State regulators took a tough line on a property insurance coverage firm that desires to boost charges by a mean of 36% on greater than 64,000 householders insurance policies, the corporate’s second massive fee hike in a yr.
Throughout a Friday morning listening to, regulators grilled executives from Southern Fidelity Insurance Co., based mostly in Tallahassee, questioning the corporate’s methodology, viability and causes for wanting to boost some householders’ charges by greater than $3,000.
“We made it very clear that we’re involved concerning the ranking methodology this firm has used for years,” stated Susanne Murphy, deputy insurance coverage commissioner for the Florida Workplace of Insurance coverage Regulation.
Regulators made no determination Friday about whether or not to approve the will increase. The corporate has greater than 8,200 insurance policies throughout Miami-Dade, Broward and Palm Seashore counties and greater than 11,100 throughout Hillsborough, Pinellas, Pasco and Hernando counties.
Southern Constancy imposed the will increase on July 1, lower than a yr after regulators permitted the corporate growing its charges by 31%.
For some prospects who have been renewing their coverage in July, that meant they have been absorbing each will increase on the identical time, seeing their premiums rise greater than 70% on common.
When requested why the corporate didn’t wait till August, so prospects weren’t being hit twice on the identical time, the corporate’s actuarial supervisor, Jesse Rehberg, stated it was the board’s determination.
“We felt it was crucial we get that fee rolling on,” Rehberg stated.
If regulators don’t approve this yr’s adjustments, the corporate must situation refunds to prospects.
Regulators are in a tough place with Southern Constancy and different home property insurers, a few of that are struggling to remain afloat. Many insurers have been searching for double-digit fee will increase, whereas others have been absorbed or gone out of enterprise. Residents Property Insurance coverage, the state-run property insurer of final resort, has seen its coverage depend develop from 463,247 insurance policies final yr to an anticipated 766,000 by the top of this yr.
Southern Constancy has seen years of losses, and regulators have permitted the corporate canceling more than 47,000 unprofitable policies since Might 2020.
Executives with the corporate blamed the necessity for the big fee will increase on greater litigation prices and the rising price of reinsurance, which insurers buy to subsidize their very own enterprise.
However regulators on Friday appeared skeptical of these causes, focusing as an alternative on the corporate’s methodology it used to provide you with the proposed will increase.
In a single instance, regulators famous the corporate was basing will increase not simply by itself knowledge, however on an evaluation of different corporations’ knowledge. And that outdoors evaluation was based mostly on houses value $300,000 inbuilt 2021.
Regulators questioned why Southern Constancy wouldn’t rely extra closely by itself knowledge, or not less than use outdoors knowledge that mirrored their very own e book of enterprise.
“I don’t assume what you’ve executed here’s a typically accepted actuarial approach,” stated Kayne Smith, an actuary with the Workplace of Insurance coverage Regulation. “Certainly your e book isn’t all composed of $300,000 houses inbuilt 2021.”
“This has been the usual course of that we’ve adopted in all of our latest filings that I recall,” stated Klayton Southwood, a marketing consultant actuary for the corporate.
Regulators stated they’ve warned them for years about utilizing that methodology.
Southern Constancy additionally stated Friday that it would search one more fee enhance within the subsequent month or two, main officers to wonder if the corporate’s practices have been sustainable.
“I’m very involved concerning the future monetary stability of this firm,” the state’s Insurance coverage Client Advocate, Tasha Carter, stated.
Info from the Information Service of Florida contributed to this report.