The Insurance Information Institute (Triple-I) has warned Florida insurance problems could worsen with hurricane impacts and frivolous legal actions continuing ahead of laws taking effect to improve the market. 
 
The Florida Insurance Guaranty Association (FIGA) has stepped in to cover more than 20,000 open Hurricane Ian claims after the insolvency in February of United Property & Casualty Insurance Co (UPC). 
 
The FIGA action will result in a 1% emergency assessment added to property insurance renewals starting October 1 in FIGA’s first such action since seven insurers failed after Hurricane Andrew struck the state in 1992. 
 
“Contributing to UPC’s demise were the exorbitant costs of frivolous and fraudulent litigation that spiralled out of control in Florida over the past few years,” Triple-I CEO Sean Kevelighan says. 
 
“Although the state’s legislature recently passed historic tort reform to address the issue, the market’s problems won’t magically disappear.”  
 
The state-backed Citizens Property Insurance Corp, which insures property owners unable to find cover in the private market, also faces financial challenges due to its increased risk exposure, and consumers would be “on the hook” to replenish its funds through surcharges if it were to deplete its reserve due to heavy storm losses, Mr Kevelighan says. 
 
“This predicament highlights the perils of government-run entities entering the high-risk arena of insurance coverage,” he says. 
 
“Politically motivated decision-making, such as offering coverage at rates that are not actuarially sound, ultimately fails in the marketplace and shifts the financial burden onto everyone.” 
 
Mr Kevelighan says it’s important to find a balance between serving the needs of consumers and ensuring the financial stability of insurance companies, whether in Florida or other states that have enacted Fair Access to Insurance Requirements (FAIR) plans.  
 
The Atlantic hurricane season starts on June 1 and runs to November 30.