Watch out, homeowners. Your insurance rates are about to jump.

Florida homeowners had better watch their wallets in 2020 -- and ask their insurance agents to shop for cheaper deals.

The torrent of insurance price hikes predicted after Hurricane Irma barreled up Florida’s gut in September 2017 is here.

On Friday, executives of National Specialty Insurance Co., which covers nearly 50,000 policyholders in Florida (including about 20,000 in South Florida), were forced to appear before state insurance regulators in a public hearing in Tallahassee to justify the company’s requested 28.1% average statewide rate increase.

A week earlier, officials of Capitol Preferred Insurance Co., which insures a similar number statewide and in the tricounty region, also had to go to Tallahassee to explain why they need a 36.5% rate hike beginning Saturday that would cost 20,000 of its customers an extra $40 a month.

That followed a public hearing in December over Edison Insurance Co.'s bid to hike rates by an average of 21.9%, amounting to about $30 a month for its 58,000 Florida customers.

Three public hearings in two months is significant. State law requires private-market companies to participate in public hearings if they propose statewide rate increases averaging more than 15%. (Public hearings are required for state-run Citizens Property Insurance Corp. each year regardless of what it requests).

Prior to the Edison hearing, the last company to propose homeowner insurance rate hikes large enough to trigger a public hearing was Fidelity National when it sought a 28.1% average hike in May 2013.

Other pending rate requests that did not require public hearings include:

12.4% from Universal Property & Casualty, the state’s largest insurer, that would take effect May 25.

14.6% for customers of Centauri Specialty, taking effect beginning May 15.

12.1% for Avatar’s 27,614 policyholders, effective April 1.

13.4% for Florida Peninsula’s 45,000 “Preferred” policyholders, effective May 1. The company just raised rates for this program 5.4% on Aug. 1 and 4% on Nov. 1.

14.7% for Florida Peninsula’s 55,000 “Elite” policyholders, effective May. 1. Average rate hikes of 7% took effect for this program on Aug. 1 and 4.3% on Nov. 1

At their public hearings, executives of Edison, Capitol Preferred and National Specialty offered varying explanations for their rate requests.

But factoring into each were increased costs of reinsurance -- which is multimillion-dollar guarantees of capital each company is required to purchase every year to ensure they have enough money to pay all claims after a hurricane or other catastrophe.

It’s also known as insurance for insurers. Prior to Hurricane Irma, the state enjoyed a decade-long break from hurricanes, during which most companies never filed for reinsurance payments. That brought reinsurance costs to record low levels and helped keep homeowner insurance rates low. But then Irma caused more than a million claims and $11 billion in losses.

Irma did not immediately trigger higher reinsurance rates because most companies were able to make favorable deals for the 2018 storm season before the cumulative cost of Irma claims came into focus. Experts said it might take a couple years before Irma’s effects on homeowner rates would be felt.

Then Hurricane Michael caused $7.4 billion in damage in the Panhandle in 2018. And Hurricane Dorian, though it generated just $19 million in damages in Florida, kept the devastating power of hurricanes fresh in reinsurance officials’ minds as it caused human and financial ruin in the Bahamas.

In 2019, reinsurers hiked rates as much as 25%. This year, reinsurance rates are likely to increase by up to 20%, insurance ratings firm A.M. Best recently projected.

Another major factor behind higher insurance rates -- sharp increases in lawsuits by plaintiffs attorneys representing homeowners or repair contractors -- has been a source of complaints by insurers for much of the past decade.

James Gragonella, president and CEO of Capitol Preferred, told regulators from the Florida Office of Insurance Regulation at his company’s public hearing on Feb. 7 that lawsuits against his company over mostly non-weather-related water damage claims increased from 148 in 2016 to 1,077 in 2019 -- a 727% increase.

Combined with three other rate increases by the company that have taken effect since June, the company’s customers face a cumulative 112% increase over the past year if the most recent request is approved.

Florida’s insurance market has eroded considerably, Gragonella said. “This was a very profitable book [of business] for several years,” he told regulators. “Basically in the last three years -- two specifically -- it has just gone into the tank due to losses.”

In January, the founder of the ratings agency Demotech warned that up to 18 private market companies in Florida faced ratings downgrades because of their eroded financial stability. Such downgrades from the A level required by federally backed mortgage lenders would require customers with mortgage loans to seek new A-rated insurers -- which would devastate the downgraded companies.

Four companies have been downgraded and were immediately purchased by financially stronger companies. The need for additional downgrades won’t become apparent until March, Demotech’s founder said.

Recommended fixes by Demotech included increasing rates by repellent but necessary levels.

Florida lawmakers, meanwhile, are continuing their efforts to reduce attorneys’ incentives to sue insurers.

A year after finally enacting reforms intended to curb abuse of policyholders’ right to sign over claims benefits to third-party contractors, several Senate bills supported this year by insurers would erect barriers between plaintiffs attorneys and lucrative legal fees they can collect when they win or settle lawsuits against insurers.

Attorneys are fighting those efforts and making the case to property owners that only competent legal representation prevents insurers from underpaying, dragging out, or denying settlement of their claims. In October, a year after Hurricane Michael, 17,347 claims remained open, attorney Amy Boggs pointed out in an essay distributed by the Florida Justice Association in January.

Insurers compare their fight against litigious attorneys to a game of whack-a-mole. When lawmakers enact disincentives, the attorneys find creative ways to make money off of insurers, they say. Honest policyholders are stuck in the middle, paying ever-higher rates to keep the insurers stable, they say.

Lisa Miller, a former deputy insurance commissioner who now runs an insurance-focused consultancy firm, said insurers aren’t equipped to withstand the volume of lawsuits.

“The red ink all over the financials of these insurance companies is dire,” she said. “It’s going to continue to hurt our consumers unless we do something about it.”

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