D’Ann Lawrence White, Patch Staff
Posted Tue, Jan 18, 2022 at 4:02 pm ET
FLORIDA — Florida customers of Southern Fidelity Insurance Co. could see a 195.6 percent rate hike on their homeowners’ insurance premiums this year if the insurance company’s request is approved by the state.
The Florida Office of Insurance Regulation has notified Southern Fidelity customers about a virtual public rate hearing Jan. 21 at 8:30 a.m. on the increase.
Southern Fidelity Insurance Company is requesting two rate hikes from the Florida Office of Insurance Regulation:
- An overall statewide average rate increase of 84.5 percent for homeowners insurance policies in its Homeowners Multi-Peril program with an effective date of Dec. 1, 2021, for new and renewal policies.
- An overall statewide average rate increase of 111.1 percent for homeowners insurance policies in its Property/Personal (Dwelling Fire) program with an effective date of Jan. 1, 2022, for new and renewal policies.
The Southern Fidelity rate increase filings were submitted under the “Use and File category,” which means the company can implement the rate prior to the Office of Insurance Regulation’s approval. If the rate is not approved, the company must issue refunds to policyholders.
The stakes are high for Southern Fidelity, leading to the request for the increase in rates.
Fidelity is among a decreasing number of insurance companies still offering homeowners insurance in hurricane-prone Florida and others Southeast states.
After the massive losses from the 2004 and 2005 hurricanes, a number of insurance companies notified Florida officials they planned to stop offering property insurance to residents in Florida.
This left Florida homeowners deemed too severe a risk by insurance companies with the state-run insurer of last resort, Citizens Property Insurance.
Founded in 2005 in the wake of the insurance pullout, Southern Fidelity offers insurance throughout Florida, South Carolina, Louisiana and Mississippi.
The insurance company was ranked No. 11 for the number of policies in Florida. That number may be higher now because, in November 2020, it merged with Capitol Preferred Insurance Co., which brought 82,800 additional Florida policies.
As a condition of the merger, however, the Office of Insurance Regulation required Southern Fidelity to raise additional capital and pay off a $25 million loan obtained from the state in 2006.
The loan was part of a legislative program meant to encourage investment in Florida’s insurance market, during which 13 insurers were awarded loans ranging from $7 million to $25 million.
If Southern Fidelity fails to bring raise the required capital and pay back its loan, the company could go into receivership, in which it would be taken over by the state.
Homeowners Insurers Dropping Customers, Raising Rates
Southern Fidelity isn’t the only company requesting a rate increase for homeowners insurance policyholders. A number of companies are asking the state to approve insurance premium increases ranging from 12 percent to Southern Fidelity’s 196 percent increase.
Insurance companies are also dropping customers due to the rising costs from lawsuits and claims. While a majority of claims stem from Florida homeowners experiencing weather-related, sometimes-catastrophic damage to their homes, insurance companies say many of the claims are frivolous and cost them billions of dollars.
In 2021, four insurance companies asked Patronis’ office to let them cancel or not renew customer policies, including Universal Insurance Company of North America (13,294 polices), Southern Fidelity Insurance Co. (19,600 policies), Weston Insurance Co. (1,500 polices), and Capitol Preferred Insurance Co. (27,500 policies).
All the companies cite “enormous losses” as the reason. That amounts to 61,894 homeowners left uninsured in Florida.
According to the state, claims paid out in Florida following hurricanes from 2017 to 2020 were:
- Hurricane Michael – $9.1 billion
- Hurricane Sally – $576 million
- Hurricane Dorian – $19 million
- Hurricane Irma – $20.674 billion
- Hurricane Hermine – $139 million
- Hurricane Matthew – $1.182 billion
In addition, homeowners were left in the lurch when two Florida insurance companies declared bankruptcy this year.
In April, American Capital Assurance Co. notified the state that it was filing for bankruptcy and Gulfstream Property and Casualty Insurance Co. followed in July.
Currently, Florida property owners with $300,000 to $399,999 in coverage pay an average of $2,350, compared to the national average of $1,252 for the same amount of insurance, according to the National Association of Insurance Commissioners.
Legislature Steps In
To provide some relief to insurance companies, the 2021 Florida Legislature passed Senate Bill 76, which became effective July 1, limiting or prohibiting advertising that encourages consumers to sue their insurance companies. The law also decreases the time limit to file a claim and limits attorney’s fees.
Senate Bill 1598 also went into effect Jan. 1, providing greater protection for homeowners.
The law requires insurers to notify consumers if their credit reports or credit scores are being requested for underwriting purposes. Insurance companies that make adverse decisions on coverage must provide a copy of the credit report at no charge to the consumer or provide contact information about the credit reporting service, the law reads.
Senate Bill 1598 also makes it clear that interest payments are due when an insurance company fails to pay the full settlement of the claim or an undisputed portion of the claim within 90 days after the claim is filed.
Finally, SB 1598 includes a section that permits insurance agents to go directly to the “surplus lines market” to place some types of property policies but requires them to inform the policyholder in writing.
A surplus lines insurer is an unauthorized insurer that has been made eligible by the Office of Insurance Regulation to write certain property and casualty insurance business that has been denied by an authorized insurer.
State Rep. Anna Eskamani, D-Orlando, whose father recently had his homeowners’ insurance policy dropped, said if insurance companies are allowed to continue hiking rates and dropping customers, only the wealthy in Florida will be able to afford to own homes.
She said some of these insurance claims that are crippling insurance companies can be averted if homeowners are provided resources to shore up their homes against natural disasters.
But so far no bills providing such help or relief to policyholders have been filed for the 2022 session.
Best Homeowner Insurance In Florida
That leaves homeowners shopping around for the best policy and then hoping they aren’t rejected by the insurance company.
Here are some suggestions on where to find homeowners insurance:
According to U.S. New and World Report’s Best Homeowners Insurance in Florida of 2022, Florida’s best homeowners insurance companies are:
- Lemonade
- USAA
- Amica
- Allstate
- State Farm
- Nationwide
- American Family
- Erie Insurance
- Liberty Mutual
- Chubb Insurance
- Progressive
- Farmers
Market Watch lists the Best Homeowners Insurance in Florida 2022 as:
Bankrate.com’s list of best homeowners insurance companiesin Florida for 2022 for homes valued at $250,000 as:
- Allstate -$1,410
- Chubb Insurance– $1,417
- Security First- $451
- State Farm– $1,404
- Travelers -$918
Southern Fidelity Rate Hearing
The Office of Insurance Regulation is hosting the Southern Fidelity virtual public rate hearing Jan. 21 to conduct fact-finding and gather additional information to determine if the rate request by Southern Fidelity is justified.
Florida Chief Financial Officer Jimmy Patronis said customers of Southern Fidelity may view or participate in the rate hearing to share feedback on the requested rate increase. Participants may speak during the public comment portion of the rate hearing. Registration is required in advance to speak.
Register for the rate hearing here.
For listen-only mode, call 1-877-309-2074, Access Code: 632-387-746
Policyholders who would like to submit written feedback can send comments to the Office of Insurance Regulation at ratehearings@floir.com with “Southern Fidelity Insurance Company” as the email subject. The record will be open for public comment until Feb. 4.
Visit the Florida Division of Consumer Services to learn more about homeowners insurance laws in Florida.