United (UPC) stops writing new Florida homeowners business

Citing recent years of catastrophe losses, rising reinsurance costs and still growing litigation related costs, property and casualty (P&C) insurer United Insurance Holdings Corp. (UPC Insurance), said it is suspending writing new homeowners business in its home state of Florida.

A memo sent to insurance agents and seen by our sister publication Reinsurance News described challenges due to high catastrophe losses from the 2020 storm season, rising reinsurance rates, and growing litigation.

United (UPC’s) move to pull-back on Florida writings comes at an interesting time for the market, when some carriers are doing similar, but others have diverted focus back to the Florida market after suffering losses in the Gulf States in recent wind seasons.

A number of primary carriers have shifted their focuses back to the Florida property insurance market, saying conditions are much better there now and in fact better than in some other catastrophe, particularly wind, exposed states such as the Gulf.

First, FedNat said that rates in Florida are already high enough to make the state attractive to write more business in again, while United Insurance Holdings also said it is targeting growth in Florida again.

Even United (UPC) had only said back in November that it would target Florida growth for its American Coastal brand.

But its United Property & Casualty Insurance Company (UPCIC) brand is pulling-back now and its message to agents in the memo is telling.

“Following the unprecedented 2020 storm season, the significant increase in reinsurance cost, and the worsening litigation trends within many of our markets, UPC has made the difficult decision to suspend new business with effective dates of January 1, 2022 and later.

“There has been a material shift in late claim reporting patterns stemming from weather events in the last six years,” the company stated. “As such, we believe the more recent experience best represents what we expect to occur moving forward,” the company said.

It’s the latest sign that the Florida property insurance market remains challenged and is likely to continue firming.

United (UPC) shares risks back from its American Coastal brand to UPCIC, but it’s unclear at this time what this move to halt new homeowners business means for the firms aforementioned Florida expansion plans for American Coastal.

Opinions as to just how attractive writing Florida business is right now seem to differ considerably and we suspect further changes in strategic direction will be seen in the state over the coming months, especially if Florida Citizens begins to depopulate more rapidly as well.

Also read: Florida P&C rate filings show reinsurance firming needs to continue.