Do you remember how the Florida insurance industry and its lobbyists promised that if the AOB reform was approved, insurance rates would fall because AOB disputes were the cause of increased premiums? Since the law was passed, prices have not fallen. Floridians were tricked by the propaganda insurance industry, and the same insurance industry is promoting more laws against policyholders that literally prevent Citizens Property Insurance from asking for a cut in interest rates – and some Florida lawmakers voted yesterday to violate Citizens Property Law to ask
An example on the Florida insurance industry's false promise that the AOB reform would lower prices can be found in an article in the Insurance Journal from June 201
This is a consumer protection measure, not just in terms of affecting the total premium pay, but also give them some protection they did not have before, says Barry Gilway, President and CEO of Florida Citizens Property Insurance Corp.
The same insurance industry is now claiming that the current rate hike is the result of lawsuits from policyholders and ceiling fraud. It has drafted current legislation against policyholders to make it more difficult for policyholders to seek redress against their low and slow paying insurance companies. These insurance companies are often involved in various unethical behaviors described in examples mentioned in, Cleared Hurricane Claims and Fraud Procedures – Why do our Florida politicians ignore these ongoing allegation problems and protect seemingly fraudulent insurance companies? The insurance industry does not want lawmakers in Florida to read that most of the real estate insurance rates are happening across the country, not just in Florida. These increases in real estate insurance are caused by a significant increase in the reinsurance rate as a result of the recent natural disasters that created a "hard market" for reinsurance rates, which are transferred to policyholders. Munich Re noted how these are historical disaster losses affect the insurance market with major economic losses:
North America suffers the highest losses
Of the ten most expensive natural disasters in 2020, six occurred in the United States. The most destructive event was a Category 4 hurricane, Laura, which landed near Lake Charles in western Louisiana on August 27 with winds of 240 km / h. Hurricane Laura caused significant wind and storm surge damage and triggered extensive flooding that extended far inland . In total, the losses amounted to 13 billion US dollars, with insured losses of 10 billion US dollars.
The hurricane season in the North Atlantic was hyperactive, with a record-breaking 30 storms, 13 of which reached hurricane status. This surpassed the previous record year of 2005 (28 storms, 15 hurricanes). The US landing record was also broken, with 12 tropical cyclones landing in one season. The previous record was nine. Total losses from the hurricane season in North America amounted to $ 43 billion, of which $ 26 billion was insured.
The hyperactive season in the Atlantic was the result of a number of factors. Apart from unusually warm water temperatures at sea, where climate change is already playing a role, La Niña conditions in the equatorial Pacific Ocean also served as a driving force. La Niña is the cold extreme of the El Niño-Southern Oscillation (ENSO) and creates atmospheric conditions that promote the development of cyclones in the North Atlantic.
Thunderstorms in the US Midwest
In the central United States, one of the most expensive disasters of the year was a strong "derecho", a rapid movement of heavy thunderstorms that swept across the US Midwest on August 10 and caused losses of $ 6.8 billion. The state of Iowa was hit hardest, destroying millions of acres of corn and soybean crops. Derecho was just one of the remarkable events during a very active year of loss across the country due to convective storms. The total losses of USD 40 billion, of which USD 30 billion were insured, were significantly higher than the previous year (USD 30 billion and USD 20 billion, respectively).
Dry conditions drive fires in California, Colorado and Oregon
Once again, a series of major forest fires raged across the western United States by 2020, including record fires (in terms of burned area) in California and Colorado. Drought conditions, especially over northern California and the northwestern northwest, helped burn dozens of large fires. 47 people lost their lives due to the fires.
As of early December 2020, California had registered a total of 9,600 fires in the state. Although most of these fires were small and did not cause any damage, the severity and extent of the largest fires damaged or destroyed about 10,500 structures. The area burned by wildfires in the state was over four times larger than the 2015-2019 average and individual fires in 2020 rank 1st, 3rd, 4th, 5th and 6th on the list of the largest fires in California since the 1930s.  It was noteworthy that harmful forest fires occurred not only in California but also in the rest of the western United States. Colorado saw its three largest fires, in terms of acres burned, in 2020. Forest fires in Washington and Oregon also set new records. In Oregon alone, about 4,000 homes were damaged or destroyed by forest fires and became one of the worst natural disasters in the state's history. In total, losses from forest fires in the western United States amounted to approximately $ 16 billion, of which $ 11 billion was insured.
These costly events are causing the reinsurance rate for real estate insurance to increase everywhere and for all industries. They have nothing to do with trials. For example, California has huge property insurance increases due to forest fires:
Thousands of rural Californians have lost homeowners insurance in recent years due to increasing wildfire damage and forced them to seek alternative coverage that is two or three times more expensive. ] Now their prices are about to get even higher.
This follows an average increase of 20% about 18 months ago and reflects the ongoing crisis in a state of wildfire as risks increase and ordinary insurance companies withdraw their coverage. 1
Another example can be found in an article, Extreme weather causes solar insurance premiums to explode :
Renewable energy projects, especially solar projects, see steep insurance premium costs caused by industry disruptions weather events, according to an analysis by Norton Rose Fulbright.
The analysis describes that the market for real estate and casu non-life insurance for solar projects has hardened in the last 18 months, with premiums increasing by as much as 400% during that time frame. damage. While all cases of extreme weather have played their part in the market's latest hardening, fires and hail play a particularly destructive role.
There have been a number of hurricanes, wildfires, hailstorms and even a freeze in Texas that have made the insurance industry notice. These natural events cause changes in loss models as catastrophic trends dictate that interest rates rise when more economic losses occur. This statement from a reinsurance manager sums it up:
Vaughn Jensen, Executive Vice President, Catastrophe Analytics, Willis Re North America, said: “A record number of hurricanes in the North Atlantic were formed in 2020, but landfalls did not occur in large numbers, exposures. If they had, the story of 2020 would have been dramatically different. However, the sheer number of storms – and the continued occurrence of billions of dollars of fires in the United States and elsewhere, plus the severity of the Iowa derecho event – give the industry reason to consider new emerging trends.
But the final analysis of what happens after disasters occur calls for a more complete analysis. What do some insurance companies do when they have losses and have not taken enough premium dollars to achieve their profit targets? It does not take a rocket scientist to calculate that cheating customers out of benefits owed at the time of the claim can be much more profitable than paying claims in full and on time. Ironically, Florida's elected officials are trying to remove policyholders' protection at a time when Florida policyholders need more protection from these wrongdoings. Some are, and I rarely end up in litigation with these amazing companies. Many are not, and these offenses really seek legislation that protects them from their responsibilities and embarrassment. That's what much of the current Florida legislation, in addition to the CFO's proposed bill, does – it protects perpetrators from liability by making it harder for policyholders to enforce their contractual rights.
While my name is Merlin, and I am sometimes a guide helping policyholders get their insurance company to provide benefits and PayUp! no man can change Mother Nature. The natural disasters we have experienced over the past five years have been surprising. The truth is that these seem to be getting worse and reinsurance companies are asking for more money to pay for these losses. Removing policyholders' rights that make it more problematic for insureds to get paid will not stop the problem of higher interest rates, which can be raised by roofers committing fraud and not mitigating property damage that is naturally caused.
Thought for the day
Humans must be careful because everything that is built by man can be destroyed by Mother Nature.
1 https: //www.sacbee.com/news/california/fires/article247680725.html