Local insurance experts discuss the current cost crisis.

As home insurance prices are poised to increase sharply, the South Florida SunSentinel asked leading insurance experts to provide their views of the disintegrating state of the market. Here’s what they had to say. Responses have been edited for length and clarity.

Locke Burt, president and CEO, Security First Insurance Co.

Insurancecost drivers arewell known and have been reported before — bad weather, increased reinsurance costs, shady contractors, aggressive plaintiffs bar with a favorable legal environment, water losses, fraud. What’s different is the trends seem to be accelerating and the Legislature has not done anything meaningful to change the trajectory of increased costs which, under Florida law, must be passed on to consumers in the required annual rate filings.

Theprivate sector is shrinking and raising rates as fast as they can because the losses are not sustainable and the providers of additional investment capital simply do not believe that the situation in Florida is going to improve for several years. That’s why the public companies are selling for 50 cents on the dollar.

This situation won’t change until legislators hear from their constituents and decide to do something, the weather improves, or the lawyers disappear.

Travis Miller, insurance regulatory attorney, Radey Law

In Florida, we face unique but foreseeable challenges due to our substantial coastal exposures andthe corresponding hurricane risk. Insurers anticipate these challenges and typically are well prepared to meet them. However, these challenges have been compounded in recent years by other issues that are not meteorological but instead are behavioral. Simply put, loss experience in Florida has deteriorated to a point historically unseen in this state and significantly worse than in other states following similar events.

The conditions in the current market just reflect how these concerns manifest over time if not addressed.

Barry Gilway, president and CEO, Citizens Property Insurance Co.

The biggest issue, in my opinion, is the unprecedented withdrawal of private companies from large portions of the marketplace including southeast Florida, Tampa Bay and even the Orlando area.

We are entering the fourth year of losses for most private carriers. Because of continued losses, companies are unable to write new policies in less-risky areas of the state to shore up their finances. It is simply very hard to attract new capital to a market that is entering its fourth straight year of losses.

The only options private companies have are to leave markets, insure only newer homes and seek unprecedented rate increases to pay for increasing litigation, substantially increased reinsurance costs and social inflation that continue to increase the number of water losses and average severity of the losses.

For Citizens, that means there is a significant and growing price gap between us and them. (Our rates are capped at 10%.)

Gilway defined social inflation as trends that result inmore litigation, broader contract interpretations and larger jury awards.

KevinWalton, executive director of product and reinsurance, People’s Trust Insurance Co.

Loss creep — the steady increase in unforeseen costs of claims fromIrma and Michael— is causing serial reinsurance rate increases of20% andmore annually that will need to be passed through to consumers plus expenses. This has been getting worse since 2018. Until Hurricane Mathew in 2016 and then Irma in 2017, we had not had a significant storm sinceWilma in 2005. Reinsurance costs were trending down until 2018 and nowthey are trending up significantly.

Losses from Irma are now more than three times more costly than expected, which changes the pricing mindset of the reinsurers. One hundred percent of these increases are caused by public adjusters and attorneys inflating the cost of claims. The frequency of this activity (solicitation for fraudulent and inflated claims) is unprecedented. This is why consumers should beworried.

Consumers should call their legislators and demand change of legislation regarding one-way attorney fees that encourage attorneys to file unwarranted and frivolous lawsuits without risk.

Dulce Suarez-Resnick, vice president and sales producer, NCF Insurance Associates

The majority of the companies that write homeowners in Miami Dade, Broward and Palm Beach counties have closed down. That means they are not accepting new applications that include windstorm coverage.

The numbers don’t lie. Citizens is growing again, and that is a sign of the marketplace, between the non-renewals and the lack of availability of options. Citizens might become the state’s biggest homeowners and commercial property carrier again, especially for windstorm coverage.

Thequestion is: Canweafford to continue on this path?

William Stander, executive director, Florida Property& Casualty Association

Contractors, public adjusters and lawyers are manufacturing insurance claims and lawsuits to pad their own pockets at the policyholders’ expense. Losses like that take18to24months to show up in the insurance rates people pay. The simple answer is all of it is nowcoming to a head, just like we’ve been warning about for years.

We can solve it by doing what they did in Texas — tying how much the lawyer makes to how much they win for their client, instead of the no-risk, free-forall that now encourages questionable claimsandshotgunlawsuits.

In a nauseating example from South Florida, a roofing contractordistributed flyers promising a $500AmericanExpress gift card just for letting someone on your roof. In a similar flyer, the contractor says they’re 99% sure the roof has hurricane damage. Thesewere going out in the days leading up to the Hurricane Irma claim-filing deadline.

Amy Boggs, property insurance committee chair, Florida Justice Association (a trade association for plaintiffs’ attorneys)

In many ways this insurance industry “crisis” is of their own creation. Every year legislators hear from the insurance industry about the need for increased rates. Every year there is a different culprit for the problem — you plug one hole and suddenly there’s a new one. There is no end in sight.

There’s also no evaluation of if the legislative “fix” worked. Before anewlawintended to lower rates for consumers can actually take affect, the industry is back saying there’s yet another change needed.

When do we say enough is enoughandhold insurancecompanies in Florida accountable? Continuing to ask consumers to pay ever-increasing premiums with little to no actual return on those premiums is nothing short of fraud if you ask the thousands of homeowners and businesses that are still unable to rebuild.

These are consumers who have had claims, who are still waiting for claims to being paid, policyholders who were victims of Hurricane Michael and three years later STILL haven’t had their claims paid.

In any other industry, a companywhose business modelwas to gain revenue while intentionally not performing under contract, would be prohibited from operating. Yet, this has become standard practice for insurance companies.

Paul Handerhan, president, Federal Association for Insurance Reform (a consumerfocused insurancewatchdog group)

While the financial stability of Florida’s homeowners insurance market is at its most tenuous levels due to escalating underwriting and reinsurance costs, I amconfident that leadership in both the Florida House and Senate are prepared to enact reforms to prohibit those individuals who conspire to game and abuse our state’s insurance systemfromcontinuing their coordinated schemes. FAIRwill be actively supporting Florida’s legislative leadership and the needed reforms to protect policyholders.