New research in the US has examined how the tragedies from hurricane Andrew ultimately paved the way for positive community safety innovations through modern building codes and enhanced regional mitigation initiatives. The study, however, reveals that new man-made events have also increased insurance crises for the US consumers.
The joint research ‘It's Not Just the Weather: The Man-Made Crises Roiling Property Insurance Markets’ released on the eve of the 30th anniversary of hurricane Andrew has been conducted by the American Property Casualty Insurance Association (APCIA), the Reinsurance Association of America (RAA), the Association of Bermuda Insurers and Reinsurers and University of South Carolina Risk and Uncertainty Management Center director and professor of finance Robert Hartwig.
The study reveals that 30 years later, there are new, growing property insurance crises in many US states resulting from man-made events - legal system abuse, government interference and fraud.
APCIA president and CEO David Sampson said, “Unchecked plaintiff bar tactics, legal system abuse, fraud, and misguided government policies are having a significant impact on the availability and affordability of insurance for American families, individuals, and businesses.
He said, “Collectively these factors have driven the average Florida homeowner’s insurance policy to nearly $3,000 in 2022, roughly twice the US annual average.”
Dr Hartwig said, “Hurricane Andrew forever changed the way American communities prepared for natural disasters. At the time, it was the costliest natural disaster in the US with an estimated $27.3bn in insured losses. Now, 30 years later, we are experiencing a new major catastrophe in states such as Florida, California and Louisiana, except this one is man-made.”
RAA president Frank Nutter said, “In Florida alone, seven insurers went insolvent in the last two years and 14 other companies have stopped writing new policies to avoid similar stability risks.
“A report by Florida state’s insurance regulator found that the state accounted for 79% of the nation’s homeowners’ insurance claim lawsuits, while making up only 9% of the nation’s homeowners’ insurance claims.”
According to the Florida Office of Insurance Regulation, in the last 10 years, $51bn has been paid in insurance claims and of that, 71% went to attorneys’ fees and public adjusters while only 8% went to claimants.
Fraud related to property insurance claims is another issue that costs policyholders and impacts the marketplace. According to data from the FBI the cost of non-health-related insurance fraud is estimated to be more than $40bn per year, which can translate to an additional $400 to $700 annually in insurance premiums for the average US family.