Facing challenges, two Florida insurance companies have stepped forward, seeking rate hikes to mitigate spiraling costs and surging claims.
In hearings held this week, representatives from Castle Key (a subsidiary of Allstate) and Amica Mutual Insurance made their cases to the state's Office of Insurance Regulation (FLOIR), overseen by a commissioner appointed by Gov. Ron DeSantis. They argued for increases exceeding 50 percent as operating losses mount due to payouts that far exceed premiums collected.
During its meeting on Tuesday, Amica Mutual appealed to Commissioner Michael Yaworsky for a 54.1 percent rate increase. However, the company said the rate adjustment would only affect about 500 out of 17,000 homeowners who have "fire dwelling policies," such as those with secondary homes or rental properties.
By The Numbers
Amica said Tuesday that the average dollar amount paid by policyholders will be $451 under the new rule, up from $295.
"It's a very small line of business for us," Mike Petrarca, Amica's senior assistant vice president said during the public hearing, adding that its Florida dwelling unit has "about 500 policies" and comprises "about one tenth of 1 percent of our Florida premium and policy count."
Amica maintains that its operational losses exceed the premiums collected, leading to a reported loss ratio of 337 percent. In other words, for every dollar of premiums received, roughly $3.37 is spent on operational expenses.
Such figures, Petraca contended, necessitate substantial rate adjustments to ensure continued coverage for Florida's homeowners.
"About 63 percent of our policyholders will see an increase, if approved, of less than $200," Petrarca said, noting that the company's policy metrics indicate that the change is warranted.
FLOIR has not issued a ruling following Tuesday's public hearing and will continue to accept public input until March 5.
Newsweek has reached out to Amica Mutual by email for comment on Wednesday afternoon.
During its Wednesday meeting, Castle Key made their case to Yaworsky to accept their 53.5 percent rate increase proposal for condominium owners policies, which they submitted in March of last year.
Although the increase directly affects approximately 105,000 customers, local news station WFTS Tampa Bay reports that these customers have already been paying the higher rates since May 2023.
"The cost of providing reliable protection for Florida homeowners has risen dramatically, and we're taking actions to ensure we can protect customers over the long haul," Allstate said in a statement shared with Newsweek via email.
"We're committed to the state of Florida and confident recent insurance reforms will address longstanding challenges in the state."
The FLOIR has not issued a ruling following Castle Key's public hearing on Wednesday and will continue to accept public input until March 6.
A Wider Crisis
As Castle Key and Amica Mutual Insurance press for unprecedented rate increases, their actions spotlight the broader, intensifying crisis within Florida's insurance sector. The predicament is symptomatic of systemic issues plaguing the state's insurance industry, driving premiums to the highest in the nation and prompting an exodus of insurers.
Florida homeowners are grappling with the nation's steepest insurance premiums, with the average annual cost soaring to $6,000, significantly outpacing the national average of $1,700. The surge in premiums is fueled by a host of challenges including sticky inflation, litigious environments fostering excessive lawsuits, pervasive fraud, and the heightened risk of severe weather events attributed to climate change.
Such conditions have escalated costs for insurers and have led to the departure of major players like Farmers Insurance from the state's market.
The departure of private insurers has left many Floridians reliant on the state's insurer of last resort, Citizens Property Insurance, Newsweek previously reported. That reliance has seen Citizens' policy numbers swell dramatically, raising concerns over its capacity to fulfill future claims.
The state's response, welcoming six new insurers, points to its efforts to stabilize the market, yet the fundamental issues persist, leaving homeowners in a precarious position.
In an endeavor to mitigate the financial strain on homeowners, Florida's Senate leaders have proposed SB 7074, aiming to reduce insurance premium taxes for properties valued at $750,000 or below.
The legislative measure seeks to offer modest relief against escalating costs, yet critics, including Democratic Representative Anna Eskamani, argue it falls short of addressing the core challenges.
Correction 2/22/24 3:32 p.m. ET: Corrected to remove reference to AAA leaving Florida as an insurer.
Update 2/22/24: 3:38 p.m. ET: This article has been updated to include comments sent to Newsweek by Allstate.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
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