Florida market to “remain hard for the foreseeable future”

Florida’s residential property insurance marketplace is expected to remain “hard,” as headwinds related to capacity and reinsurance, elevated catastrophe losses and high levels of litigation persist, Dan Peed, the CEO of United Insurance Holdings Corp. (UPC) has said.

Speaking during his companies second-quarter earnings call yesterday, Peed said that catastrophe and non-catastrophe claims at the insurance group continued to be affected by “increasing inflation and excessive litigation, driving increased severity.”

Something that has been particularly problematic for the United (UPC) business in Florida.

“We continue to experience inflation and excessive litigation levels in Florida, causing significantly increased severity in current and prior accident years,” Peed explained.

Peed is hopeful that some of the legislative reforms announced that target Florida’s property insurance market will have a beneficial effect, in time, and reduce the impacts of these inflationary items.

“Florida litigation continues to see the total number of lawsuits when adjusted for notice of intent to litigate, decreasing over the last quarter from peak rates in June and July of ’21,” Peed said.

The data suggests any decrease in litigation in Florida’s property insurance claims is so far very minimal.

Peed said he is hopeful that “the provisions of SB 76 will begin to help the excess litigation issues in Florida” and that “the provisions in SB 2-D and 4-D will favorably impact excessive litigation.”

There does seem some consensus on this in the market, that a reduction in litigation is likely, but more widely there remains concern about fraudulent claims as well and it’s not yet clear that any of the steps taken are slowing that trend, or going to be sufficient to quash litigated claims and the attorney fee issues the state has been facing enough to satisfy reinsurance capital providers.

Because of the challenges faced and still facing Florida’s insurance marketplace, Peed believes hard market conditions will persist.

“We expect the Florida residential market to remain hard for the foreseeable future, due to a sceptical and hard capital and reinsurance market, recently elevated catastrophe activity, and continued headwinds created by excessive litigation levels,” Peed said.

Recall, Peed’s insurance company United (UPC) said recently it continues to face significant uncertainty after having been downgraded and become eligible for the Florida Citizens guarantee structure.

Read all of our news and analysis on the Florida insurance and reinsurance market.

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