Hurricane season officially started on Thursday, June 1, but no matter how many storms hit Florida this year, the state’s residents are already struggling as they try to get affordable homeowners’ insurance.
State of play: National insurers have small market shares in Florida while dominating more than 70% of the U.S. property/casualty market, CNN reported Thursday.
- Meanwhile, many of the Florida-domiciled regional residential insurers left to provide coverage to Floridians are in bad financial shape. In fact, more than half of the 47 Florida companies are on the state insurance regulator’s watch list due to their financial health, Triple-I’s Mark Friedlander said.
By the numbers: Six were forced to liquidate last year before Hurricanes Ian and Nicole struck the state, another one earlier this year. And to try to stay solvent, the remaining insurers are charging average rates nearly four times as high as the national average, according to Friedlander.
- Homeowners in the state pay private insurers about $6,000 a year, compared to a national average of $1,700.
What we’re saying: Friedlander said the state’s risk from hurricanes is only part of the problem, and points to years of legal system abuse and claim fraud schemes.
- The insurance industry pushed for the state legislature to enact numerous reforms meant to curb what it saw as abuse, but so far it hasn’t changed the outlook for insurers. To make matters worse, a deluge of nearly 300,000 lawsuits was filed against property/casualty insurers just before a broad tort reform law took effect in late March. This is on top of the hundreds of thousands of lawsuits already working their way through Florida’s court system.
“This is a man-made crisis,” Friedlander said. “The mass volume of new lawsuits will muddy the marketplace for years to come. It may drive more regional companies out of business.”
- He concluded, “The laws have changed but the market conditions have not changed. It’s still a mess.”