We've written previously about the crisis looming in the Florida property insurance market. It's a situation that we, and many others, are watching very closely. And Florida isn't the only state likely to feel these same impacts.
It's a situation that has been caused by a "perfect storm" of issues related both to natural disasters and the impacts of the coronavirus on the economy.
Recently the South Florida SunSentinel tackled the issue in an article by Ron Hurtibise.
Rising Home Ownership Rates Threaten Continued Economic Growth
The issue is one that has been emerging since 2017 when Hurricane Irma did significant damage resulting in a steep uptick in claims. Since then, homeowners have experienced home insurance increases of up to 40%, and these increases are anticipated to grow.
The concern isn't only over the rising costs of home insurance, but the impact those rising costs could have on real estate investments. Florida's real estate market is strong, despite — or even because of — the coronavirus. People around the country are leaving areas where they feel oppressed by too much government oversight and restrictions. Florida is a desirable state to move to both because of its relatively unrestricted virus-related rules and its warm climate.
But those draws could be potentially diminished by rising insurance costs. Hurtibise and others are ringing the warning bells. Pointing to comments from Guy Fraker, owner of Cre8tfutures, Hurtibise writes: "If those costs are allowed to continue to grow, the price of insurance could make the monthly cost of homeownership so expensive that fewer and fewer people will be qualified to buy a home."
Proposals for Reform Could Mean the End is in Sight
There are proposals for reform floating around, but none come without controversy and the potential for pushback from impacted groups.
Back in November, Hurtibise wrote another article for the SunSentinel outlining some ideas that lawmakers were mulling to help keep coverage affordable related to:
Attorneys' fees
Abuse of coverage for repairing or replacing roofs
Long deadlines for filing claims
Adjusters who inflate claims costs
While the situation seems somewhat dire, there's hope on the horizon if meaningful reforms are enacted. Hurtibise leaves readers with a ray of light: "…if meaningful reforms are enacted, investors will increase their Florida insurance holdings and earn healthy returns again. The number of lawsuits will decline, and, in turn, reinsurance rates will return to levels of other hurricane-prone southeastern states."
You can prompt this positive potential by reaching out to your representatives to express concerns or support for their proposals and the reforms they are supporting or opposing.
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