This content was published on October 5th, 2022 – 5:26 pm October 5th, 2022 – 5:26 pm
Miami, October 5 (EFE). – With losses currently estimated at about $40,000 million in Florida alone, Hurricane Ian is a devastating blow to that state’s ailing insurance sector, but fraud and lawsuits are worse than hurricanes, according to an insurance company specialist.
Just 9% of insured property claims filed by homeowners in the U.S. originate in Florida, but the state accounts for 79% of claims against insurers, says Shahid S. Hamid, director of the Florida International University (FIU) Insurance Laboratory. in an interview collected on the center’s website.
In 2019, these lawsuits cost insurance companies more than $3 billion in legal costs in Florida, she adds.
Hamid, in his interview with the digital The Conversation, replayed on the FIU’s website, explained why insurers are losing money in the state even as insurance prices have nearly doubled in five years.
Since the beginning of 2020, a dozen Florida insurers have filed for bankruptcy or left the state, including six this year, and Florida State-backed Citizens Property Insurance now has more than a million policies, according to Hamid.
Thirty other companies are on the Florida Office of Insurance Regulation (FIOR) watch list.
The director of the insurance lab fears some of those latter companies could go under because of Ian, whose losses to date are estimated at $40 billion to $60 billion.
“Ian could be one of the costliest hurricanes in Florida history. I’ve seen losses estimated at $40 billion to $60 billion. I wouldn’t be surprised if some of the companies on the watch list leave after this storm,” he says. . .
Citizens Property Insurance on Wednesday estimated the 34,000 claims it has received over Ian’s damage are likely to total between $2.3 billion and $2.6 billion and said it expects more than 225,000 claims in total.
After punishing western Cuba, Ian made landfall in southwest Florida on Wednesday, September 28 with winds of 150 miles per hour, causing devastation in that area and also in the center of the state where the flooding was “historic,” according to authorities.
“Insurance companies had over a billion underwriting losses in 2020 and again in 2021. Even if premiums go up that much, they’re still losing money in Florida,” says Hamid.
In his opinion, the main reason for the poor results is the problem of “performance allocation”. “Insurance companies have done part fraud and part exploiting lax rules and court decisions,” he points out.
Hamid said that’s what happens when a contractor tells the owner of a cyclone-damaged home that they can get them a new roof if they “give up their insurance.”
Builders can then charge the insurance company whatever they want without the owner’s consent, and if the insurer has trouble paying their claims, the builder sues, he explains.
Another problem arises from the fact that only about 14% of Florida homeowners pay for flood insurance, and some without insurance file claims with their property insurance company, arguing that the wind caused the problem.
Florida established a $2 billion reinsurance fund in May 2022 that can help smaller insurance companies in such situations, he says. EFE
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