Key takeaways from the 2022 Florida Association of Insurance Agents convention

At least six insurers have already pulled out of Florida this year, citing climate pressures. Others are pulling out of specific high-risk areas. (MarekPhotoDesign.com/Adobe Stock)

In June, the Florida Association of Insurance Agents (FAIA) held its 118th Convention & Education Symposium. The backdrop: a Florida insurance industry in crisis.

With industry turbulence in mind, convention attendees noted a few trends with implications for independent agents. Here, I’ll highlight three takeaways, and explain how agents can take action.

Takeaway no. 1: Insurers are aggressively mitigating risk.

Florida has always been a high-risk space for P&C insurers. But in 2021, insurers lost $936.2 million, more than the previous two years combined.

As a tropical peninsula, Florida suffers from three climate-related risks: rising sea levels, more intense hurricanes, and heightened wildfire risk. P&C insurers are feeling the impact as homeowners’ claims spike.

Insurers are aggressively mitigating their risk to keep from going under. The goal: to protect themselves so they can protect the masses.

Right now, Florida insurers have three paths forward:

  1. Hike premiums. Industry watchers anticipate that many insurers will hike rates by at least 20%. Triple-I expects annual premiums to reach $4,231, which would be nearly triple the national average.
  2. Restrict coverage. Some insurers are dropping coverage for homes with aging roofs — a big risk factor for homeowners.
  3. Pull out of the state. At least six insurers have already pulled out of Florida this year, citing climate pressures. Others are pulling out of specific high-risk areas.

It’s clear that the industrial crisis will get worse before it gets better. While the situation is out of the hands of independent agents, they can do their part to keep customers up to date.

Here’s what I suggest:

  • Help your customers understand the landscape. Circulate climate information in your newsletter or other agency communications.
  • Work with your customers to plan for perils. Make sure your customers know how to prepare their home for weather-related disasters.

These trends are dynamic, so keep an eye on the news as risks change.

Takeaway no. 2: An overactive hurricane season will demand multi-carrier partnerships.

Florida is in the middle of an intense hurricane season. It’s the seventh back-to-back overactive season on record, with up to 21 named storms expected to form in the Atlantic.

One trend we’re noticing: underprepared homeowners. With P&C insurers restricting coverage or pulling out, homeowners may not have the coverage they need if disaster strikes.

Here, independent agents can take action. I recommend a three-pronged approach:

  1. Placing risk appropriately with the correct carriers. Tech-powered risk assessments can help customers adapt to industry turbulence.
  2. Help customers update their coverage limits or find a new carrier. Customers may need updated coverage as insurer attitudes change.
  3. Make sure every customer has flood insurance. Hurricane-related flooding is not limited to coastal areas. It can happen nationwide — and customers should prepare for the worst.

With hurricane season in full swing, it’s important to act quickly so your customers can cover their bases.

Takeaway no. 3: A tight reinsurance market is impacting homeowners.

The Florida reinsurance market is tightening, and experts are sounding alarms. Between fraud and climate change, Triple-I warns: “We have the potential of a massive failure of Florida insurers, probably the worst on record.”

That’s no exaggeration. Already, three insurers declared insolvency this year due to reinsurance struggles. The state recently approved a $2 billion reinsurance assistance package, but it’s unlikely to do much.

With limited reinsurance available, many insurers are pausing new policies to give themselves time to recover losses. On top of fraud and climate change, homeowners are feeling the impact.

While you can’t solve the reinsurance crisis, you can educate customers about the situation. This way, customers will understand why change is happening – and can weather this storm alongside you.

Stay tuned…

If we’ve learned nothing else this year, it’s that things change quickly. Just days after the FAIA conference ended, the US Treasury began investigating the insurance impact of climate change in Florida. And with ongoing state legislative discussions, there may be more developments to come in the reinsurance space.

As the P&C insurance space evolves in Florida, keep an eye on the news to spot upcoming trends. Then, relay that information to your customers. With consistent communication, you can maximize your value in this troubling industry climate.

Jim Bone is general manager at We Insure, a national insurance franchise agency that’s disrupting the industry with an innovative business model focused on customer experience and exceptional agent support. The franchise offers unprecedented access to carriers and complete operational, IT, service and marketing support to its agency owners. We Insure is expanding rapidly across the US with more than 200 retail locations.

Any opinions expressed in this article are the author’s own.

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