Florida property insurance crisis likely to get worse after Hurricane Ian

Even before Hurricane Ian hit land in September, my home insurance was set to jump 40% this year. I do not live in a flood zone and have minimal coverage. what’s going on? That’s a question many homeowners across the state have been asking, and the issue has caused an estimated $67 billion in insured losses following the Ian incident, which has become the most costly storm in Florida’s history. , has become even more pressing.

Nationally, home insurance costs average about $1,600 each year. But Florida has the highest premiums in the nation, more than triple her in some areas. At $5,093 a year in Miami-Dade County, he rises to $6,729 in the Florida Keys. In Sarasota County, the average fare is $2,470, about 35% higher than the national average. And the numbers keep going up.

“Over the past year, we’ve seen rate increases of 10 to 50 percent. Last year, one company had an increase of 111 percent,” says Paul Jorgensen, local agent for Florida Farm Bureau Insurance. Tani Perez, his vice president of South East Insurance at Premier Concierge, has shown a similar trend, with prices on some policies doubling overnight for him.

Jorgensen said interest rates had risen before Ian, partly due to rising costs of building materials and labor, but the number of insurers willing to do business in Florida has declined. Six companies have gone bankrupt recently, and others have not renewed their contracts for next year, he said.

“Overall, there were almost 10 fewer companies doing business in Florida last year, which is a lot,” says Jorgensen. In July, state regulators placed 27 companies deemed financially unstable on a watch list. Two important causes are legal costs and roof fraud.

“Florida is the most hurricane- and lawsuit-prone state in the nation,” said Pinellas County Republican State Senator Jeff Brandes. “Other states had less than 1,000 homeowner insurance lawsuits last year. Even before Ian, they were on the road to losing that amount this year.”

Nearly 80% of homeowner insurance lawsuits nationwide are filed in Florida, which accounts for just 9% of all homeowner claims, according to Governor Ron DeSantis’ office.

Why are there so many lawsuits? “Official assessors and roofing companies work with lawyers to offer free roof inspections, and unpretentious homeowners allow them,” he says Jorgensen. “They find the damage, tell the homeowner, ‘We’ll take care of it,’ and ask them to sign the roofer’s benefit contract assignment.” Effectively remove it from the equation. Further communication is between the roofer and the insurance company.

“Insurers take inflated costs to repair roofs and when they refuse to pay, they go to court,” says Jorgensen. “So maybe the roof is just old, but insurance companies are paying lawyers. And if the insurance company has to replace everyone’s roof and pay legal fees, everyone’s premiums will go up.” will rise.”

Another factor contributing to the rising costs is that insurance companies are buying their own insurance, called reinsurance, to pay out after a catastrophe like Ian’s is wiped out. As with consumer insurers, some reinsurers are exiting the state, while others are raising rates by as much as 50%. As Florida homeowners repair the damage caused by Ian, many may turn to Citizens Property Insurance Corporation, a state-backed tax-free company that industry insiders call “insurance of last resort.” There is a nature. available to consumers.

Like private insurance companies, Citizens is funded by policyholder premiums. However, state law requires citizens to impose assessments on Florida property policyholders. This means that if there is a deficit as a result of the storm, it will have access to premium pools from private insurers, all of which could see an increase in premiums. Citizens is growing rapidly, covering 1.1 million policyholders statewide as private insurers tighten requirements and raise premiums. But Citizens claims it can bear the growth.

“Citizens is in good financial shape, able to pay its claims from Hurricane Ian, and has reserves left over for the next storm,” said company spokesperson Michael Pelletier. As the number of customers increases, so does the company’s exposure, and the likelihood of higher rates for all Floridians.”That’s the risk,” says Peltier.

In May, the state legislature passed a bill addressing roof fraud. Created a $2 billion reinsurance fund to help insurers pay potential hurricane damages, with the support of State Senator Jim Boyd, a Republican from Manatee County It introduced new limits on litigation and attorney fees, and evaded the lure of roofing companies by proposing Hurricane. Mitigation inspections and permitted policies with separate deductibles for roof damage leave some homeowners paying more for roof replacement.

“Insurers are prepared for these storms, but not for the fraudulent claims that have driven up costs dramatically,” says Boyd. He believes the change will lead to lower prices for consumers. The bill passed with bipartisan support, but Democrats say the move falls short and fails to provide immediate financial relief to homeowners with ballooning insurance premiums. acknowledges that it will take 12-18 months for prices to drop.

Add the homeowner insurance crisis to Sarasota’s affordable housing crisis and it makes homeownership a dream come true for many.

“Right now, I think this will hit your local settlers the hardest, who are trying to get a home to live in,” Jorgensen says. We’re talking about people who fill Starbucks and teach kids.”

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