Rate hike won’t be as big as feared

Insurers will have lower costs this year

There hasn’t been much good insurance news to report for Florida property owners over the past several years.

Premiums for most South Florida policyholders have increased significantly over the past three years — a result of claims abuses and sharp upticks in costly litigation for major insurance carriers.

And those factors are expected to trigger rate hikes for most area property owners again this year.

But here’s a bright spot, such as it is: Your 2018 policy cost won’t increase as much as insurance executives had expected after $140 billion in catastrophe losses last year from events that included hurricanes Irma, Harvey and Maria, and wildfires in California.

That’s because rates for reinsurance — which is the insurance that insurance companies pay to help them pay claims after a catastrophe — only increased an average 1.2 percent for the 2018 Florida hurricane season that began June 1, according to a report released late last week by JLT Re, a unit of Jardine Lloyd Thompson Group PLC, a London-based provider of insurance advice and brokerage services.

The increase is a turnaround from the previous six years of reinsurance rate decreases. But a 1.2 percent increase is considerably lower than what most insurers were expected to pay, JLT Re’s report said.

Paresh Patel, president of Tampa-based Homeowners Choice Insurance, said investors expected the heavy losses from 2017 to trigger rate increases ranging from 10 percent to 20 percent, which would have sent individual property owners’ premiums up by similar percentages.

But “because everyone thought that, all this money came pouring into the marketplace [from investors] wanting a piece of the action,” he said.

And because so much money was available to sell to insurance companies, reinsurers had to keep rates low just to compete, Patel said.

“Suddenly, you ended up with too much [capital] chasing the business. So the rate increases didn’t happen.”

And while that might not have made the investors happy, it’s a windfall for policyholders, he said.

“Once in a while, Florida gets lucky,” Patel said.

Reinsurance rates as a whole