Florida Property Insurance Market Crisis

Another Florida insurance carrier is declared insolvent. On March 4th 2022, a petition was filed to approve an order making the Department of Financial Services (“DFS”) the appointed receiver for Avatar Property & Casualty Insurance Company (“Avatar”). Avatar stopped writing new policies in Florida sometime in February of 2022.??Just a few weeks earlier, St. Johns Insurance Company was also declared insolvent.

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Some of the current policies that Avatar holds may be taken out by other prospective insurance companies. It is also anticipated that Florida Insurance Guaranty Association (“FIGA”) may cover Avatar’s outstanding claims. South Florida Sun Sentinel claims Avatar has about 38,282 residential and commercial polices as of 2021.

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FIGA has authorized insurance companies to collect a 1.3% assessment on all new policies and renewals to cover potential costs that they may face in the event the company becomes insolvent. This comes after assessment increases have already been enforced by FIGA to cover the costs of other companies that have also gone under such as Gulfstream Insurance and American Capital Assurance. The state has also now interfered with the private sector and has required that all policy holder’s file a notice of intent to litigate with the state before you can file a lawsuit against an insurance company for grossly underpaying your claim or a straight denial. This gives insurance carrier’s up to one hundred (100) days to evaluate your claim and loss. One hundred days of dealing with a loss before you can take significant action.

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The state of Florida currently has written legislation that allows policy holders to recover reasonable attorney fees and costs if they prevail in an action against an Insurance Company and obtain a judgment. However, the new notice to the state requirement mentioned above, that gives carrier’s additional time to evaluate and potentially seek alternative dispute resolutions, forces the policy holder to pay out of pocket for representation.?Again, more opportunities for the insurance company to do the right thing despite a long history of grossly underpaying claims, constant improper denials and even fraud. See Fla. Stat. Section 627.428.

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If insurers continue to go under, premiums will continue to rise. What we are seeing is a rise in premium costs and continued coverage limitations. For example, Citizens Property Insurance Corporation (“Citizens”) has added the Managed Repair Contractor Network Program to most of it’s policies. This effectively limits the policy holder’s water coverage to a $10,000 limit and allows Citizen’s, at their option, to elect to have it’s preferred contractor make the repairs Citizens deems fit. Otherwise, Citizen’s will pay 10k minus deductible (often $2,500.00) for losses that are covered under the policy. If Citizen’s denies your water loss, which is often the case, even if you prevail in a breach f contract lawsuit, the policy still only offers the $10,000.00 limitation (minus deductible) for the policy holders indemnity.

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Higher premiums, less coverage and less possibility of representation. Is it safe to call it a crisis now?