Homeowners in Florida have been experiencing what some consider to be a “crisis” in the area of homeowner’s property insurance. Not only are rates going up, but many are losing coverage at record rates. This week, Governor Ron DeSantis announced that a special session of the Florida Legislature will convene in late May to address the issues that homeowners and property insurance companies are facing.
All across the state, homeowners are seeing increased rates on their property insurance. In many cases, rates are double or triple what they were a few years ago. Some homeowners are seeing rate increases by thousands, even by double digits in some cases. This is not something that many homeowners can sustain long term as increases have been continuing year after year, with no end in sight.
Another problem facing policyholders is that many are actually losing coverage. Property insurance companies are tightening standards on things like roof age, which is resulting in the cancellation of thousands of policies. On top of this, there have been several large property insurance companies that have been forced to liquidate, and even more that have made the decision to pull out of the Florida market, leading to even more homeowners losing coverage.
The problems facing Florida homeowners regarding homeowner’s property insurance has reached a tipping point and state politicians have been calling for a solution. During the last legislative session, members were unable to find one. This is what has led to the special session being called for May 23-27 of this year - just a few days ahead of the start of hurricane season. Many have reiterated the importance of putting something in place before hurricane season begins, as this is one of the biggest sources of the problem.
What is behind the massive problems facing the industry? Analysts see it as a 3-pronged problem: hurricane damage payouts, unnecessary litigation against insurance companies, and rampant insurance fraud.
Hurricane season in Florida, and the damage caused by storms like these, means that insurance companies in this state face much higher liability and larger payouts, requiring higher premiums for policyholders, as well as greater probability of bankruptcy. Additionally, Florida has some of the highest rates of insurance fraud and litigation, which has led many insurance companies to insolvency. According to State Representative Tom Fabricio, though the state accounts for just 8% of all property insurance policies in the country, 80% of lawsuits against insurance companies are in Florida. On top of that, insurance fraud in Florida is some of the highest in the country - particularly roofing scams. Not only does this affect the policyholder, but insurance companies in Florida often cannot stay in business or struggle to fulfill their financial obligations as a result. This is why so many insurance companies in the state are either going under or moving out of Florida. According to local politicians, laws need to be put in place to protect homeowners and to ensure that they are not only able to receive a property insurance policy in this state, but that they are able to afford it.
Next month, the special session of the legislature will convene and hopefully by the beginning of hurricane season on June 1, we will see some sort of solution. Residents of Florida Keys homes can be particularly susceptible to these problems due to the potential for hurricanes and flooding, and relief is definitely needed in our community.