With American Mobile Out, Florida’s Mobile Home Insurance Market Seems to Have ‘Fallen Apart’

Reinsurance in Florida’s long-stressed property insurance market was supposed to have stabilized this year – with only moderate rate increases and more availability.

But those calmer waters apparently have not reached the mobile home market, and Florida insurance agents are now reporting that higher reinsurance costs have forced at least one carrier to cancel coverage for mobile homes and manufactured homes. Agents said they can find very little available coverage, especially for mobile homes that are more than two years old.

“One of our niches has been manufactured homes and mobile homes. But now the market has absolutely fallen apart in Florida,” said John Gardner, of Fort Myers, principal at Lee County Insurance agency.

The trouble began in March, when St. Petersburg-based American Mobile Insurance Exchange sent a notice to Florida agents and insureds, notifying them that more than 1,100 policies would be canceled in just 45 days.

“These cancellations have been issued as part of AMIE’s plan to withdraw from the mobile homeowners market in Florida prior to the beginning of the 2024 hurricane season,” the bulletin reads. “This plan to withdraw is due to deterioration of AMIE’s financial condition.”

Agents are also responsible for the return of any unearned agent commissions associated with the affected policies.

Florida law requires most cancellations to give a 120-day notice. But American Mobile’s notice said that Florida Statute 627.4133(2)(b)6 allows a shorter period, if regulators approve, for a few reasons including hurricane risk and lack of adequate reinsurance.

American Mobile CEO Jeffrey LeGare and others with the company could not be reached for comment. But the memo to agents said the policies were canceled ahead of the 2024 hurricane season, one that climate scientists have predicted to be unusually busy. And agents have reported that American Mobile officials have said that the exchange’s reinsurance costs this year were higher than the company’s written premium on mobile home policies in the state.

American Mobile, less than four years old, had been seen as a lifeline for at least part of the mobile home market after other insurers had pulled back from litigation-heavy Florida in recent years. But financial issues may have been building for months. The exchange, part of K2 Insurance Services, in April 2023 was acquired by a K2 affiliate known as Summit Acquisition Inc., according to a consent order with the Florida Office of Insurance Regulation.

Then, American Mobile last November withdrew its filing with OIR on a planned takeout of mobile home multiperil policies. And in April, American Mobile had its Demotech financial stability rating withdrawn. It was unclear if the withdrawal was voluntary or if it was initiated by the Demotech rating firm. In a follow-up bulletin to agents and insureds, the exchange said in late March that it had struck a deal with American Traditions Insurance Co. to assume about 8,000 of its mobile home policies.

American Traditions, which is not affiliated with American Mobile, is rated “A Exceptional” by Demotech and “BBB” by the KBRA rating firm.

“The coverage provided by ATIC will continue until the current expiration date of each AMIE policy and the premium will remain the same during that period,” American Mobile’s follow-up notice explained. Renewals will be subject to ATIC’s underwriting guidelines and premiums, the bulletin said.

But even ATIC, reportedly near its capacity, has recently limited coverage to newer mobile homes – those manufactured in 2022 or sooner, Florida agents said. Other carriers have also limited coverage to homes built in 2020 or newer. Older mobile homes in some cases were not built to modern wind-resistance standards and are more vulnerable to damage, studies have shown.

That means one thing: Agents have little choice but to turn to Florida’s state-created Citizens Property Insurance Corp. to cover older mobile homes – at a time that Citizens is hoping to continue a depopulation program and reduce its policies and exposure.

“If it’s older, Citizens is it,” Gardner said.

In the last year, Citizens, in fact, has seen its mobile home policies climb almost 10%, from 79,158 to 86,808, Citizens data show. Part of the growth is likely due to American Mobile’s cancellations and other insurers’ limitations – as well as the fact that Citizens’ rates continue to be some of the lowest in many parts of Florida, Gardner said. That comes despite a significant increase in Citizens’ mobile home rates in 2023.

For all coverages, Citizens on July 12 had more than 1.22 million policies in force, a slight drop from a year ago but an increase from May’s numbers.