Florida regulators say water claims costs increased over 14 percent in five years
A recent blog post on assignment of benefits (AOB) pointed out two things: the rise in the number of water damage claims and the rise in the cost of repairs for that damage. Some insurers forewarned of this trend driving up claims costs, and now there is data to show the alarm bells bear heeding. An analysis of five years of water claims released today by the Florida Office of Insurance Regulation turned the AOB alarms from anecdote to fact.
In an analysis of data provided by the top 25 insurers, regulators said the frequency of water damage claims rose by 46 percent since 2010. And, the average severity (cost) of those water damage claims increased by 28 percent over those five years. Combined, that equates to an increase of 14.2 percent in water damage costs each year. When frequency and severity rise, insurance rates rise.
While Southeast Florida had the highest increase, it by no means holds exclusive rights to this trend. The report says all regions of the state saw “significant increases in water losses.” Additionally, the report said claims in which the benefits were assigned to a third party, such as the repair company, generally cost more, but the report said regulators could not determine why — because they did not ask.
The American Consumer Institute knows why — a rise in attorneys involved in the claims process. The institute says that Florida had a 1,000 percent increase in AOB lawsuits over the past nine years. It is at this point that you should read up on Florida’s one-way attorney fees.