Top 10 Southeast Insurance Journal Stories of 2022

December 29, 2022 by

Some of the best-read and most-commented-on stories in the Southeast this year were mostly about Florida’s imploding insurance market, insurer insolvencies, and hurricanes, but also included news on Georgia’s auto insurance rates and proposed legislation on roofs.

Three Florida-based insurers slipped into insolvency in 2021 in a market that has been squeezed by a juggernaut of claims litigation, exaggerated roof claims, hurricanes and rising reinsurance costs. In February, United Property & Casualty Insurance Co., one of the largest carriers in the state, set off alarm bells that more insolvencies were on the way when it announced it would stop writing new business in the Sunshine State.

St. Johns Insurance Insolvent, to be Liquidated, Florida DFS Reports

Just three weeks later, another large carrier, Johns Insurance, was put into liquidation by state regulators. Four more would follow before summer had turned to fall.

When Hurricane Ian ground its way across Florida in September, it left a path of destruction from high winds, storm surge and heavy rains. But when the dust settled, researchers found that many newer homes had sustained only minimal damage while older structures had roofs ripped off or were completely washed away. The disparity showed that Florida’s vaunted building codes, toughened several times since the late 1990s, made a big difference, according to reports from university researchers.

Two months before Florida lawmakers were set to convene in a second special legislative session to tackle the insurance crisis, officials were taken aback by the large number of public adjusters and plaintiffs’ attorneys that had descended on parts of southwest Florida after Hurricane Ian. The “swarms” prompted state Chief Financial Officer Jimmy Patronis to hold a news conference and call for an outright ban on assignment-of-benefits agreements and limits on fees paid to public adjusters. At the December special session, lawmakers granted one of his wishes and outlawed AOBs, but did not address public adjuster regulations.

The Demotech financial rating firm in July created a firestorm of controversy when it informed 17 Florida insurers that they would soon be downgraded or lose their stability ratings altogether, due to financial losses and flagging surplus levels. Some in the industry said the downgrades were not unexpected, given Florida’s deeply stressed market. But the state’s chief financial officer, the insurance commissioner and the Florida Association of Insurance Agents cried “foul” and fired off letters objecting to it. Officials also hired a consulting firm to find alternatives to Demotech. Ultimately, the rating firm downgraded only three carriers, while others voluntarily withdrew from the firm’s review process.

If you haven’t noticed, the sport known as pickleball has gone crazy across the country, and as many as 15 high-end pickleball clubs are now being built in Florida. With Florida’s insurance market in trouble, though, developers have found it difficult to find construction risk and liability insurance. And the big sticker shock won’t come until the clubs are built and the owners have to find property insurance. Some are hoping that insurance reforms passed at the Legislature’s December special session will soften the market a bit.

Meanwhile, as Florida lawmakers contemplated repealing laws and codes that required full roof replacement when only a small part of the roof is damaged, a Georgia state representative fired up the insurance world by introducing a bill that would have done the opposite. Florida insurance buffs decried the bill, and it died in the Georgia House of Representatives.

In the long war between restoration companies and insurers in Florida, contractors suing carriers in assignment-of-benefits claims is nothing new. And insurers have long argued that some construction firms are colluding with adjusters and law firms to jack up claims and churn lawsuits. A Stuart, Florida, roofing and restoration company in January brought in a new weapon: The contractor claimed in a federal lawsuit that United Property & Casualty Insurance Co. had conspired with adjusters to systematically deny and underpay thousands of AOB roof claims after Hurricane Irma hit the state in 2017. A federal judge in October dismissed the suit on something of a technicality. He noted that federal law leaves it to states to regulate the business of insurance. A state suit is pending.

Georgia Insurance Commissioner John King, in the middle of a close reelection campaign, publicly shamed Allstate Insurance after it announced a 25% increase in auto insurance rates in the state. The insurer had employed a “file and use” method, as it’s known in Georgia – raising rates, then asking for approval, as allowed by law. But King said Allstate had bypassed his office, prompting some in the industry to say that the commissioner did not understand the rate review process.

The Florida Legislature met in May, in the first special session on insurance. But after more carrier insolvencies and a continued flood of claims litigation, lawmakers were called back in December to leave no stone unturned. After just three days, the House and Senate approved a sweeping reform package that will repeal the state’s one-way attorney fees, ban assignment-of-benefits agreements, offer a new layer of state-backed reinsurance, and require Citizens Property Insurance policyholders to also buy flood insurance, among a number of other changes.

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