Florida’s new insurance commissioner is optimistic about homeowners’ rates

As the head of the Office of Insurance Regulation, Yaworsky is responsible for approving insurers' rate increases, monitoring their conduct in the marketplace and assessing fines. He grew up in the community of Rotonda West, has a social science degree from Florida State University and worked in both the Georgia and Florida offices of insurance regulation.

The Herald/Times met with Yaworsky at the office's headquarters in Tallahassee to discuss Florida's homeowners' insurance crisis and whether he expects premiums, currently the highest in the nation, to go down.

This interview has been edited for length and clarity.

You were nominated during a historic insurance crisis in Florida. Why did you want this job?

I get that question a lot. I get a mixture of condolences, and congratulations, I think, when I run into people. It is an unprecedented time in our market, probably the most challenging time that we've had in our market in probably the past 30 years. And I would not have taken this job if I didn't think I could do some good in it. By no means do I consider myself the foremost insurance expert in the world. But I thought I had a good idea of where we are and where we need to go.

What is the condition of the state's property insurance market?

The state's property insurance market has been in a state of deterioration for the past several years, compounded over the past five years by excessive litigation, costs of reinsurance rates rising at an unprecedented rate and the natural catastrophes that Florida has experienced. Those things have kind of combined together and created kind of this perfect storm, or cauldron, that's boiled over and just made our property market unsustainable.

READ MORE: Homeowners insurance in Florida is a precarious mess that was years in the making

The Legislature has done quite a bit about that litigation issue in recent years. Rates are still rising, though, and companies are going out of business or withdrawing from the state. When will homeowners start to see the effects ofthat legislation?

So we're about six months in since the most groundbreaking change in litigation space was passed by the Legislature and signed by the governor. And it was terrific because it took away the main driver of excessive litigation, which was the one-way attorney fee statute (a longstanding Florida law that required insurers to pay attorney's fees if they lost a civil lawsuit).

However, the rates that people are paying right now, No. 1, did not account for that change and the amount of litigation to take place. No. 2, the rates that are being approved right now, we haven't necessarily seen the data impact of that change in litigation.

Why is that?

It's gonna take time. So for example, any claim derived out of Hurricane Ian, which has had over 800,000 claims, all those are coming through the system now, and are governed by the prior law. ... So effectively, the system is still churning out litigation under the old mechanism.

You also mentioned reinsurance rates. Where does that stand? Are things looking better in that area? (Reinsurance is insurance for insurers to help pay storm-related claims.)

It's looking better. ... My first week here, we were looking at projections that were quite dire.

What do you mean by "quite dire"?

Reinsurance rate increases above 60%, 65%, across the board, for a number of our companies ... in Florida. The potential for many companies to have a solvency crisis because they could not pay their entire reinsurance coverage up front, because of the amount of the increase. Some reinsurers were indicating that they were gonna require all upfront payments, which would have been quite a bit of money.

We need reinsurance to have a functional market. We monitor this stuff very carefully. ... We're just now beginning to get data on what (rates insurance companies have gotten for reinsurance this year). And the initial results are pretty positive -- for us -- in the sense that, the rate increases are still substantial, but not quite where they were looking at the beginning of the year. And the payment terms seem to be more favorable.

Have you heard from Floridians who are frustrated by this crisis? And what do you tell them?

Absolutely. I tell them that we're all in this, every single one of us. It's hard to believe that there isn't anyone at (the Office of Insurance Regulation) that isn't paying for insurance. It's painful, though. I hear my hometown community, Charlotte County, I hear it from them. I hear from my parents. My parents hear it from their neighbors, who happen to know that I'm in this position. It's going to take time. It took us a long time to get into this. And it's going to take us some time to get out of this.

Lawmakers passed an"insurer accountability" bill this year that gives your office new powers and the ability to levy higher fines. Is that kind of an acknowledgment that the office has been too soft on insurers in the past?

I don't know if it's an acknowledgment that it's been too soft. I think it's definitely an acknowledgment that we need to make sure that companies are doing things that are treating consumers in a way that's fair.

So 80% of our market is domestic insurance companies. That's probably the exact opposite of most states, where 80% would be composed of large national insurance companies. Here, it's single-state domestics, some of which aren't very old, some of which may not have had, necessarily, the experience.

And I think what we need to reach over time with these companies is a place where they have proper procedures and policies in place that are upholding their terms of the contract, doing so efficiently, making sure claims are valid, are paid in a swift manner, and just generally, trying to put the consumer back in the place they were before any kind of incident happened.

What have you heard from insurance companies in response to the recent legislation?

It's been an interesting mix. There are some companies out there in Florida that just generally do a fantastic job. Even in this difficult market, they've managed their exposure well, they've handled things very well. A lot of those CEOs are supportive of the changes in (Senate Bill) 7052.

There was some concern on pieces of the bill when it came in, related mainly to the ability to attract capital into the state and some other things. But I think we wound up walking a really good line throughout 7052 that brought us to a place where you still will have future capital interested in coming here and playing in a good market that's understandable and stable.

Speaking of market conduct, you have, I'm sure, seen the reports of theseinsurance adjusters who have allegedthat insurers were illegally manipulating their reports to low-ball homeowners. What can you tell us about that investigation and your office's role within that?

The ability to speak individually on any particular investigation or examination that might be going on is something I can't do. But definitely, we hear things, we pick up on things, we gather a good amount of data from (the Department of Financial Services). If we're seeing anything that raises concern, we're definitely in the mix.

An examination does take time. ... But if we find instances of inappropriate behavior, fineable behavior or other behavior that we can take action on, we'll do it.

We've heard from victims of Hurricane Ian about not getting paid for their claims, or not getting paid on time. And your office's data shows, I think, like 52% of claims were closed without payment, which is a much higher rate than both hurricanes Michael (14%) and Irma (31%). What's going on with Ian claims? Are you seeing any kind of unusual patterns there?

When I first got here, the percentage of closed claims without payment was a bit surprising. There could be a couple of historical, or just factual, reasons why that may be.

Ian was a huge water event. And so you get into this classic discussion, unfortunately, for the consumer. A lot of consumers don't know that flood is not covered under their primary homeowners policy. ... And so that often leads to closed claims that would be unexpected. And so in a large percentage of Lee County claims, the homes were flooded, which is causing some of that.

But it is higher than we expect. And on the latest data call, we've added a number of new fields of specific reasons why a claim might be closed without payment. And so we're gonna gather that data and look and see what might be going on in that space. I will have that pretty soon.

Where do you see the state in the next year or two? Do you expect to see new companies coming into the marketplace? Do you expect a sign of the recovery to be lower rates for Floridians?

We've met with multiple parties that have come to the table already this year that are interested in either moving their existing company into Florida or starting a new company. ... So there's definitely capital interest coming into this state. We'll see how long that takes to fully form. I think we may see a couple by the end of the year.

Insurance markets are a complicated thing, but competition in just about any market is a good thing. We will eventually see some of the rate pressure recede. We may see a bit of a pressure recede in the reinsurance space as well. That's a global, unregulated market and that has a huge impact on the rates in Florida today.

I hate saying this every time, "the train is on the way," but eventually there will be ... a good amount of rate stabilization and decrease.

Decrease being the key word.

I believe so. I think so. We've lost 13 companies over the past several years. ... And I think bringing in new capital, making sure that the capital that is coming in ... is attached to qualified people that have experience in insurance, have the right business plan, have a long view of the insurance market in Florida, is a very good thing. It will help.

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