Thriving Changes in Florida's Property Insurance Landscape
The property insurance landscape in Florida is experiencing a resurgence, marked by the emergence of new players and a growing demand for policies. This promising trend suggests a more stable market after years of upheaval, premium spikes, and insurer challenges. Recent developments include companies seeking takeout orders from Citizens Property Insurance and the entrance of two new insurers into the field.
One notable contributor to this shift is HCI Group, headquartered in Tampa, Florida. CEO Paresh Patel announced during an earnings call that the company had applied for a substantial volume of policies – up to 75,000 – from Citizens Property Insurance. This move comes on the heels of HCI Group's impressive financial performance, posting a profit of $33 million in the first half of 2023, a remarkable improvement over the same period in the previous year.
HCI Group's success is attributed in part to the positive impact of recent legislation in Florida. Mark Harmsworth, HCI's Chief Financial Officer, emphasized that the legislation's effects are becoming evident in the company's results. HCI Group's subsidiaries, including Homeowners' Choice Property & Casualty Insurance with around 88,300 policies and TypTap Insurance with approximately 56,000 policies, are contributing to this upward trajectory. However, the exact recipient of the Citizens policies is yet to be determined pending regulatory approval.
These potential takeout transactions, if given the green light by Florida regulators, could mark a significant shift, possibly exceeding 350,000 Citizens takeout policies approved in the current year alone. This is a particularly positive development for the market, given that Citizens, the state-established residual insurer, has grown to be the largest property carrier in Florida, boasting over 1.3 million policies.
Further enhancing the transformation, Florida Insurance Commissioner Michael Yaworsky recently announced the approval of Mainsail Insurance Co., a Texas-based carrier, to operate in Florida. This news closely follows the approval of Tailrow Insurance, a subsidiary of HCI Group, which gained regulatory approval in April.
In addition, Recoop Disaster Insurance, underwritten by Professional Solutions Insurance Co., revealed plans to offer a distinctive form of parametric property coverage in Florida. This coverage is designed to provide a predetermined payout, up to $25,000, following a storm. Though Recoop executives were unavailable for comment, the Florida Office of Insurance Regulation confirmed that Professional Solutions Insurance Co., based in Iowa and operating in Florida since 2019, is connected to the initiative. The parent company, NCMIC Insurance Co., originally focused on chiropractic malpractice insurance but has since expanded its offerings to include personal lines and business coverage.
Overall, these developments indicate a positive shift towards a more stable property insurance market in Florida. The state has faced challenges such as soaring premiums, insurer withdrawals, and insolvencies over the past four years. Commissioner Yaworsky attributes these encouraging changes to legislative reforms enacted in 2022 and 2023, which brought an end to one-way attorney fees and assignments of benefits in claims litigation.
Commissioner Yaworsky stated, "The addition of Mainsail Insurance Co. to the Florida market is evidence that recent legislative reforms are having a positive impact for consumers." Mainsail Insurance Co., a part of Hippo Holdings Inc., joins the market along with Hippo Insurance and Spinnaker Insurance Co. Although Hippo Insurance is not operational in Florida, it has expanded its footprint to encompass at least 15 states in recent years. Similarly, Spinnaker Insurance Co. reported approximately 57,000 policies in force in Florida as of the end of March, according to the latest quarterly report from the Florida Office of Insurance Regulation.
In conclusion, the evolving landscape of Florida's property insurance sector signifies a positive shift, fueled by the entry of new insurers, strategic takeout initiatives, and legislative reforms. These advancements are not only reshaping the industry but also instilling greater confidence in a more stable future for policyholders in the Sunshine State.
-Insurance Leak 2023
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