2016 Brought Its Share of Novel Issues
As 2016 winds to a close, we can look back and see the impact this year’s events had on the Florida insurance market. In the property and casualty sector, we saw two hurricanes affect Florida after a decade without hurricanes. Fortunately, Hurricane Hermine remained a relatively small storm, and Hurricane Matthew stayed just offshore enough to avoid the type of damage we feared could occur. Still, the storms affected many families in our state, and some residents continue to rebuild. The hurricanes served as a reminder that our peninsula can experience a hurricane in any year, and even multiple hurricanes within a year.
The property and casualty sector also continues to see losses from the “assignment of benefits” issue and from water damage claims, particularly in certain areas of south Florida. The frequency and severity of these losses are enough to create upward pressure on rates, and ultimately for the private market to rethink its writings in some areas of the state. Citizens Property Insurance Corporation has pointed to substantial data showing that not only are rates higher than they otherwise would be, but the trend of reduced exposures in Citizens in recent years is beginning to reverse itself and its policy count will continue to grow.
This year also has been a tumultuous one for workers’ compensation insurance. Beginning with reforms made in 2003, workers’ compensation rates in Florida dropped sharply over the following decade. However, two Florida Supreme Court decisions this year found that restrictions on benefits and attorneys’ fees went too far. Invalidating those portions of the reforms led to a proposed rate increase of more than 19% filed by NCCI. The filing ultimately was approved at approximately 14%. That decision has been challenged with claims that the rate development process did not conform to Florida’s open government laws.
Finally, no year would be complete without uncertainties regarding the Affordable Care Act. Premiums continue to increase, and some private insurers have been rethinking their participation in the exchanges. Of course, the results of the presidential election and its impact on the ACA’s future add to the uncertainty and speculation.
As 2016 winds down, several of these issues will continue to have high profiles in 2017. With the legislative session just around the corner, legislative committees already have started the process of evaluating some of these items.