Amid accusations that Florida’s property insurance companies, including state-backed Citizens Insurance, are deliberately paying only half their claims and “in a state of collapse,” comes new insight and fresh data that debunk the charges. The man behind the allegations is Martin Weiss of Weiss Ratings, who’s now the subject of an investigation by state insurance regulators.

Former Florida Deputy Insurance Commissioner Lisa Miller shares the new push-back from Citizens’ President & CEO on these accusations and sits down with the head of a large private insurance company who shares new data showing why these charges are inaccurate and unfair in what is a tightly-regulated marketplace.

Show Notes (For full Show Notes, visit https://lisamillerassociates.com/episode-54-the-truth-behind-the-50-claims-denial/
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The news stories emerged mere weeks after two devastating hurricanes – Helene and Milton – struck Florida, creating $5.3 billion in estimated insured losses in Florida as of late November 2024. Host Miller dives deep into the controversies and complexities surrounding the state-created Citizens Property Insurance Corporation and the broader Florida property insurance market on its claims handling and claims payment rates.

"The innuendo that's going around in the media space is that there is a suspicion that Citizens is trying to cheat its customers, and now forces are trying to extend that innuendo to Florida's private property insurance market companies,” said Miller. “In my opinion, that's just plain dishonest and unfair."

The program features soundbites from Weiss, Citizens Property Insurance President & CEO Tim Cerio, and a studio interview with Locke Burt, CEO and Chairman of Security First Insurance Company. Burt served in the Florida Senate for 12 years, where he helped write the laws that created Citizens and the Florida Hurricane Catastrophe Fund.

Weiss, in various November media reports, said that he’d reviewed Citizens Property Insurance 2023 annual financial statement and concluded that Citizens didn’t pay 50.4% of its 2023 claims. He said that was worse than any private insurance company’s no-pay rate. Weiss declined an invitation to appear on the podcast.

Burt and Cerio defended Citizens and the broader Florida insurance market against Weiss’ accusations, noting there are legitimate reasons claims are closed without payment. It's not always about denial. The reasons include:

• Claims that fall below the policyholder's deductible.
• Duplicate claims.
• Claims related to flood damage, which are not covered by standard homeowners' policies.

Weiss, in his criticism of Citizens, was quoted in the media as saying “One factor that we believe is probably playing a role is a deliberate strategy to reduce their liabilities for whatever reason.”

Cerio shot back at the December 4, 2024 Citizens Board of Governors meeting. “It's critical to just point out that, we are the state created, not for profit, insurer of last resort. We have no financial incentive to not play claims. Zero,” he said.

(For full Show Notes, visit https://lisamillerassociates.com/episode-54-the-truth-behind-the-50-claims-denial/
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Image credit: danielfela/Shutterstock

Why were some homes in Hurricanes Helene and Milton heavily damaged while others sustained little or no damage? Much of the answer lies with the building materials and techniques used in their construction.

Former Florida Deputy Insurance Commissioner Lisa Miller talks with a building science researcher, a building products manufacturer, and a developer whose homes survived unscathed from the hurricanes about how resilient construction can save money and insurance costs for both new and existing homes.

Show Notes (For full Show Notes, visit https://lisamillerassociates.com/episode-53-fortified-homes/)

Host Lisa Miller opened the discussion by highlighting the devastation caused by recent Hurricanes Helene and Milton, particularly in Florida. She emphasized the urgent need for homeowners to prepare their properties to withstand such disasters. “Everywhere I go in Florida, I see homes built with plywood and two-by-fours, and I affectionately say that these production homes are built with sticks. I don’t see how they withstand 150 mph winds,” said Miller, who is a disaster insurance and recovery expert. The focus of the episode is on using innovative building products and techniques to enhance the resilience of homes.

Fred Malik, Managing Director of the Fortified Program at the Insurance Institute for Business and Home Safety (IBHS), shared his expertise on building techniques and materials designed to minimize damage from natural disasters. He stressed the importance of rigorous building standards and inspections, noting that "you get what you inspect, not what you expect." Malik explained that homes built to the Fortified standard undergo thorough third-party inspections, ensuring that critical details are not overlooked. This certification process provides consumers with a way to differentiate between homes that may appear similar but have vastly different levels of resilience against severe weather.

Marshall Gobuty, Managing Director at Pearl Homes Developments, shares his firsthand experience with building resilient homes. He discusses his development, Hunter's Point in Cortez, Florida, which successfully withstood Hurricane Milton without any damage. Gobuty attributes this success to his innovative building practices, which include using a combination of block and poured concrete for foundations, as well as advanced insulation techniques that enhance the structural integrity of the homes.

Scott Lidberg, CEO of NEXGEN Building Products, introduced his company's innovative magnesium oxide-based building materials. He explained how these products can replace traditional materials like plywood and gypsum, offering superior resistance to impact, moisture, and fire.

(For full Show Notes, visit https://lisamillerassociates.com/episode-53-fortified-homes/)

What’s going on with property insurance in Florida? Specifically rates, coverage, condominiums, automobile insurance, telematics, flood insurance, and the reinsurance costs that carriers pass along to consumers.

Former Florida Deputy Insurance Commissioner Lisa Miller gets to the heart of the issues with three experienced insurance agents in South, Central, and North Florida who share their insights and suggestions on improving Florida’s challenging property insurance market.

Show Notes

Host Lisa Miller and guests discussed the high premiums affecting homeowners and auto insurance, driven by catastrophic weather, inflation, litigation, and reinsurance costs. Positive trends such as rate decreases and more flexible coverage options are highlighted. The conversation also covered the critical need for flood insurance and the role of the news media in educating the public about insurance complexities and how agents can help the media do so. The episode underscores the importance of transparency and proactive communication in the industry.

Miller’s guests each brought unique perspectives from different regions of Florida:

• Jay Wolfberg, President of We Insure, headquartered in Sunrise. Wolfberg has over a decade of experience in commercial and residential property insurance. He discusses positive trends in the market, including rate decreases and more creative coverage options.
• Anna Regina Myrrha, Agency Principal and Broker at American Insurance Pointe (AIP) in Orlando. Myrrha shares insights on the stabilization of rates and the importance of adapting coverage to meet clients' needs.
• Paul Lalonde, President of Insurance Wagon, a Jacksonville insurance agency. Lalonde provides a perspective on the homeowners as well as the commercial insurance market and the challenges posed by recent legislation affecting condominium insurance.

Overview of the Florida Insurance Market

Host Miller highlighted the current state of the Florida insurance market, where premiums for automobile, homeowners, and commercial insurance are at an all-time high. She identified four main factors driving these rates:

1. Catastrophic Weather: Florida's susceptibility to hurricanes and other severe weather events significantly impacts insurance costs.
2. Inflation: Rising costs of goods and services contribute to higher insurance premiums.
3. Litigation: Legal fees and settlements from lawsuits lead to increased insurance costs.
4. Reinsurance Costs: The cost of reinsurance, which insurers purchase to protect themselves from large claims, is a significant factor in premium pricing, comprising upward of 40% of a homeowners insurance premium.

Host Miller emphasized the uncertainty surrounding reinsurance costs, especially with the ongoing hurricane season, and the potential for higher rates if a significant hurricane occurs.

Positive Trends in Homeowners Insurance

Rate Decreases and Stabilization

Host Miller highlighted a recent report from the Florida Office of Insurance Regulation that 12 companies have requested rate decreases, while 25 have sought to maintain their current rates. For example, American Integrity Insurance Company has announced a nearly 7% rate decrease for a significant number of policyholders... (For full Show Notes, visit https://lisamillerassociates.com/episode-52-agent-roundtable/)

High-risk flood zones are expanding this year along significant stretches of Florida’s coastline. In Broward County, nearly 90,000 properties have been moved into a FEMA flood zone. But 80,000 of them were in such a zone prior to ten years ago, when FEMA moved them out – only to add them back in this year. Many will now have to purchase flood insurance.

Former Florida Deputy Insurance Commissioner Lisa Miller talks with the county floodplain manager for an explanation, the reporter who broke the story, and another reporter from Palm Beach County, which is fighting FEMA’s efforts to expand flood zones.

Show Notes

FEMA calls these high-risk flood zones Special Flood Hazard Areas (SFHA). They are designated on a FEMA Flood Insurance Rate Map as zones that begin with the letter “A” or the letter “V” for those living along the coast, subject to additional threat of storm surge. Properties in these zones supposedly have a 1% probability of flooding each year, or about a one-in-four chance every 25-30 years. Some refer to this as the 1-in-100-year flood probability.

FEMA’s 2024 updated maps have moved nearly 90,000 (88,913) properties in Broward County, Florida into a high-risk flood zone. But almost 80,000 (79,689) were in that zone prior to FEMA’s 2014 map update, then removed, and now 10 years later are back in a flood zone. “How did this happen and what’s the science behind it?” asked host Miller.

Carlos Adorisio, Floodplain Manager for the unincorporated area of Broward County, explained that FEMA flood maps are based on studies of two factors: rainfall and coastal storm surge. Maps from the 1980’s and 1990’s reflected most of the county was high-risk. “In 2014, FEMA updated the maps, but they only updated the portion for the rainfall risk and not for the storm surge. There was a lot of development and better modeling and a lot of areas were removed from the 100-year floodplain,” he explained. In its 2024 maps, FEMA updated only the coastal storm surge risk. “There’s been more development, updated storm data, and better computer modeling techniques and mapping,” since the last storm surge studies done in the 1980’s, said Adorisio, who is a Professional Engineer and a Certified Floodplain Manager.

“One of the components of storm surge is the sea level, which is higher than they accounted for in the 80’s and therefore the storm surge is higher in this study,” Adorisio explained. “Now the southern part of the county is lower than the middle and northern sections of the county...and it's to the point where FEMA believes that the higher storm surge elevation not only goes to I-95, it goes all the way to U.S. 27, which is close to the Everglades levee. That’s why you have those almost 90,000 parcels that are increasing in flood risk and now in the Special Flood Hazard Area,” said Adorisio, who earlier in his career worked for FEMA as a technical consultant for flood maps.

Ron Hurtibise, business reporter for the South Florida Sun Sentinel, first reported the scope of the 2024 flood map changes. The new high-risk flood zones are primarily located along... (For full Show Notes, visit https://lisamillerassociates.com/episode-51-floridas-expanding-flood-zones/)

A new working paper from the Congressional Budget Office estimates that for every dollar spent to elevate or buy-out a flooded home, $2.69 would be saved in future costs over the next 30 years. Of the 1.3 million projects the paper identifies, roughly 138,000 would see a greater savings of $6 dollars. Total savings would amount to $519 billion in future damage if governments and homeowners together would spend $193 billion today.

Former Florida Deputy Insurance Commissioner Lisa Miller sat down with one of the paper’s co-authors and the head of a national home floodproofing solutions company to discuss the government’s current efforts – and what’s lacking – to avoid costly future flood damage across the nation.

Show Notes

The Congressional Budget Office (CBO) is the research arm of the U.S. Congress, tasked with providing nonpartisan analysis for lawmakers to consider when making policy. Its May 2024 working paper, Flood Damage Avoided by Potential Spending on Property-Level Adaptations found:

• There are opportunities for adaptation for approximately 1.3 million projects nationwide (each adapting a single property of one to four units) where the expected avoided damage exceeds project costs primarily from elevating the home above flood stage or a buyout of the property for later destruction.
• The total cost of completing these projects would be $193 billion, preventing $519 billion of expected damage over 30 years.
• On average, each dollar spent on these projects would avoid $2.69 of expected damage.
• About 138,000 projects would result in expected avoided damage over six times the cost of the project.
• Outcomes vary based on area income and geography.

“We started looking into federal spending on adaptation to flood risk and we found that there's a big literature out there, but it can be really difficult to compare across studies, and apply one context to another,” explained paper co-author Evan Herrnstadt. “So we would need a scalable and flexible approach and found it was feasible for us to use the National Structure Inventory from the U.S. Army Corps of Engineers and flood modeling from the First Street Foundation and combine that with some other work to estimate avoided damage from property level interventions like buyouts and elevations,” said Herrnstadt, who is a CBO economist. The national framework that CBO developed used inland and coastal residential properties that contain 1 to 4 housing units.

While the CBO doesn’t make policy recommendations to Congress, Herrnstadt said in this report, it does characterize sets of projects and different allocation schemes to provides potential opportunities to avoid flood damage paid principally by federal, state, and local governments, together with homeowners. The paper notes that FEMA has multiple programs that fund property-level adaptation. From fiscal years 2008 to 2019, annual obligations for those programs totaled about $280 million, representing an average of 29% of the amount FEMA has obligated for hazard mitigation.

“Evan this is fantastic work,” said Tom Little, President & CEO of Floodproofing.com, an integrated company providing property risk analysis, wet and dry floodproofing solutions, and flood insurance. “This is the type of information that we need to get out there to continue to build awareness that we can actually invest money and get a strong return on that investment, by retrofitting the existing infrastructure that we have... (For full Show Notes, visit https://lisamillerassociates.com/episode-50-dollar-sale-on-flood-damage/)

A new report claims that Florida's property insurance market is full of “low quality insurers,” especially those Florida-based companies that write the bulk of the 7.5 million homeowners and condo insurance policies. It casts aspersions on Demotech, the rating agency that reviews their financial stability.

Former Florida Deputy Insurance Commissioner Lisa Miller sat down with Demotech President Joe Petrelli to get the other side of the story that the report didn't. She also learned that it wasn't low capital and surplus that led to seven company insolvencies, as the report claims, but instead targeted technology-enabled claim instigation.

Show Notes (For full Show Notes, visit https://lisamillerassociates.com/episode-49-when-insurers-exit/)

The report, When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets was written by researchers at Columbia University, Harvard University, and the Federal Reserve Board and published online prior to being peer reviewed. The report’s abstract describes it as a study of how homeowners insurance markets respond to growing climate losses and how this impacts the home mortgage markets.

“Using Florida as a case study, we show that traditional insurers are exiting high risk areas, and new lower quality insurers are entering and filling the gap. These new insurers service the riskiest areas, are less diversified, hold less capital, and 20 percent of them become insolvent. We trace their growth to a lax insurance regulatory environment. Yet, despite their low quality, these insurers secure high financial stability ratings, not from traditional rating agencies, but from emerging rating agencies.”

The report specifically targets rating agency Demotech, which provides Financial Stability Ratings (FSR) for most of the 50 or so Florida-based property insurance companies, including six of the recent eight carriers to enter the market. The report claims Demotech’s ratings “are high enough to meet the minimum rating requirements” of Fannie Mae and Freddie Mac, which back many home mortgages, but that most of those insurance companies wouldn’t meet government requirements if rated by AM Best, suggesting the companies are financially weak.

“I think the thing to keep in mind is the report is based on what are called counterfactual AM Best ratings of Demotech-rated companies,” said Joe Petrelli, President of Demotech, who described counterfactual methods as those based on “what-if” scenarios. “So I think that, in and of itself, should have alerted people that this was not based on anything real or actual. It was based on counterfactual information. It's like rewinding the world, changing a few crucial details, and then hitting play to see what happens. It's essentially a simulation,” said Petrelli.

Petrelli is an actuary and a 55-year veteran of the insurance industry. He and wife Sharon co-founded Demotech in 1985 and today the agency reviews and rates 460 insurance companies across America. It is registered with the U.S. Securities and Exchange Commission as a nationally-recognized statistical rating organization for insurance companies. Florida regulators approached Demotech in 1995 to become the very first ratings company to review and rate independent, regional and specialty companies that filled the gap left by.... (For full Show Notes, visit https://lisamillerassociates.com/episode-49-when-insurers-exit/)

How will the insurance bills that passed in the recently completed 2024 Florida legislative session compliment past marketplace reforms? Is a property insurance market marred by carrier insolvencies in recent years and ongoing double-digit rate increases starting to stabilize?

Former Florida Deputy Insurance Commissioner Lisa Miller talks with two legislators about the new laws expected to impact Florida’s property insurance and real estate markets, reinsurance prices, condominium affordability, and their joint belief in bipartisanship for finding workable policy solutions.

Show Notes

Florida State Representative Tom Fabricio (R-Miami Lakes) sits on the House Insurance & Banking Subcommittee and Chairs the House Ethics, Elections & Open Government Subcommittee. He is a former insurance defense attorney whose practice now focuses on commercial and real estate litigation, including real estate transactions.

Florida State Senator Nick DiCeglie (R-St. Petersburg) is Vice Chair of the Senate Banking and Insurance Committee, Chair of the Senate Transportation Committee, and a former Chair of the House Insurance & Banking Subcommittee. He is President and CEO of Hope Villages of America, a Tampa Bay area nonprofit organization addressing hunger, homelessness, and domestic violence.

Both lawmakers discussed their motivation for entering the Florida Legislature and their vision for Florida’s homeowners insurance marketplace and by extension, the state economy. Topics included the admitted insurance market (those companies whose rates and policy forms are approved by state regulators) and the surplus lines companies (those whose rates and forms are largely unregulated, and who often insure risks admitted companies don’t), along with reinsurance companies, who provide catastrophe insurance for insurance companies. Among the bills and issues discussed on the podcast with host Lisa Miller:

• HB 1503 authorizes surplus lines insurance companies to take out policies (“takeouts”) from the legislatively-created and state-backed Citizens Property Insurance Corporation’s non-homesteaded residential properties, such as second homes, among other risks. “I think surplus lines are important (for) it allows other free market competition,” said Rep. Fabricio. “Because ultimately, with Citizens having a population of over 1.2 million to close to 1.3 million policies, we need to depopulate Citizens. We need to bring Citizens down to a number under a million policies, where Citizens will be truly our carrier of last resort,” he said.
• HB 1029 applies the popular My Safe Florida Home homeowners program to condominium complexes and individual condo unit owners in an initial pilot program. The program offers a $2 to $1 match to incentivize homeowners to harden their homes from future hurricanes. “Anytime that we can mitigate losses in the state, it’s going to go a long way in contributing to that healthy insurance market,” said Sen. DiCeglie, who sponsored the Senate companion bill. “In my district alone, we have thousands of condominium associations and those folks are looking for relief as well. Recent condominium reforms requiring them to put more money in reserves, so that they're making the necessary repairs and upkeep of the condominiums (together with)....

(For full Show Notes, visit https://lisamillerassociates.com/episode-48-2024-legislative-roundup/ )

Ray Shelton, Ph.D. is a nationally-known expert on stress and the impacts it has on frontline personnel in disasters and other crises. He is a Fellow and the Director of Professional Development for The American Academy of Experts in Traumatic Stress, in Miller Place, New York. He’s seen tragedy first-hand over 35 years serving with the Nassau County, New York Police department, including the Twin Towers Collapse during 9/11. He’s also a former firefighter and paramedic.

“The adjusters are no different than fire, police, and EMS, they're front line. They're action-oriented. They take risks. They have tremendous attention to detail. They have a powerful need for control, to help people get their lives back in order,” said Shelton. “But the price that is paid for that, is all of the memories, all of the conversations, all of the sites that they see stays with them. There's absolutely no delete button in the human brain.”

Shelton worked with the Liberty Mutual Insurance Catastrophe Response Team during the California Wildfires in 2008 and subsequent tornado outbreaks across the country. That’s where he met Jenny Pye, M.S., whose 35 years with Liberty Mutual included serving as a Property Claims Manager and Director of Quality Improvement for Auto Physical Damage (APD), Property, and Shared Services.

“Every time I hear Ray talk, it takes me back to early in my career when I was an adjuster in the field and would go out and have multiple fatality 18-Wheeler accidents, and just the emotions of being on scene and investigating a claim,” said Pye.
“Sometimes the bodies were still there and then talking to their families, just all those emotions.”

Today, Pye is the Director of Commercial Claims at Pilot Catastrophe Services, based in Mobile, Alabama. She helps adjusters and the firms they serve to not only proficiently manage the technical part of the job, but manage the emotional toll that claims can have. She said adjusters who strive for great customer experience, often ignore or cover-up signs of traumatic stress.

“But sometimes you get feedback as a manager and hopefully before you get that feedback from your customer, you're recognizing these issues,” said Pye. “Maybe the adjuster is not as responsive as they normally are. It's not just answering a text or phone call, if you're calling about a claim, it can be on a Zoom call and you will see where these folks that are normally engaged are not engaged.” That, she adds, requires claim managers to “finely tune your senses to be aware of what’s going on.”

Shelton, who presents “Fine Tuned Adjuster” webinars for the Property Loss & Research Bureau said there are consequences of not recognizing the signs in adjusters or of claims management not responding to the signs.

“If you do nothing, it stops productivity and the bigger danger (is) maybe that you lose that person who has bottled this all up from multiple times that this has occurred and finally says, ‘You know, I've had enough’ and they leave the industry,” Shelton said, noting the current market challenge of recruiting adjusters to replace those that leave the profession.

(For full Show Notes, visit https://lisamillerassociates.com/episode-47-stress-strain-of-adjusting/)