Insurer CEO Warns Limits on Cancellations Will Deter Carriers From Florida Market *Centurion Insurance AFS*

The head of two property insurance companies set to enter the Florida market this year is warning state lawmakers that bills that would limit policy cancellations and nonrenewals after storm damage could do more harm than good.

“It absolutely it gives me pause to sit here and see the state revert back,” said Ken Gregg, the CEO of Orion180 insurance companies. “If this thing passes, it would absolutely bring up a question of concern about coming to Florida, or how much I’m willing to do in Florida.”

Gregg was talking about Senate Bill 1104 and House Bill 1149, which are slated for floor votes this week, the final week of the Florida Legislature’s regular 2024 session. Those bills have been dubbed “the agents’ bills,” and have been pushed, at least in part, by the Florida Association of Insurance Agents.

Both bills would bar HO cancellations or nonrenewals until at least 90 days after storm repairs have been made, with some exceptions, including fraud, misrepresentation or nonpayment of premiums. The House bill, as it stood Monday, would go further and allow the state insurance commissioner to ban cancellations and nonrenewals for up to 270 days in ZIP codes most affected by a storm, even for flood damage that was not covered by a wind or multi-peril policy.

The bills arose out of concerns by some Florida insurance agents that they may have have some liability if insureds lose their coverage while awaiting repairs and restoration work, and that many agents have had to work overtime to find new coverage when damaged homes have been nonrenewed. Other agents, though, including the head of the Professional Insurance Agents of Florida, have said there’s no need for the legislation.

And some carriers have grown increasingly concerned that the measures would undermine their ability to balance risks on their books.

“Most insurance companies – I don’t want to say everyone – but most will work with customers if they’re getting their homes repaired,” Gregg said Monday in an interview with Insurance Journal. “But if the homes just sit there and don’t have any progress whatsoever, you can’t stay on the risk because it creates a lot of uncertainty. There could be another loss come in, and where do they apply the loss?”

Gregg is in a rather unique position to evaluate the ups and downs of the Florida insurance market and recent legislative changes. He previously was with CNA Insurance and Allianz, and launched Orion180 as a tech-heavy company in 2018. It is headquartered in Melbourne, Florida. But the company has waited to enter the Florida property market until this year, after 2022 and 2023 litigation reforms were enacted and after extensive market analysis. Meanwhile, Orion has rapidly expanded into other Southern states, as well as Indiana, and plans to add another half-dozen jurisdictions later this year, Gregg said.

The firm’s first quarter of 2024 is shaping up nicely and reinsurance placements have been secured at better-than-expected prices, Gregg said.

Orion180 will operate as two insurers in Florida: Orion180 Insurance Co. and Orion180 Select Insurance Co. Both are domiciled in Indiana and were approved in August 2023 to operate in Florida under an expansion application.

The companies had plans to launch in Florida in the next few months, but now Gregg is having some thoughts about how many policies the firms may go after in the Sunshine State, due to SB 1104 and HB 1149.

“If you’re trying to attract people to the market, putting more controls in place is not going to be very attractive, in my opinion,” he noted. “I don’t understand quite what the politicians are thinking when they have an environment where they’re trying to attract companies.”

While he has credited lawmakers with passing major reform bills in the last two years, reining in excessive litigation and roof claims, he noted that those laws have yet to make a big difference for insurers.

He pointed out that notices of intent to litigate against insurers, filed with the Florida Department of Financial Services, increased sharply in the wake of the reform legislation, from 2022 to 2023. DFS data show that 54,226 notices were filed in 2022, compared to 86,338 in 2023. Many of those came after plaintiffs’ law firms rushed to file claims lawsuits before the historic 2023 tort reform package took effect last summer.

So far in 2024, the trend has continued. About 11,500 notices of intent were filed in the first two months this year. If that pace continues for the rest of the year, it would reflect a 28% increase in notices over 2022’s level.

Gregg said the numbers show that litigation threats continue and insurers don’t need to be hit with new risks from unrepaired properties that must remain on the books. The bills limiting nonrenewals “incentive the insured not to get (the property) fixed. Or it could just be a bad risk and the insurer is stuck on a risk that could increase losses,” he said.

He noted that while the legislation may be well-intended as a nod to consumers and agents after the pro-insurer litigation reforms, the bills raises questions about how well lawmakers understand the risk-transfer fundamentals of the insurance business.

“Personally, I see it as a challenge when people who are not at risk of losing their own money get to dictate to the person at risk of losing their money how to operate,” Gregg said. “The people that are making these decisions aren’t guaranteeing a profit to the companies that are taking the risk. So it’s all one-sided, when you look at it from that perspective.”

Topics
Florida
Carriers