Reinsurance was expected to bring stability to Florida’s troubled property insurance market this year, with moderate rate hikes and more options. However, this stability hasn’t reached the mobile home sector. Florida insurance agents are now reporting that rising reinsurance costs have led at least one insurer to cancel coverage for mobile and manufactured homes. Availability of coverage is scarce, particularly for mobile homes older than two years.
John Gardner from Lee County Insurance in Fort Myers shared, “We used to specialize in manufactured and mobile homes, but now the market in Florida is falling apart.”
The issues started in March when American Mobile Insurance Exchange, based in St. Petersburg, announced it would cancel over 1,100 policies in just 45 days. The company said this was part of a strategy to exit the mobile home market in Florida before the 2024 hurricane season, citing deteriorating financial conditions.
The company promised to refund unearned premiums and subscriber surplus contributions by June 3, 2024, to help policyholders find new coverage. Agents will also need to return any unearned commissions related to the canceled policies.
Florida law typically requires a 120-day notice for cancellations, but American Mobile’s notice cited a statute allowing a shorter period if approved by regulators, due to hurricane risk and inadequate reinsurance.
American Mobile CEO Jeffrey LeGare and others were unavailable for comment, but the company’s memo indicated that the cancellations were made in advance of an unusually busy hurricane season predicted by climate scientists. Agents have reported that American Mobile’s reinsurance costs were higher than the premiums it collected for mobile home policies in Florida.
Despite being relatively new, American Mobile was seen as a crucial player in the mobile home market after other insurers pulled back due to litigation issues in Florida. However, financial troubles may have been brewing for some time. The exchange, part of K2 Insurance Services, was acquired by Summit Acquisition Inc. in April 2023. The company also withdrew its filing for a planned expansion and had its financial stability rating withdrawn last November.
In response, American Mobile reached a deal with American Traditions Insurance Co. to take over about 8,000 mobile home policies. American Traditions, which is not affiliated with American Mobile, is rated “A Exceptional” by Demotech and “BBB” by KBRA. Their coverage will continue until the expiration of each AMIE policy, with the premium remaining unchanged during that period. However, coverage will be subject to American Traditions’ underwriting guidelines and premiums.
Unfortunately, even American Traditions is now nearing its capacity and has limited coverage to newer mobile homes built in 2022 or later. Other insurers are similarly restricting coverage to homes built in 2020 or newer. Older homes, which might not meet modern wind-resistance standards, are more vulnerable to damage.
As a result, agents are increasingly turning to Citizens Property Insurance Corp., a state-run insurer, for coverage of older mobile homes. Citizens is currently aiming to reduce its policy numbers and exposure. Gardner noted, “If it’s older, Citizens is the only option.”
Citizens has seen its mobile home policies rise nearly 10% over the past year, from 79,158 to 86,808, partly due to American Mobile’s cancellations and other insurers’ restrictions. Despite a significant rate increase in 2023, Citizens’ rates remain among the lowest in many parts of Florida.
As of July 12, Citizens had over 1.22 million policies in force, a slight decrease from last year but an increase from May’s numbers.
For those facing challenges with mobile home insurance, Preferred Claim Solutions is here to help. At Preferred Claim Solutions, we understand the complexities of navigating the insurance landscape in Florida. Our team is dedicated to providing tailored solutions to meet your specific needs. Whether you’re dealing with cancellations or seeking new coverage options, visit our website at Preferredclaimsolutions.com for expert guidance and support. Let us help you find the best possible insurance solutions to protect your home and peace of mind.
