Florida regulators question insurance company’s rate increase

Kimiko G. Judith

This is the sight no Florida homeowner ever wants to see. A tarp covers a leaky roof in Hialeah on Thursday, October 6, 2020.

This is the sight no Florida home owner at any time needs to see. A tarp covers a leaky roof in Hialeah on Thursday, October 6, 2020.


Point out regulators took a hard line on a property coverage business that would like to increase charges by an ordinary of 36% on extra than 64,000 owners guidelines, the company’s second major charge hike in a calendar year.

All through a Friday morning hearing, regulators grilled executives from Southern Fidelity Coverage Co., centered in Tallahassee, questioning the company’s methodology, viability and reasons for seeking to increase some homeowners’ fees by more than $3,000.

“We designed it very apparent that we’re concerned about the ranking methodology this corporation has utilized for several years,” reported Susanne Murphy, deputy insurance coverage commissioner for the Florida Office environment of Coverage Regulation.

Regulators built no selection Friday about no matter if to approve the boosts. The enterprise has much more than 8,200 insurance policies throughout Miami-Dade, Broward and Palm Beach front counties and much more than 11,100 across Hillsborough, Pinellas, Pasco and Hernando counties.

Southern Fidelity imposed the boosts on July 1, a lot less than a yr following regulators accepted the organization rising its fees by 31%.

For some prospects who were renewing their policy in July, that meant they have been absorbing both equally will increase at the exact same time, viewing their premiums increase much more than 70% on common.

When requested why the organization did not wait until finally August, so prospects weren’t becoming strike 2 times at the exact time, the company’s actuarial supervisor, Jesse Rehberg, mentioned it was the board’s final decision.

“We felt it was imperative we get that fee rolling on,” Rehberg reported.

If regulators don’t approve this year’s improvements, the firm will have to situation refunds to prospects.

Regulators are in a tricky placement with Southern Fidelity and other domestic assets insurers, some of which are struggling to continue to be afloat. A lot of insurers have been searching for double-digit amount increases, though other folks have been absorbed or absent out of company. Citizens Residence Insurance, the state-operate house insurer of very last resort, has seen its coverage rely mature from 463,247 procedures last calendar year to an anticipated 766,000 by the end of this yr.

Southern Fidelity has viewed many years of losses, and regulators have accepted the organization canceling a lot more than 47,000 unprofitable procedures because Could 2020.

Executives with the business blamed the need to have for the substantial level raises on larger litigation charges and the climbing expense of reinsurance, which insurers order to subsidize their very own business enterprise.

But regulators on Friday appeared skeptical of those people reasons, concentrating as a substitute on the company’s methodology it employed to occur up with the proposed boosts.

In one example, regulators pointed out the firm was basing improves not just on its possess information, but on an assessment of other companies’ info. And that exterior evaluation was dependent on properties worth $300,000 designed in 2021.

Regulators puzzled why Southern Fidelity wouldn’t depend a lot more seriously on its own facts, or at the very least use outdoors information that mirrored their possess e book of business enterprise.

“I don’t consider what you have completed listed here is a generally accepted actuarial system,” reported Kayne Smith, an actuary with the Place of work of Insurance policies Regulation. “Surely your reserve isn’t all composed of $300,000 properties designed in 2021.”

“This has been the typical process that we’ve adopted in all of our the latest filings that I remember,” mentioned Klayton Southwood, a expert actuary for the business.

Regulators explained they’ve warned them for years about applying that methodology.

Southern Fidelity also claimed Friday that it could search for nonetheless another rate improve in the next month or two, foremost officers to speculate whether the company’s tactics were being sustainable.

“I am extremely involved about the potential fiscal stability of this business,” the state’s Insurance plan Consumer Advocate, Tasha Carter, explained.

Details from the Information Services of Florida contributed to this report.

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