South Florida customers of the state’s largest home insurer earned a reprieve this week from looming rate hikes.
Universal Property & Casualty, headquartered in Fort Lauderdale, has withdrawn a request for an 8.1 percent average rate hike throughout the tri-county region after state regulators questioned whether it was “unfairly discriminatory.”
The withdrawal comes a month after another of the state’s largest insurers, Heritage Property & Casualty, withdrew a request to boost rates an average of 14.9 percent statewide — and up to 25 percent in parts of South Florida — amid questions from state regulators.
Universal sought rate increases averaging 2.6 percent statewide for its multi-peril single-family home policies, effective Aug. 15.
In 10 underwriting territories comprising Broward, Palm Beach and Miami-Dade counties, the company sought identical 8.1 percent hikes, according to the company’s rate filing with the state Office of Insurance Regulation.
While that wasn’t the highest average rate increase Universal sought in its 78 territories, the company’s uniform treatment of all tri-county territories caught the attention of one of the state’s rate-file reviewers.
In a July 21 letter to the company, Kayne Smith, an actuary with the office’s property & casualty review division, said the company appeared to be using separate “loss trends” — or predictions of future claims — in tri-county compared with the remainder of the state.
Smith asked the company to show why the tri-county region should be “treated differently than the remainder of the state” and why the company’s method for determining how much it would need to increase rates in the tri-county region differed from the method used for the rest of the state.
“Explain why this treatment does not result in rates that are unfairly discriminatory,” Smith asked.
Universal responded on July 28 in part by referencing reports from Citizens and the Office of Insurance Regulation stating that Southeast Florida has the largest number and most expensive non-weather-related water damage claims of any region in the state. A Citizens presentation pointed out that water claims turn into “Assignment of Benefits” claims, Universal noted, referring to the trend of increased claims-related litigation that Citizens and other insurers have said is forcing higher rate increases in South Florida than other areas of the state.
After looking at those factors and Universal’s own claims data for South Florida, the company decided the tri-county region warranted “a special consideration,” the response said.
On Aug. 8, Smith sent Universal an email outlining the conditions under which the rate filing could be approved, including withdrawing “all proposed changes” to multi-peril single-family home insurance rates, and revising requested condo insurance rates so the tri-county is not treated differently than other territories. The result, Smith said, should be an overall statewide average rate decrease of 1.5 percent.
Universal’s response to Smith was to thank him for his review of the filing.
“Like so many in the industry, the company has concerns with the growing prevalence of water claims and attendant assignment of benefits abuses in South Florida,” the letter from Kenneth Leonard, senior consultant, said. “Nonetheless, the company is withdrawing the above referenced filing and will continue to evaluate the data and trends until its next filing.”
Neither Universal nor the state Office of Insurance Regulation would answer questions about the issues identified in the exchanges over the rate filing.
However, Amy Bogner, spokeswoman for the state office, said Smith’s review found Universal’s rates “were not supported and questions were asked of the company [seeking] additional information that would help the office make a decision.”
Universal can re-file the rate increase request or contest the state’s response, Bogner said, “and therefore we cannot provide any further comment on it at this time.”
Travis Miller, an attorney with the Radey Law Firm in Tallahassee who was asked to respond for the company, said in an email that “no company has been more committed to writing business in South Florida” than Universal.
“Based on the feedback received from [the state], the company has agreed to further evaluate the information set forth in the filing as well as other potential data sources. In light of this, we don’t anticipate that another filing will be made this year.”
Universal Property & Casualty, which had 555,866 personal residential policies statewide on March 31, overtook state-run Citizens Property Insurance Corp. as the state’s largest insurer in 2015 — a result of Citizens’ efforts to depopulate by encouraging private insurers to take over Citizens policies.
In the tri-county region, Universal had 198,369 personal residential policies on March 31 and was still in second place to Citizens, with 231,633. Heritage was third with 96,139.