One of Florida’s leading property insurers, Orlando-based St. John’s Insurance, was deemed insolvent this weekend by the Florida Department of Financial Services and will soon be subject to liquidation.
The measure is another blow to Florida’s increasingly volatile insurance market that has seen homeowner coverage jump in price by the thousands. In early February, St. John’s became the 6th carrier this year that has pulled out of Florida, citing an unstable market and heightened levels of risk due to worsening storm seasons and aging infrastructure.
St. John’s has over 160,000 policies, according to the Florida Association of Public Insurance Adjusters. Slide, an insurance company based in Tampa, agreed to take on most of the St. Johns policies in Florida, and policyholders will be moved to Slide starting this week, according to Insurance Journal.
“To protect policyholders, DFS worked with the Office of Insurance Regulation on a plan to transition St. Johns Insurance Company policies to another carrier ensuring there is no loss in coverage,” Audrey Walden, Deputy Communications Director for state CFO Jimmy Patronis told The Capitolist. “Ultimately, for the policyholder, this will be one of the most seamless transitions. The plan to protect policyholders was approved in court this morning. Any existing claims will be covered through normal guaranty association processes.”
Florida’s capricious homeowner insurance market has led to a surge in policies at the state-backed Citizens Property Insurance Corp., which was created under the pretense of it serving as a ‘last resort’ for consumers, but has grown to the level a dominant player in the market. As of Jan. 31, Citizens had 776,790 policies, about a 75 percent increase since 2020.
The announcements come as state lawmakers consider proposals to address the troubled industry, which has shed policies and sought hefty rate increases to try to reduce financial risks, including Sen. Jeff Brandes, who recently lambasted the structure of Florida’s property insurance system, insinuating that residents are entrapped in a ‘crisis.’
“This is an all-hands-on-deck situation. We are not far off from homeowners paying more for insurance premiums than the mortgage,” said Brandes. “Florida’s property insurance rates are going up 30% a year, how much money does the state spend on research property insurance…zero.”
In the last 3 weeks, 4 Florida homeowners insurance companies have told regulators they can’t continue writing coverage…3 have stopped totally and one non renewing over 50k, this is just beginning. How many more will pull back before the legislature puts for a comprehensive plan
— Jeff Brandes (@JeffreyBrandes) February 15, 2022
As the precarious situation worsens for private insurance corporations, many are arguing for legislative change that builds upon what was passed during the previous Legislative Session.
“Despite legislative reforms passed during the 2021 Legislative Session, Florida’s homeowners have continued to see dramatic property rate increases. At the same time, the insurance industry is losing billions to unnecessary lawsuits from third-party contractors,” the Florida Association of Insurance Agents said. “For the first three quarters of 2021, financial results show that property insurers had $1.22 billion in underwriting losses.”
A Senate bill, SB 1728, recently approved by the Banking and Insurance Committee, would provide changes to reduce rates such as allowing insurers to offer policies that cover just the depreciated value of a roof.
“The Legislature finds that private insurers are unwilling or unable to provide affordable property insurance coverage in this state to the extent sought and needed. The absence of affordable property insurance threatens public health, safety, and welfare and likewise threatens the economic health of the state,” says the preamble of the bill. “The state, therefore, has a compelling public interest and a public purpose to assist in assuring that property in this state is insured and that it is insured at affordable rates so as to facilitate the remediation of damaged or destroyed property in order to reduce the negative effects otherwise resulting to the public health, the economy of the state, and to the revenues of the state and local governments.”