Personal Insurance Perspectives – A Guide to Purchasing Personal Insurance Protection in January 2024

Much is written regarding the state of the personal insurance marketplace in 2024.

An article in the Wall Street journal on January 8, 2024, maintains that “Buying home and auto insurance is becoming impossible.”

WSJ further assert that “For many Americans, getting insurance for both their cars and home has gone from a routine, generally manageable expense to a do or die ordeal that can strain household budgets.”

This memo focuses on two geographic areas: The Midwest, including Ohio, Pennsylvania, Indiana and Illinois; and the State of Florida. The Fedeli Group (TFG) provides thousands of personal insurance policies in these two regions of the country.

MIDWEST AT A GLANCE

Major price increases on home, auto, umbrella and recreational vehicle protection. Insurers say that they lost billions of dollars ($32.2 billion in the first nine months of 2023) because of weather related catastrophe claims; supply chain shortages and price increases on both materials and labor; and inflation overall.

Outright cancellation of policies; Insurance carriers refuse to accept new accounts.

Roof replacement provisions, especially those over 10 years of age; larger deductibles on wind/roof claims.

Auto policy price increases of 25% to 40% because of increase in costs to repair vehicles, primarily because of electronic components now contained in modern transportation systems. Vehicles are now being declared total or total constructive losses after an accident that, in the past, would not have been total losses by insurance carriers. Also, predatory insurance carriers, whose clients caused an accident are anxious to total not at fault driver’s cars to part them out because of the profit gained on used car parts.

Good credit is paramount: A good credit score as a first line of defense, which will allow The TFG to attempt to rescore credit with insurance carriers, as they base their pricing on an individual’s credit score. Significant variables arise when you have good credit versus poor credit.

• Higher deductibles. The use of deductibles generally is a good way to help lower premium costs. You are taking more risk but, with higher home values due to inflation and skyrocketing prices for new cars and trucks, this form of premium savings can be attractive. Some new vehicles have increased in price by over 30% in the last two years! The loss of free surcharges is also affected by wise use of deductibles.
• Changes in work location. It’s important to communicate professional changes such as if you now primarily work from home or are retired. Vehicle usage affects the premium overall. If the car is rated “back and forth to work 15 miles” versus “pleasure use only” there will be a cost difference.
• Policy coverage. Your homeowner’s policy-coverage can vary from one carrier’s homeowners’ policy to another. Also, some of TFG’s premier carriers have new important new protection at no or little cost. For example, one carrier includes protection for underground utilities damages. It includes electrical, plumbing, drainage and gas lines. Cost is $40 per year for $25,000 of protection. These claims are very large, and the coverage is easily worth the cost. Likewise, one carrier provides automatic liability insurance protection via their homeowner’s policy for electric bicycles at no additional charge. The proliferation of these new motorized units is not covered by standard homeowners’ policies. Losses can be exceptionally large!

FLORIDA AT A GLANCE

Major legislative changes were made in December 2022 by Governor DeSantis and enacted into law on December 22nd of that year. Good results are just unfolding from year 2022, which saw Hurricane Ian slam this state. Because 2023 had little weather-related activity, the law will affect the carrier’s results from 2022 into 2024, as the claims are settled.

Senate Bill 2A ends the era of one-way attorney fees. It repeals the fee provision has long governed property insurance lawsuits in Florida.

This now defunct law entitled an insured to reasonable attorney’s fees in ANY lawsuit in which ANY amount of recovery was awarded. The consequence of that leverage resulted in an explosion of litigation and the development of a cottage industry of contractors, mitigation companies and law firms formed to exploit the statutory scheme for profit.

The new statute deletes almost all references to attorney’s fees. In signing the Bill, Governor DeSantis eliminated the opportunity to bring frivolous lawsuits and reduce the burden of excessive and predatory litigation in Florida.

A second onerous practice has also been eliminated is the “assignment of benefits” issue. The Bill includes an outright prohibition on policy holders assigning any post loss insurance benefits under either personal or commercial property insurance policies issued after January 1, 2023. The benefit is that insurance carriers should be less fearful about litigating legitimate coverage disputes.

• Fewer lawsuits. The Risk Brief, a publication of a sister Company to the Society of CPCU announced last week that 13.2% fewer lawsuits have been files since early 2023 against Florida’s top 25 property insurers; a 20% decrease in lawsuits filed against State owned Citizens Insurance Company; a 46.8% decrease in lawsuits filed against Universal Property and Casualty, a large Florida Carrier.
• Steady pricing. Although some prices are softening, insurance carriers will continue with at least present pricing and demand building protection.
• Flood insurance. This coverage will be required via the Federal Flood Insurance Program by many homeowners’ carriers as a separate policy with additional affiliated costs.

Whether you are located in the Midwest or Florida, TFG wants you to be aware of news and trends of 2024. Have questions or concerns? Please reach out to Debbie May (dmay@thefedeligroup.com) or Alaina Fausett (afausett@thefedeligroup.com) of our personal lines department to assist you today.