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Florida’s Housing Insurance Crisis Is About to Get Worse

JP Alegre February 28, 2023 4:29 PM

Florida’s housing insurance crisis is about to take a turn for the worse as property insurance premiums are expected to rise significantly in the next few months. Florida’s current property insurance rates are already some of the highest in the country.

Premiums could go up as much as 25% by June 1, according to John Rollins, former Chief Risk Officer at Citizens Property Insurance, in a local report. And the main driver, Rollins says, is the cost of reinsurance or the insurance for insurance companies.

The rates for reinsurance have gone up 100% in the last four years, and experts are projecting another 50% hike by June 1. And when these go up, insurers will pass some of the burden to consumers.

“So, when the reinsurers raise their rates 50% in a single cycle like June 1st, that could lead to 25% rate increases for the average Floridian,” said Rollins. “Right now, it’s at a generational high and probably representing 50% or more of the average consumer’s premier dollar.”

But this isn’t likely to solve the problem as Floridians are finding property insurance rates so high that in a climate where the cost of living has become less affordable, many have been forced to just forgo it completely. 

An estimate by the Insurance Information Institute in December found that 13% of Florida homeowners do not have property insurance, almost double the national average of 7%. Spokesman Mark Friedlander told Tampa Bay Times told that the figure is mostly driven by those who’ve already paid off their mortgages and are now on fixed incomes, or those paying cash to acquire their homes, “particularly those living in manufactured homes.”

For those who still carry mortgages but decide to drop property insurance, the lender, in a move to protect their interests, can resort to lender-placed or force-placed insurance and force homeowners to pay higher premiums plus charges.

Insurers, on the other hand, are facing insolvency. At least six Florida property insurance companies have been placed into receivership due to insolvencies in 2022. The most recent insurer to face this fate, United Property & Casualty Insurance Company (UPC), was put into receivership by Florida’s Office of Insurance Regulation (OIR) this week.

Floridians have taken to Twitter to express their frustrations on how Governor Ron DeSantis has handled, or not handled the crisis. Some have accused the recently re-elected Republican to be too busy running for president to address the more urgent problems in his state — although DeSantis has not officially announced his bid for the 2024 presidential election.

Information for this briefing was found via Tampa Bay Times, Insurance Business America, Twitter, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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