Property insurance companies have always been wary of the Florida market because of the constant dangers of weather-related damage on a large scale. That is why Florida stands near the top of the list regarding insurance costs, with an average annual premium of over $4,000. This is nearly three times the national average. Moreover, according to the Insurance Information Institute (III), insurance premiums in this state are expected to increase to about 40 percent this year.

Separately, according to a Florida insurance attorney, the costs of insurance increase is due, in part, to the high levels of litigation and insurance bad faith claims. As per Florida Statutes section 624.155, bad insurance faith claims occur when an insurance company fails to settle a claim, even if they can do it honestly and fairly. Such insurance disputes follow a similar trend.

Florida Insurance Industry

In the challenging Florida environment, the home insurance market is facing a crisis as more and more insurers choose to pull out of the state or go out of business. In 2022, nine companies left the market, affecting tens of thousands of people. Among the insurance trends one is expected to see in 2023 include the following:

Rates Will Skyrocket

Unfortunately, when it comes to property and homeowners’ insurance, Floridians are familiar with the word ‘crisis.’ The Florida insurance market is on the brink of a collapse, with insurance companies leaving the state, revoking policies, limiting coverage, or raising premiums by double digits. In the past years, rates have increased considerably and are expected to skyrocket, leaving many property owners struggling to find affordable coverage.

Behind this crisis stands roofing scams, lawsuits, and storm hazards. That led to a sharp escalation in homeowners’ insurance policy rates and uncertainty over the future solvency of some of the state’s providers. Some insurers still offer property insurance, yet the news that some companies have pulled out or plan to exit is unsettling.

On the other hand, per data from the Florida Office of Insurance Regulation, the state sees a higher number of homeowner lawsuits than other states. In fact, about three-quarters of all lawsuits filed across the United States in 2019 were in Florida. And this only occurred due to insurance companies failing to provide a fair settlement, refusing to pay a valid claim, or attempting to avoid paying a claim.

All insurance companies are expected to conduct claims in good faith. However, due to the weather trends in Florida, and considering that more hurricanes have hit the state more than any other state, not all insurers act in good faith, risking being held liable for their actions.

Florida May See More Roofing Insurance Issues

Probably one of the most significant issues in Florida at the moment is home insurance fraud, being driven by roofing claims. Even though Florida accounts for only 9 percent of the United States’ home insurance claims, it is home to almost 80 percent of the country’s home insurance lawsuits.

This recent law passed by Florida’s legislators aims to reduce roofing-related price hikes in the state. In addition, the law protects homeowners from being discriminated against for the age of their roofs. Moreover, insurance companies are prohibited from denying coverage solely based on a roofing system age if the roof is fewer than 15 years or has a life expectancy of five years when the policy is issued.

That said, insurers must decide if they are comfortable with such restrictions or continue leaving Florida. Not to mention that hurricane Ian caused widespread damage and financial fallout, causing the already-teetering property insurance market to collapse due to increased home repair expenses.

In the aftermath of hurricane Ian, thousands of people struggled with insurers to pay their claims. Some have been denied outright, while others have been delayed for months. Fraudulent scams have put additional pressure on insurance companies, some unable to adhere to Florida law requiring a 90-day timeframe within which the claim has to be either denied or paid.

The Trend of Personalized Premiums

Generally, in such an environment, insurance companies need to tighten their belts. However, it has been anticipated that some insurers will implement new technologies and capabilities to increase revenue and improve operational efficiencies. Because Florida’s geographic location makes the state highly vulnerable to severe storms and hurricanes, the homes near the peninsula’s interior must be fully protected. In fact, Colorado State University suggests that the hurricane season is expected to be much more severe than in previous years.

Beyond the trend of having to pay up a lot more to protect your home, premiums are more likely to become highly personalized. With the use of advanced tech, property insurers might be able to extract real-time data on the loss of exposure of consumers. As such, advanced analytics can be deployed to adjust policy prices, identify exceptions, and optimize business strategies.

Affiliated Insurance Companies Charge Higher Fees

Like many other states, Florida permits insurers to be charged for services by their sister and parent companies. Such an affiliated company can charge the insurer for commission or charge fees for handling claims. Suppose an insurer’s sister company charges a commission, then the insurer might need to pay a percentage of these premiums to the sister company. That murky relationship between the insurance companies and their affiliates is frustrating. For many years, questions whether these fees are for legitimate services.

Because insurance companies continue to fail, state officials try to pinpoint the root of the problem. After reviewing some reports, financial auditors found a common issue: affiliated insurance companies charge high and unnecessary fees, draining the host insurance companies dry. This remains a significant financial burden, leading to the downfall of many insurers in Florida.

As the Florida insurance market is teetering on the brink of collapse due to this combination of skyrocketing rates, high fees charged by affiliated insurance companies, roofing claim issues, and constant storm hazards, how soon this chaos can be managed remains to be seen. The truth is that while there are laws to mitigate the situation, only time will tell.

What to Do If Your Insurance Company Pulls out of Florida or Acts in Bad Faith?

If your property insurance company decides to pull out of Florida, here is what you should do:

  • Call your insurance company, speak to a representative, and find out the reason for the cancellation. It is vital to find out how long you have to get new insurance coverage, as an insurance company that goes out of business and one pulling out of the state might have different timelines.
  • Begin asking for quotes. It is crucial to start gathering quotes right away. Because many other Floridians are in the same situation, getting new coverage might be challenging. Start immediately to ensure you have the time to choose the right insurance policy.
  • Complete any house repairs. Finding new insurance coverage will be more straightforward if your home is in good condition. Moreover, home insurance companies will look for any weather-proofing work you have done.
  • Get help. If you believe you have been mistreated, get legal help from a bad-faith insurance attorney. If you need help finding new coverage, it is best to contact the Florida Department of Insurance Regulation and ask for assistance in helping you get coverage.

On the other hand, if you think your insurance company has operated in bad faith, you can file a bad faith insurance claim. Some of the most common bad faith actions from insurers in Florida include unreasonably denying coverage or payout or refusing to settle, defend, indemnify, or investigate a claim. If your insurance company takes too long to evaluate your claim, it might eventually refuse to pay. That is usually done to force you to give up pursuing your claim.

To succeed on your insurance bad faith claim, you must prove that the insurance company acted in bad faith, and you can do so by showing that the insurer has:

  • Knowingly failed to investigate your property claim in a reasonable manner
  • Intentionally denied or delayed payment of benefits owned
  • Refused to pay the benefits without a legitimate reason
  • Failed to evaluate the evidence in your claim correctly

If your insurer has unreasonably delayed payment of benefits or your insurance claim is denied, you may be eligible to file a bad faith claim against your insurance company.

However, getting help from a skilled bad faith insurance attorney is vital if you are involved in a dispute with your insurer. A lawyer specializing in bad faith claims knows the ins and outs of Florida’s bad faith laws and will know how to proceed best to validate your claim. If you feel that your insurer has not acted in good faith concerning your insurance claim, it is in your best interest to speak to an attorney right away. After all, you do not want to let insurance companies take advantage of you and your money.

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Mashum Mollah
Mashum Mollah is an entrepreneur, founder, and CEO at Viacon, a digital marketing agency that drives visibility, engagement, and proven results. He blogs at BloggerOutreach.io.

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