Two latest studies mirror developments in Florida’s property insurance coverage market, together with the continued progress of surplus strains’ enterprise and an uptick final yr in litigation prices for carriers.
The Florida Surplus Traces Service Workplace reported this week that the admitted market and surplus strains’ business books each grew in complete written premium by greater than 42% in 2023, persevering with a gradual rise in premium since 2018.
The admitted market carriers’ business property premium written jumped from $8.7 billion in 2022 to greater than $12.5 billion final yr, the FSLSO famous in its business property market white paper, posted July 15. The non-admitted market, made up largely of surplus strains insurers, noticed business premiums rise to virtually $7 billion, up from $4.8 billion in 2022.
The FSLSO stated the will increase are the results of greater charges and premiums for policyholders, necessitated by inflation, together with escalating labor and materials prices.
“Regardless of these challenges, the market’s means to broaden underscores its resilience and adaptableness in assembly the evolving wants of business property house owners throughout the state,” the report stated.
Surplus carriers’ business coverage counts additionally rose, mirroring the general progress for extra and surplus insurers in Florida within the final three years, as main market insurers have raised charges and in the reduction of on protection in a lot of the state.
Checked out one other manner, the admitted market, whereas nonetheless rising in complete premium, continues to lose some market share to surplus strains. In 2018, the admitted market held 70% of the Florida property insurance coverage market. However by 2023, that share had dropped to 64%, FSLSO famous. The excess strains’ share has risen, from 30% in 2018 to 36% final yr. The admitted market knowledge doesn’t embody Florida’s largest property insurer, the state-backed Residents Property Insurance coverage Corp.
The best share of the excess strains’ business enterprise was for higher-end properties. These paying $1,000 to $5,000 in premium make up virtually 29% of the excess strains’ business protection enterprise. Insurance policies with greater than $1 million in protection noticed a “dramatic surge” in 2023, with a 72% soar in coverage depend and a 33.5% rise in premium.
“Such sharp will increase sign a rising demand for high-value insurance coverage protection to safeguard premium business belongings,” the excess strains workplace wrote.
The FSLSO report didn’t point out litigation as a price issue. However the Florida Workplace of Insurance coverage Regulation’s July report on property insurance coverage stability famous that in 2023, Florida property insurers paid virtually $3.5 billion in protection prices and containment bills, which incorporates lawyer charges.
That determine is up sharply from 2022. The DCC prices had fallen from a earlier excessive of about $3 billion in 2021 to $2.9 billion for 2022, after Florida lawmakers ended pricey assignments of advantages and one-way lawyer charges in claims disputes.
The soar in litigation prices for 2023 possible is a one-year blip – the results of the tens of 1000’s of lawsuits that plaintiffs’ companies rushed to file earlier than a significant tort reform regulation took impact final summer time. Different knowledge point out that claims litigation statewide is on the wane: Residents officers reported final month that litigation charges for non-catastrophe claims has dropped from a excessive of 14% in 2020 to six% in 2023.
The Florida OIR report, required twice a yr by 2022 statute, reveals that authorized service of course of filings have continued to drop since late 2021. Whereas the LSOPs, that are tracked by the state Division of Monetary Providers, spiked a bit in 2023, the amount has diminished in 2024.
Providers of course of for task of advantages litigation even have dropped sharply since 2019, when lawmakers instituted early however restricted AOB reforms. Notices of intent to litigate have fallen since a excessive of greater than 8,000 in February 2023, OIR famous. Precise lawsuits on residential claims, measured with civil treatment notices filed, spiked in 2023, then fell, then jumped once more early this yr.
And an information set that has been quoted greater than another additionally reveals enchancment. The OIR has beforehand reported that in 2019, Florida accounted for 8% of householders claims in the USA, however 76% of the owners lawsuits filed. That statistic had been cited repeatedly by insurers, lobbyists, and lawmakers because the tell-tale snapshot that confirmed what was improper with Florida’s litigation guidelines earlier than reforms had been enacted.
By 2022, that ratio had mellowed a bit: Florida claims had risen to fifteen% of the U.S. complete, and lawsuits had dropped to 71%, in keeping with the OIR report, primarily based on knowledge from the Nationwide Affiliation of Insurance coverage Commissioners.
The OIR report can bee seen here. The FSLSO report is here.
Related: Florida Surplus Lines Saw ‘Monumental’ Growth in February
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