Florida insurance firms, not homeowners, reap benefit of $2 billion taxpayer-financed fund
That would barely make a dent in the double-digit increases in premiums millions of state homeowners have endured for years — if those companies actually extend those savings to their customers.
The law creating the fund provides no guarantees that the companies will pass on the savings to consumers. Many are simultaneously filing for rate increases to cover the higher cost of private reinsurance, which they buy to cover themselves in the event of major disasters.
Republican state Sen.
He said the
The Reinsurance to Assist Policyholders, or RAP program, was approved during a special session called by Gov.
Insurance companies that wanted to tap into it this year had to hustle if they wanted to meet the
“OIR is expediting the review of these filings and ensuring submitted filings are in accordance with the recently passed legislation,” said
Opponents have called it an industry bail-out that won’t result in savings to consumers. It looks like they were right based on the savings companies are offering.
“This is not just what we feared, but what many legislators said would happen,” said
On a positive note, Newton said, this reinsurance plan is backed by
“As long as it can offer reasonably priced insurance, the market will be stable, sort of, and private companies will have to keep their rates down too,” Newton said. “Citizens is what holds it all together. Oh, and Citizens has been making money most years despite having the highest risk customers. Guess it is not that hard to make money in the insurance biz.”
Citizens recently asked for an 11% rate increase.
On average,
Insurance costs have risen since DeSantis was sworn in from
Reinsurance is insurance for the insurance companies to cover claims they don’t have the capital to cover themselves. Reinsurance companies are not regulated by the state and have jacked up their fees as Florida’s insurers have become more dependent on them to cover catastrophic claims.
The RAP program provides a breather for those domestic insurers, allowing them to tap into the
The catastrophe fund kicks in when a hurricane causes
That money won’t go to insurers unless there is an actual disaster, such as a major hurricane, and they need it to cover damage claims.
The 68 separate rate filings by 59 companies show how much they would theoretically save by tapping into that free money. The premium savings range from a low of 0.7% to a high of 3.9%, with most in the 1% to 2% range. Many of those rate changes wouldn’t take effect for months.
For the average homeowner, that means a savings of anywhere from
The companies submitted pages of documentation and worksheets demonstrating how much savings they could pass on to their policyholders.
But the rate filings are all over the map. Some spelled out the dollar amount they could return to policyholders, while most only showed a percentage reduction of what they recouped that could be passed onto policyholders. Several shielded their plans as trade secrets, a tactic that troubled state Rep.
“Folks are in the dark and desire answers,” Eskamani said.
Some companies ran into trouble calculating their estimated premiums, damages and rate rollbacks, and state regulators had to point out and get them to correct their errors. In one case, Officials told Berkley it was using the wrong numbers on growth to determine insurance premiums and suggested a way to get a more reasonable estimate of savings.
At least one company, Foremost, ran numbers and decided it wasn’t worth it to participate until OIR officials convinced them otherwise.
Some companies applying for RAP have been struggling financially.
United Property and Casualty of
United stopped issuing new policies in February and is considering a sale or merger to stay afloat, insurance industry trade publications reported. It recently asked the state for a 15% rate hike.
“Our fears are being confirmed that the special session was more about bailing out the insurance industry than giving consumers a break,” Eskamani said.
“Citizens is becoming the insurer of only resort,” Eskamani said. “None of this is sustainable at all.”
©2022 Orlando Sentinel. Visit orlandosentinel.com. Distributed by Tribune Content Agency, LLC.
Health Insurance Market to See Huge Growth by 2027: Allianz Group, State Farm Group, Zurich Insurance Group
Carpe Data Appoints William Magowan as Chief Revenue Officer
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News