Escalating Uncertainties of The Property Insurance Market in Florida

Highlights:

• Roofing fraud and inflation creating a fissure in the property insurance market in Florida
• 3 insurance companies on the verge of liquidation ahead of this year’s hurricane season
• Recommendations to keep homeowner’s insurance policy in check and document all property assets

According to the Insurance Information Institute (III), Florida’s private property insurance market is in twists and turns with increased rates in insurance premiums and deductibles. All of this is because of two very significant reasons; roof-replacement fraud and widespread litigation. Although Florida has 8% of property insurance in the U.S., shockingly, it has almost 80% litigation in the US.

In March 2022, two roofing contractors from Webb Roofing & Construction LLC were accused of fraud as they illegally solicited homeowners to file insurance claims to get their roofs replaced. This incident has questioned property insurers’ ethics and motives across the states. This has resulted in bothersome effects on Florida-based homeowners.

With the onset of hurricane season, a significant pool of around 5500 customers is queuing up to settle insurance claims and quotes per week. But with an increment of approximately 30% to 40% on insurance premiums, the tides are turning. According to Bankrate, the average cost of home insurance in Florida this year is around $1,648, significantly higher than the national average of $1,383.

A grave problem underlies the insurance market of these regions. Three property insurance companies in Florida, and five more in Louisianna were placed into receivership after becoming insolvent after paying hurricane claims. It won’t be long until the situation liquidates them, ceasing to operate in the respective states.

The Palm Beach Post recently quoted Mark Friedlander from III, “The private insurance marketplace now is on a trajectory for collapse.” Insurers across Florida have been dropping clients, stopped writing policies, or even doubled policy renewal rates. A similar situation in Louisianna has led at least ten property insurers to leave the market since 2020, and five others have stopped writing new policies.

Recently, there have been sessions of lawmakers taking place at Tallahassee, Florida, concerning the property insurance market. If fruitful, the sessions would create a $2 billion reinsurance fund and prohibit insurers from automatically denying coverage to homeowners with older roofs. Furthermore, there will be an approximate savings of around $1 billion for the homeowners across Florida.

Popular Florida-based news portals have claimed that the Citizens Property Insurance Corporation (CPIC) could be the last resort for the homeowners. A surplus lines insurer such as CPIC is unregulated by the state, and can pay out claims for those who haven’t been able to receive their shares from their concerned insurers.

However, this comes with greater risk. If the surplus lines go into receivership, the homeowners waiting for their claims won’t get paid. Not only this, but with insurers holding more policies, they can fall into risks, even with a $6.5 billion surplus. There is no immediate solution to this. Florida-based insureds can only wait for the result of the sessions going on.

III recommends that Florida-based homeowners perform an insurance checkup before the hurricane season is in full swing. You should check if your insurance policy is enough to cover the inflated cost of repairs and labor in the property market.

Not only this, but you should also take relatively minuscule measures that are often overlooked. For example, you can trim away growing vegetation near your area to reduce the risks of property damage and prepare an emergency plan. Besides this, you must actively keep your insurance documents and photographs of the inventory at your property safe.

Agency Height is a platform for insureds and insurance agents to connect with each other. Our insurance news portal is developed for informational purposes only. The content provided in Agency Height’s insurance news portal focuses on the latest local and national news circulating in different parts of the U.S. The rightful credit is provided to the respective news sites and insurance journals, from which we have sourced the information.