It has been another busy year for the Southeast region – from the troubled Florida property insurance market to the COVID-19 pandemic, there was plenty of news to follow.
Some of the main insurance topics this year were:
Florida, Florida, Florida
The Florida real estate insurance market was a rollercoaster ride this year, and the readers of Insurance Journal were all over it, as stories about the Florida insurance market dominated the headlines. While the state was lucky enough to avoid a major hurricane in 2020, it still dealt with many issues from past storms and outrageous claims.
The year began with previously ordered rehabilitation for Florida insurer Windhaven, deemed "useless" by a County Court judge, who then ordered the insurer's liquidation. Soon after, the company ceased operations and its assets were auctioned. From that moment on, the problems of the market only got worse.
Insurer Ratings Drama
Insurance Journal released the news in January that Demotech, which reviews more than 40 Florida domestic insurance companies, is the head of Citizens Property Insurance Corp. had warned that more than a dozen Florida insurers were facing rating downgrades due to dangerous financial conditions. Demotech president Joe Petrelli wrote an update on the Florida insurer's downgrade situation for IJ shortly after, stating that most companies would receive confirmations, while addressing the variety of "macroeconomic and unique state-specific issues" Florida has to do with, notice.
For most companies, Florida insurer ratings trickled out in the coming months, while the most troubled companies either went bankrupt or were acquired, including:
In April, Demotech unveiled his final assessment decisions for the remaining companies, while hitting the state's insurance market as the & # 39; toughest & # 39; in the US.
In February, several Florida airlines attempted dizzying fare increases amid the market turmoil. In public hearings before the Florida Office of Insurance Regulation, company representatives said the requested rate increases ranging from 20% to 40% were necessary to keep their businesses healthy.
Insurers such as Capitol Preferred were among many insurers responding to deteriorating conditions in the Florida homeowners insurance market caused by a combination of AOB, water damage claims and years of major hurricanes, as well as some insurers' loss creep ; call claims.
"Unfortunately, there will come times when you will need to do certain things to increase your rates and keep your business viable and functional and healthy," said Jimmy Graganella, President and CEO of Capitol Preferred, at the Feb. rate increase of 36.5% on one of its insurance programs.
But rate increases weren't enough to help the insurer, and in May, just weeks before the start of the 2020 hurricane season, the government regulator approved Capitol Preferred's request to abolish nearly 24,000 policies and began monitoring its operations. . In the fall, Capitol Preferred merged its operations with its affiliate, Southern Fidelity, and shortly thereafter transferred majority ownership to Hudson Structure Capital Management, which does its reinsurance / insurance business as HSCM Bermuda. The transaction became effective on or around November 12, 2020.
Market in crisis
Industry experts say the Florida insurance market is heading for an availability crisis and the market issues and potential regulatory solutions were discussed in detail in the Insurance Journal series Florida Property Insurance Market Inches Closer to Crisis – Part 1, Florida Property Insurance Market Inches Closer to Crisis – Part 2.
Other Major Florida Headlines:
Florida attorney Scot Strems' story began in June when he was suspended by the Florida Supreme Court in response to an urgent petition from The Florida Bar. Strems has faced allegations that he and his firm were causing great public damage by filing thousands of frivolous lawsuits over the allocation of benefits against state insurance companies.
The Van Strems firm was accused by the bar of & # 39; lying, bad faith behavior & # 39; and making unfair or even fraudulent statements to other parties involved in legal proceedings, including the courts. The bar also accused Strems of illegally filing multiple lawsuits over an individual policy claim, delaying and ignoring court deadlines, and violating court orders.
"Mr. Strems is at the head of an extensive campaign of unprofessional, unethical and fraudulent behavior that is now infecting courts and communities across the state," the order said.
Strems tried to have the case against him settled, but the court-appointed arbitrator found his suspension to be justified and later the Florida Supreme Court rejected Strems's bid to settle it. The Florida Bar also filed a petition of contempt against him.
Following a lawsuit in September, Judge Dawn Denaro, the referee who oversaw Strems's case, agreed with The Florida Bar that Strems violated 14 bar rules, found guilty of misconduct, and recommended a 2-year suspension plus probation. of a year.
Strems is also facing a lawsuit by Citizens Property Insurance Corp. who claims he has filed sham lawsuits against the insurer and is guilty of extortion. Strems has denied all allegations of wrongdoing against him, but has stated that he saw where the company was failing in terms of communication and said he could have better dealt with the problems that had developed within his company. Still, Strems said he believed his company was bringing out "quality representation for the vast majority" of its customers.
Strems testified that he did not run the company to mislead or take unfair advantage of insurance companies, but insurers generally "aren't looking to do the right thing for our customers."
The Florida Supreme Court has yet to make a final ruling on Strems's case and has recommended the punishment, although Strems wants to review the referee's report. The Florida Bar has one additional complaint against Strems alleging further violations of the Bar.
Unsurprisingly, the coronavirus pandemic not only dominated national headlines, but was also a major topic in the Southeast. From insurance rebates to how state insurance regulators guided consumers and the industry through the unprecedented crisis, there's plenty of news to report.
Regulators in the Southeast issued industry guidelines for carriers and agents when the pandemic first started in the US in March. Regulators in North Carolina and Georgia stated that insurance was an essential activity so that companies could continue to work for their customers.
The Florida Office of Insurance Regulation mandated insurers to prepare for coronavirus-related outages, and the Florida Department of Financial Services made an allowance for insurance agency representatives who would otherwise be restricted from doing business outside of a licensed agency to work remotely.
When the economy stalled in March thanks to stay-at-home orders, insurers tried to ease the financial burden on their customers and respond to less driving by offering discounts and flexible payment options:
The Florida Association of Insurance Agents (FAIA) also spoke to Insurance Journal about what Florida agents needed to know during the coronavirus crisis.
Other Important COVID-19 Headlines:
North Carolina political drama
The very public drama of North Carolina insurance magnate and political donor Greg Lindberg came to a head this year when a federal jury found former Eli Global CEO guilty of conspiring to commit fair services, wire fraud and bribery.
North Carolina Insurance Commissioner Mike Causey, who was not charged with wrongdoing, was instrumental in alerting authorities and collaborating with the FBI investigation to prove that Lindberg was trying to bribe him in exchange for special treatment.
The founder of an insurance and investment company, Lindberg has been one of the top political donors to the state in recent years, donating more than $ 5 million to state and federal candidates and commissions since 2016. He was especially supportive of Republicans, but also Democrats.
Prosecutors in the case against Lindberg said he had shown no regret for what he had done and insisted on a 14-year sentence, although he ended up facing a 7-year sentence. Lindberg appealed the conviction, but lost and began his jail term in August.
The scandal was brought up regularly during the 2020 North Carolina Insurance Commissioner race between Causey and his Democratic challenger Wayne Goodwin. Causey won re-election in November and will serve as a commissioner for four more years from January.
Southeast Court Cases
Several lawsuits have sparked the interest of readers this year, particularly those related to business interruption caused by the pandemic:
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