Fraud & litigation push Florida home premiums to national high
The annual average cost for home insurance in Florida is expected to surpass $4,230 this year, Triple-I reports.
As property insurers in Florida continue to fall, policyholders statewide can expect to pay three times more than the national annual average for coverage this year as the Insurance Information Institute (Triple-I) is projecting the state will see average annual home insurance costs reach $4,231 in 2022.
The average home insurance costs in Florida have been steadily rising, Triple-I reported. In 2020, policyholders in the state paid an average of $2,505 for coverage. A year later the average rose to $3,181.
Sean Kevelighan, Triple-I CEO, noted that while Floridians face the highest home insurance premiums nationwide, these costs have little to do with hurricanes.
“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,” Kevelighan said in a release. “These two factors contributed enormously to the net underwriting losses Florida’s homeowners insurers cumulatively incurred between 2016 and 2021.”
Since 2016, the state has seen two major hurricanes make landfall, according to Triple-I. During the past three hurricane seasons, the state recorded no direct hits from hurricanes. However, the state still saw 79% of all national homeowners insurance lawsuits regarding claims filed. Florida home insurers see about 9% of all U.S. home insurance claims.
JD Supra examined how lawsuits impacted Florida insurers’ operating costs during a 10-year period, and found that 71% of the $51 million paid out during that timeframe went to cover attorney fees and public adjusters. In both 2020 and 2021, cumulative net underwriting losses among Florida home insurers exceed $1 billion.
“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. 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” Kevelighan said.
While property insurance companies in the state have struggled, policyholders have flocked to Citizens Property Insurance Corp., the state’s insurer of last resort. Citizens’ policy count has swelled to nearly 900,000 and is projected it will surpass 1 million this year. In 2019, Citizens had about 420,000 policies.
However, Citizens is not immune to the challenges other Florida insurers face. Since 2015, Citizens has posed underwriting losses, which have been offset by its investment portfolio. In 2021, the insurer-of-last-resort posted net income of $81.1 million, despite a $166.5 million underwriting loss.
“We just want to be solvent so when a CAT event comes, we are not sticking Floridians with Citizens’ assessments across the state,” Citizens Chairman Carlos Beruff said in a release. “That is my mission.”
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