Which Came First? Claim or Insurance Premium Hike?

The title was my attempt to be witty.  It’s a spin on the well known “which came first, the chicken or the egg?”  For years Florida residents have had to put up with rising insurance premiums from the insurer of last resort, Citizens.  Recent data regarding claims made against policies held by the insurer made me think about the old adage.

Are insurance rates up because of all the claims made?  Are some of the claims made, false?  I don’t know.  I can’t even venture a guess.  But I do know that the percentage of claims originating in our county of Miami-Dade far outweigh the rest of the state and yet policies held don’t mirror those numbers.

For instance, Miami-Dade accounts for 33% of reported claims to Citizens, yet only 19% of the policies in force with Citizens are held by Miami-Dade residents.  An even more disparaging number, is that in the past 5 years, 84% of all claims were from Miami-Dade, Broward & Palm Beach counties, yet there are 67 counties in all of Florida.  The old 80/20 at play here.

Further, 50% of those claims came through 10 law firms and 60 percent of those came from Miami-Dade.  There are aggressive Miami lawyers taking Citizens to court because Citizens has routinely denied water-damage claims, thereby forcing policy holders to hire attorneys to have their claims paid.  It seems silly that Citizens would spend triple the amount of a claim in legal fees to fight it.  Silly is too light a word.  Downright stupid, perhaps?

You can read more about this and get lots and lots of numbers here.

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