause, were blamed for losses driving the rate increase request.
“Those losses have increased significantly in the last 18 to 24 months in this program, and they are a big component of the loss drivers in this program,” Rehberg said in the hearing. “Generally, these claims are represented either by a public adjustor, a water mitigation company or a lawyer. Those claims generally run about double the non-represented claim.”
Southern Fidelity’s average non-represented claim was $10,997. “When that claim is represented, it increases to $24,136,” he said.
The assignment of benefits law passed to control rising litigation costs had limited affect on the company, causing a 5% savings for the company, Klayton Southwood, consulting actuary for Southern Fidelity, said.
Rate hikes for reinsurance, policies Southern Fidelity purchases to cover its losses on the policies it issues, were another reason for the rate hike increase, Rehberg said.
He said the company is converting all HO-3 preferred insurance policies to standard policies
Sandra Evans, a policyholder since 2011, said her insurance bill increased 122.44%, up from $753 to $1,675. Evans said she doesn’t live in southern Florida and her house has wind mitigation installed.
“I understand some rate increase, but this is unreasonable,” she said in the hearing.
She also criticized the timing of the meeting, saying it should have been postponed until the public can participate.
“I am retired so I have time to do this,” she said in the hearing.
Murphy told her the hearing was held quickly because the insurance company chose to impose the rate hikes on Aug. 1, knowing that they might have to refund policyholders if the request was denied or reduced.
“Because it was implemented on Aug. 1, we felt it was important for us to have this hearing as quickly as possible to make a decision on whether or not the filing was subject to approval or disapproval,” Murphy said in the hearing.
She also explained rate hike requests are an average of all affected policyholders, with some policies getting increases above or decreases below that amount.
Public comments can be made on the rate hike request by emailing to: RateHearings@floir.com with the subject line: Southern Fidelity Insurance Company by Aug. 21 at 5 p.m.
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