jump to main menu jump to subject menu jump to content jump to footer

Insurance Consumer Advocate

Sha'Ron James

Contact Us
Mailing: 200 East Gaines St.
Tallahassee, FL 32399-0308

For Consumer Assistance:
Contact the Division of
Consumer Services within the
Department of Financial Services

Online at
Consumer Services
Toll-free in Florida
Out of State
(850) 413-3089
(850) 413-3033

Public Records Requests

Follow the ICA on Twitter

design placeholder only

Heritage CEO: Failure to Enact Assignment of Benefits Reform Affected Florida Election


Date: November 09, 2016
Source: Best's News Service


Heritage Insurance Holdings Inc. isn’t taking any policies from Citizens Property Insurance Corp. and won’t until rates rise or meaningful assignment of benefits reform takes place in Florida, Chairman and Chief Executive Officer Bruce Lucas said during a third-quarter earnings call.

The call was held the day after the general election, and Lucas said he noticed “some of these guys had a little trouble on their re-election last night … rising insurance premiums are a part of it. Maybe they shouldn’t have blocked AOB last year.”

Had they approved reform, he said they would “probably still be in office.” Lucas thinks change is in the works, saying he held some “off-the-record” conversations with “several leaders in both the house and senate.

They are very, very much in support of comprehensive AOB reform this session,” he said, adding he’s cautiously optimistic.

With Tallahassee politics, Lucas added, “You never know what’s going to happen.” In the third quarter, net income at Heritage declined 35% to $10.9 million.

Net premiums earned increased 23% to $101.6 million.

The combined ratio on net premiums earned worsened 14.5 points to 89.3. Net investment income increased to $2.3 million, from $1.97 million. Total revenue rose to $109.3 million, compared with $89.2 million in the prior-year quarter. Lucas said Heritage was approved for a 9.9% overall rate increase to take effect Dec. 15 for multiperil homeowners business taken out from Citizens, although the effect in the tri-county area in South Florida — Broward, Palm Beach and Miami-Dade counties — will be about 15%.

He said the company also sought, and was granted, approval to cap water claims on homes 40 years or older at $10,000.

The owners of homes newer than that may opt in to the cap in exchange for a reduction on their premiums. “We are pricing for the risk,” Lucas said, after seeing the loss ratio worsen by about 10 points over two years because of assignment of benefits. Should attrition occur because of higher rates, “somebody else can pick it up and lose money on it.”

In many water damage claims, Florida homeowners have signed assignment of benefit agreements allowing home repair vendors to assume the policy, inflate claim costs and then file a lawsuit when insurers dispute the bill (Best’s News Service, Aug. 18, 2016).

Heritage entered into a marketing agreement with National General Insurance Co. and started writing homeowners insurance through its distribution network early this year in North Carolina. “We are looking at expanding that partnership in other states,” said Lucas, as the deal has been “very symbiotic for both companies.”

He said Heritage is on track to write $9 million to $10 million in premium in North Carolina this year. On Sept. 30 the insurer said it had 4,899 policies-in-force in North Carolina. Absent a strategic partner, he said the company wrote about $200,000 in premium in the third quarter in South Carolina, a new market for Heritage.

Category 1 Hurricane Hermine hit the Florida Panhandle on Sept. 2, resulting in 523 claims and $4 million in third-quarter losses, Lucas said.

It was the first of two hurricanes to impact the state, and the first to make landfall in Florida in 10 years. Hurricane Matthew early in the fourth quarter was more damaging, leading to about 2,500 claims to date. Lucas said Heritage expects $30 million in incurred losses in the fourth quarter from Matthew.

Chief Financial Officer Steven Martindale said the insurer has closed more than 75% of claims related to Matthew. Shares of Heritage Insurance Holdings Inc. (NYSE: HRTG) were trading on the afternoon of Nov. 9 at $12.94, up 11.84% from the previous close.