In Part Two of our webinar series, our team continues to unravel the intricate challenges stemming from the ever-changing landscapes of high-risk states, with a particular focus on Florida and California. Building on the insights from Part One, our CEO & Co-Founder, Ashwin Agarwal, VP and industry expert, Kristine Economus, are once again joined by the distinguished Commercial Lines Property & Casualty Agent from Insurance Office of America (IOA) in Boca Raton, FL, David Zemlin.

View the full Webinar recording below

Here's a brief recap of the key takeaways:

National Market Trends:

• The insurance market has been experiencing a general hardening trend nationwide, with increasing challenges in traditional areas.
• The catalyst for significant disruptions in the market was fraud, compounded by the impact of Hurricane Ian, which led to companies leaving or going bankrupt.

Legislative Measures:

• Legislative measures are being explored to address the issues plaguing the insurance market and ensure its stability.

Florida Insurance Renewals:

• Insurance renewals in Florida are expected to be challenging, with a 200% increase due to valuation and premium hikes.
• There's a decrease in the flow of capital into the market, making it more difficult to secure coverage.

Florida Claims and Litigation:

• Florida experiences 7-10% of homeowner claims, with a staggering 80% of claims litigation originating in the state.
• The effectiveness of legislative measures will be assessed over the next year or two.
• The current hurricane season in Florida is expected to be navigated without major setbacks, as well as the wildfire season in California.

California Insurance Market:

• Several factors are driving a seismic shift in the California insurance market, including the aging infrastructure, political factors, regulatory issues, and wildfire exposure.
• Carriers are using crime scores to assess policies due to a correlation with property losses.

Crime Scores and Coverage:

• Crime scores can be obtained from in-house teams of most insurance carriers or through platforms like Bestplaces.com.
• Coverage issues can arise in brush areas due to the movement of brush by wind, resulting in higher rates if lost due to expiration or non-eligibility.

Rate Increases:

• Rate increases are expected to alleviate market pressures, bringing new capital and carriers, and fostering more competition.
• The shift in the market is challenging, but improvements are anticipated in 2024.

Specialized Insurance Plans:

• Fannie Mae accepts Demotech for specialized insurance plans.
• The FAIR plan is increasing coverage limits to $20 million per location for commercial properties, filling the gap left by the private market.
• Properties in brush zones may rely on the FAIR plan for coverage, but it won't come cheap due to the inherent risks.

Challenges with Citizens:

• Citizens, as a state-sponsored insurer, imposes greater compliance requirements, making it more challenging to obtain coverage.

Case Studies:

• Two case studies were presented, one in Maryland and one in Friendswood near Houston, highlighting how premiums have substantially increased due to various factors such as CAT exposure and changing guidelines.
• Communication and education play a vital role in managing client expectations when renewal premiums are significantly higher than expiring premiums.

Water Damage Exclusions:

• Water damage exclusions, especially due to freezing events, have become more common in certain regions.
• Houston's flooding situation emphasizes the importance of understanding flood risk and its connection to development.

Wind-Driven Rain Coverage:

• Wind-driven rain coverage is often excluded or limited, primarily due to market issues and deductible structures.
• The majority of flood claims originate in non-high hazard zones.

Cancellations and Non-Renewals:

• Non-renewals can be challenging in the current market, and mid-term cancellations are on the rise.
• Insurance carriers are increasingly focused on inspections and may cancel policies if issues are not addressed promptly.

Market Players:

• RSUI and CIBA are emerging as significant players in the market, with specific limitations on the regions they cover and the types of insurance they provide.

NFIP and Excess Flood:

• The reauthorization of the NFIP program is a recurring concern, with its next reauthorization scheduled for November 17th.
• The excess flood insurance market is challenging to navigate and relies heavily on Lloyd's, which may be expensive due to capacity issues.