The Florida insurance industry is in a state of crisis.
Over the past year and a half, 15 Florida insurers placed moratoriums on writing new business in most counties and seven were declared insolvent.
Then, earlier this week, that the company is pulling out of Florida altogether.
It appears the financial relief promised when state legislators passed significant insurance tort reform at the end of 2022, isn鈥檛 expected anytime soon.
Even though the average homeowner experienced a 42 percent rise in insurance premiums last year, industry expert Mark Friedlander of the Insurance Information Institute predicts rates will go up again.
鈥淪ignificant increase are being incurred by homeowners in counties across the state, not just coastal counties,鈥� Friedlander said. 鈥淭his insurance crisis filters down to all levels of homes, all income levels and all different types of communities well away from the coast or coastal municipalities, it doesn鈥檛 matter.
Across the country, the average home policy costs $1,700.
Not in Florida.
鈥淔loridians pay the highest average premium in the U.S. at $6,000 a year with a 100 percent cumulative increase just over the last three years,鈥� Friedlander said.
That鈥檚 insurance to cover expenses caused from hurricane wind, as well as other catastrophes like fire. This does not include flooding, which requires an additional policy.
There are many reasons for price increases in insurance.
Fraud, which the legislature tackled during a special session at the end of last year, is the biggest contributor said Friedlander.
There鈥檚 also climate change which is producing stronger storms and more frequent weather events.
And there鈥檚 inflation. Simply put, it cost more to repair and replace items.
Friedlander says the Florida鈥檚 insurance crisis is also effecting would-be Florida homeowners: 鈥淭he leaders of the National Association of Realtors tell us that they are seeing conditions in Florida where they are having problems on closing on some homes because they cannot find insurance. It鈥檚 happened. 鈥 wouldn鈥檛 consider it a red alert at this point but it鈥檚 certainly something to watch. And unfortunately, it will have negative impacts on our very robust real estate market.鈥�
Friedlander applauds moves by the Florida Legislature that stopped one-way attorney fees which largely abused the legal system. The reform measure killed what is called 鈥渁ssignment of benefits鈥�.
Assignment of benefits fraud involves dishonest contractors who typically go door-to-door telling homeowners there鈥檚 been a recent storm with damage in the community and they鈥檇 be happy to go up on your roof and check for damages. And if they do find damages, they鈥檒l go ahead and handle the claim with the insurance company.
鈥淲hat happens is these unscrupulous contractors take control of your claim. They then replace the roof, that in most cases, is not a legitimate loss -鈥� meaning it should not have been covered by insurance. When they send a bill to the insurance company, they typically mark up the bill 50 to 100% over a legitimate roof replacement. So, say a legitimate replacement is $20,000, an unscrupulous contractor will send a bill to your insurer for $40,000. Obviously, the insurer is not going to pay that bill so they reject it and then the litigation ensues. So, a lot of the legal system abuse we鈥檝e seen is generated by this assignment of benefits issue.鈥�
As result, all Floridians are paying for the cost of fraud litigation. Fraud has can be difficult to combat in a state known to attract fraudsters.
鈥淯nscrupulous contractors continue to initiate the schemes with workarounds,鈥� said Friedlander. 鈥淪o unfortunately, we are still seeing roofing scams in neighborhoods across the state.
And there鈥檚 potentially more bad news on combatting fraud: Friedlander said in the days leading up the Florida鈥檚 insurance reform laws taking effect, more than 280,000 lawsuits were filed against Florida insurers.
鈥淭hey did that because they wanted to get those suits on the books before this one-way attorney fees were banned. That was the full reason for the mass filing of lawsuits,鈥� Friedlander said.
In spite of these insurance reforms and the latest massive rate hike, Friedlander expects prices to jump another 43 percent in the coming year.
鈥淲e鈥檙e very supportive of those reforms and thing they will bring stability to Florida鈥檚 market which has been extremely volatile over the past few years. But to promise any consumer that their rate is going to decline is not realistic because no rates in the U.S. are declining with the rising cost of catastrophes, rising replacement costs.鈥�
WGCU is your trusted source for news and information in Southwest Florida. We are a nonprofit public service, and your support is more critical than ever. Keep public media strong and now. Thank you.
Copyright 2023 WGCU. To see more, visit . 9(MDAyNDY5MjM1MDEyODE2MzMyMTZmZDQwMg001))
