With mobile home rental cancellations across the United States, Florida’s mobile home market has ‘collapsed’

Reinsurance in Florida’s long-troubled property insurance market was expected to stabilize this year — with moderate rate increases and greater availability.

But those calmer waters don’t appear to have reached the mobile home market, and Florida insurance agents now report that higher reinsurance costs have forced at least one insurer to drop coverage for mobile homes and manufactured homes. Agents said they’re finding very little coverage available, especially for mobile homes more than two years old.

“One of our niches was manufactured homes and mobile homes. But now the market has completely collapsed in Florida,” said John Gardner of Fort Myers, agency manager of Lee County Insurance, one of the largest agencies in the area.

The problems began in March, when St. Petersburg-based American Mobile Insurance Exchange sent a notice to Florida agents and policyholders that more than 1,100 policies would be canceled in just 45 days.

“These cancellations were issued as part of AMIE’s plan to exit the Florida mobile homeowner market prior to the start of the 2024 hurricane season,” the bulletin reads. “This exit plan is due to AMIE’s deteriorating financial condition.”

The bulletin noted that the exchange would issue refunds of unearned premiums and excess subscriber contributions on June 3, 2024, to help policyholders pay for replacement coverage.

Agents are also responsible for reimbursing any unearned agent commissions associated with the affected policies. To this end, within 30 days, you will also receive a Reimbursement Commission Statement that reflects the reimbursement commission obligations for your canceled policy listing.

Florida law requires most cancellations to be given 120 days’ notice. But American Mobile’s notice says Florida Statute 627.4133(2)(b)6 allows for a shorter notice period, if regulators approve it, for several reasons, including hurricane risk and lack of adequate reinsurance.

American Mobile CEO Jeffrey LeGare and others at the company could not be reached for comment last week. But the memo to agents said the policies were canceled ahead of the 2024 hurricane season, a season that climate scientists have predicted will be unusually busy. And agents reported that American Mobile officials said the exchange’s reinsurance costs this year were higher than the premium the company wrote on mobile home insurance policies in the state.

American Mobile, just three years old, was seen as a lifeline for at least part of the mobile home market after other insurers pulled out of litigation-heavy Florida in recent years. But financial problems may have been building for months. The exchange, part of K2 Insurance Services, was acquired in April 2023 by a K2 subsidiary known as Summit Acquisition Inc., according to a consent order from the Florida Office of Insurance Regulation.

Last November, American Mobile withdrew its application to the OIR regarding a proposed withdrawal of mobile home multi-peril policies. And in April, American Mobile had its Demotech financial stability rating withdrawn. It is unclear whether the withdrawal was voluntary or initiated by the Demotech rating agency. In a follow-up bulletin to agents and policyholders, the exchange said in late March that it had reached an agreement with American Traditions Insurance Co. to take over about 8,000 of its mobile home policies.

American Traditions, which is not affiliated with American Mobile, is rated “A Exceptional” by Demotech and “BBB” by KBRA.

“Coverage provided by ATIC will continue through the current expiration date of each AMIE policy and the premium will remain the same during that period,” American Mobile’s follow-up notice explained. Renewals will be subject to ATIC’s underwriting guidelines and premiums, the bulletin said.

But even ATIC, which is now reportedly close to capacity, has limited its coverage to the newest mobile homes — those built in 2022 or earlier, Florida agents said. Other carriers have also limited their coverage to homes built in 2020 or newer. In some cases, older homes weren’t built to modern wind-resistance standards and are more vulnerable to damage, studies have shown.

That means one thing: Agents have no choice but to turn to Citizens Property Insurance Corp., created by the state of Florida, to cover older mobile homes — at a time when Citizens hopes to pursue a depopulation program and reduce its policies and exposure.

“If it’s older, it’s Citizens,” Gardner said.

Over the past year, Citizens has seen its mobile home insurance policies jump nearly 10%, from 79,158 to 86,808, according to Citizens data. Some of that growth is likely due to American Mobile cancellations and limitations from other insurers, as well as the fact that Citizens’ rates continue to be among the lowest in many parts of Florida, Gardner said. That’s despite a significant increase in Citizens’ mobile home rates in 2023.

For all coverages, Citizens had more than 1.22 million policies in force as of July 12, down slightly from a year earlier but up from May’s figures.

Related: Ways to Mitigate Wind Damage in Mobile Homes Are Often Overlooked

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