Nicole Vinson | Property Insurance Coverage Law Blog | February 13, 2016
Insurance Companies are in the business to make a profit. This is no secret. Policyholders believe that if they buy insurance and have a covered loss, the insurance for that damage should kick in. This is a basic understanding.
Insurance companies in Florida have been spared hurricane claims for almost a decade, but instead of decreasing premiums, many carriers publicly alleged there was a water claim crisis and have alleged that South Florida’s Miami-Dade County is in large part to blame.
The Florida Office of Insurance Regulation asked for information on water claims statewide and information regarding water claims where a policyholder signed an assignment of benefits form to have a remediation company do the water extraction. Nearly 260,000 water losses over a 5 year period were evaluated. Documentation from Citizens Property Insurance Corporation had previously been gathered and was not part of this data call evaluation.
The results are in and have been analyzed by the State. Was there an increase in the claims? Yes, but with an 8.3% increase in the number of claims is not shocking. What I would like to see is how many of those claims were denied, and then later, paid. The severity of claims also shows a slight increase but as the data shows, this number is not off the charts.
The complete report is available here, but below is the summary taken directly from the report. Carriers have repeatedly alleged the claims are not timely reported but the claims information is contrary.
- The HO-3/DF frequency of water claims per 1,000 policies has increased by 46% since 2010. This represents an average annual increase in frequency of water claims of 8.3% each year.
- The average severity of HO-3/DF water claims increased by 28% since 2010.
- This represents an average annual increase in the severity of water claims of 5.4% each year.
- The combined impact of changes in frequency and severity result in an average 14.2% increase in water losses each year.
- Southeast Florida has the highest frequency and severity of HO-3/DF water losses; however, the highest combined change in frequency and severity actually occurred in Central Florida. All regions are seeing significant increases in water losses.
- Claims with an Assignment of Benefit (AOB) generally have a higher severity than claims without an AOB; however, the cause of this cannot be determined by this data call.
- There has been a significant increase in the use of AOBs since 2010, from 5.7% of the claims to 15.9% of the claims. This increase in the use of AOBs is being seen across all regions.
- With the exception of Southeast Florida, all regions have at least 50% of the water claims being reported to the insurer within three days.