Florida legislators battle to hold costs down, but homeowners face increasing costs
Recent legislation will not magically bring insurance companies back to the market overnight, but it can bring short-term relief and long-term stability.
Every year, like the scariest of clockwork, those of us who live and work in Florida brace ourselves for yet another hurricane season — which is becoming more destructive and more intense each year.
And more costly. Last year alone, the Sunshine State experienced weather-related disaster damages that, according to the National Oceanic and Atmospheric Administration’s annual U.S. Climate Assessment, ran up an astounding tab of some $116 billion. That’s the most expensive year for Florida ever, and the state comes in second only behind Texas in terms of the price tag of recuperating from such natural disasters.
This has led, in part, to yet another insurance company leaving the market as Farmers Insurance recently announced they are ending their residential, auto, and umbrella programs in Florida — estimated to be approximately 100,000 policies. Farmers is the fourth major insurer to leave the market in the last year — joining Bankers Insurance, Centauri Insurance and Lexington Insurance. And this list does not include the fifteen insurance companies that have gone insolvent since 2020 or others that are “scaling back” new business.
So what can be done? There are only so many wooden planks that can be hammered into storefronts the next time a named storm rolls in. Short of moving elsewhere in the country where hurricanes are much less prone to strike, the problem of more powerful storms — and the fiduciary pain that comes with recovering from them — will continue to bedevil Florida’s insurance sector as well as homeowners.
This is all on top of ongoing supply chain problems, our new post-pandemic reality, as well as inflation and interest rate hikes.
Put it all together, and we are staring down the barrel at an incredibly expensive statewide problem. Floridians have seen a sharp increase in property insurance premiums this year, up 40% on average. And if you are near the coast, the increase has been seen to be exponentially higher.
We can do better. We must do better. Thankfully, politicos in Tallahassee are not only paying attention but actually offering solutions for a change. Near the end of 2022, Florida enacted signed laws meant to bring some relief to burdensome insurance woes affecting all Floridians, which included providing more state funds for reinsurance programs and adding tighter deadlines for the insurance companies to investigate and pay claims.
The recent legislation will not magically bring insurance companies back to the market overnight — see Farmers’ swift exit. But hopefully, in the short term, it will streamline the claims process and provide homeowners the assistance they need after another storm and, in the long term, strengthen the market to lure insurance companies back to Florida.
After the calamitous hurricane season as we experienced last year, those of us who work in the insurance business can’t help but bite our nails waiting for the local news to report a “disturbance” off the coast of Africa. For summer is now in full bloom and the beaches are crowded, but before long there will be a storm brewing in the Atlantic that’s heading our way.
And if trends of the past several years hold, 2023’s hurricane season is set to be more intense, more devastating and more costly for everyone. While we cannot control the weather, what we can do here in Florida is ensure that the government and the insurance industry are on the same page so that the needed recovery and relief funds go to where they are most needed: Our state’s millions of hard-working homeowners.
Kelly Corcoran is an insurance attorney and partner at Ball Janik LLP, specializing in construction defect law. He may be reached at kcorcoran@balljanik.com.
Related: