Hear that low rumble in the distance, growing louder every day? It's emanating from the state of Florida and it's the sound of property owners expressing outrage over what's happening with the rates they're paying to insure their properties in Florida.
It's a topic we've tackled previously, and one that is gathering attention on a variety of fronts.
Home to Disaster and High-Ticket Insurance Claims
Florida, of course, is a state that has long been plagued by disasters of various types—most notably hurricanes.
In 2005, when hurricanes Katrina and Wilma hit, a number of insurers left the state, leaving only about 60 small to mid-sized firms in operation today, according to Reuters. The last big hit occurred in 2017 when Hurricane Irma struck and, to a large degree, insurers are still recovering from those losses.
But it's not just hurricanes that give rise to claims. Leaky pipes also represent a significant percentage of claims which can be heightened when those leaks cause major damage including mold.
The Property Insurance Market in Florida
But the property insurance market in Florida is a big one. Reuters reports that the market collected $56.5 billion in premiums in 2019. Despite that number, though, Reuters indicates that domestic property insurers in Florida suffered underwriting losses of more than $1 billion during the first three quarters of 2020.
The situation hasn't gone unnoticed by contractors and lawyers who have capitalized on the situation by filing a variety of claims, causing litigation in Florida to spiral "out of control," according to Logan McFaddin, an American Property Casualty Insurance Association executive.
Citizens Property Insurance Corp, known as Florida's "insurer of last resort," is also reaping benefit from the situation. According to Reuters: "Citizens issued 545,000 policies as of Feb. 5, a 23% increase from a year ago, and it expects the number to grow to about 700,000 by year-end, a spokesman said."
An End in Sight?
Proposed legislation in Florida holds the potential to stem the tide and the rate hikes, but the issue can become complex. As Reuters reports "the bill might also harm homeowners' ability to pursue legitimate claims."
It's a situation we're watching. If you own property in Florida, you should be watching too.
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