Analysts at the Insurance Information Institute (Triple-I) have warned that Florida’s insurance market is “on the verge of failure” despite recent efforts by lawmakers to mitigate its challenging conditions.
Triple-I notes that re/insurers are contending with an overabundance of unneeded new roofs on homes and massive settlements on claims, meaning the average Florida homeowners insurance policy is set to stand nearly three times higher than the national average at $4,231 this year.
“Floridians pay the highest homeowners insurance premiums in the nation for reasons having little to do with their exposure to hurricanes,” said Sean Kevelighan, CEO, Triple-I.
“Floridians are seeing homeowners insurance become costlier and scarcer because for years the state has been the home of too much litigation and too many fraudulent roof replacement schemes. These two factors contributed enormously to the net underwriting losses Florida’s homeowners insurers cumulatively incurred between 2016 and 2021.”
Governor’s office data shows that Florida is the site of 79% of all homeowners insurance lawsuits over claims filed in the US, despite that fact that the state’s insurers receive only 9% of all homeowners insurance claims.
“The state’s homeowners insurers have been forced to respond to these unfortunate market trends this year by restricting new business, non-renewing existing policies and even canceling policies mid-term,” Kevelighan explained. “What’s more, four homeowners insurance companies have been declared insolvent since February – all while more Americans are moving to Florida than any other state.”
Triple-I further notes that Citizens Property Insurance Corp., the state-backed property insurer of last resort in Florida, has seen its policy count rise to nearly 900,000 this month statewide, up from 420,000 in October 2019.
And placing further pressure on the affordability and availability of homeowners insurance in the state, third-party rating bureaus have downgraded the financial ratings of some homeowners insurers who operate in Florida.
In response to these challenges, Triple-I urges Floridians and others residing in natural disaster-prone states to better manage risk and become more resilient, using tools such as Triple-I’s Resilience Accelerator initiative.
“The insurance industry’s focus on resilience is starting to pay dividends as more Americans recognize the very real risks their residences face from floods, hurricanes and other natural disasters,” Kevelighan concluded.