Earlier this year, commercial insurance rates were at a 10-year low. Now, observers say, the premium decreases have slowed and rates may begin to creep up again, but it’s not because of Hurricane Matthew, which skirted South Florida in October but had an impact further north.
“There are other reasons,” said Jorge Pena, managing director of ASI Florida and past president of the Latin American Association of Insurance Agencies.
“Rates are not dropping the way they were,” he said. “Some companies have left the market area.”
A major factor in some insurers’ decision to leave is the unregulated water damage remediation industry, he said. Insurance companies are wary of claims that are hard to analyze, and some claims have been inflated, if not downright fraudulent, critics say.
“It’s not so much that people are breaking pipes on purpose, but sometimes people who have $3,000 to $5,000 in damages will inflate that claim to $15,000 to $30,000,” Mr. Pena said. “They take existing damage and create more. Then they bring in other people to help them get the claim paid.
There was a sizable rate drop at the end of this year, but that has leveled off, said Ryan Cassidy, a commercial insurance agent at Franklin Street Insurance Services. “Since then, it’s been mostly flat, with maybe a 10% to 15% decrease on the property side.”
This is a signal that the market is near “the bottom of the floor,” he said. “I almost relate it to gasoline prices. There is a point at which the market cannot bear it anymore, because no one is making any money.”
Mr. Cassidy doesn’t relate it to Hurricane Matthew’s near miss or any other external factor. “At this point, at least, it’s all marketplace pressure.”