Rising home insurance rates in Florida could be driving people away. What’s happening:
Florida’s home insurance crisis may be causing residents to flee the state in droves as premiums skyrocket from a combination of fraudulent lawsuits, hurricanes that have become more frequent and violent and rising building costs.
While Florida experienced a population boom in recent years, the U.S. Census Bureau estimates that Florida is also near the top of the list for the number of people who left the Sunshine State last year. An estimated 275,666 people left Florida in 2022, nearly 23,000 people a day, according to the bureau.
Anyone hoping to keep track of what’s happening in Florida’s home insurance market would be hard-pressed to keep up with the number of insurers fleeing the state or going solvent, the new companies coming in and what’s going on with Citizens Property Insurance, the state-backed insurer of last resort.
Thankfully, we can catch you up. Here’s a recap of what’s currently happening in Florida’s home insurance market
Florida home insurance premiums are the most expensive in the U.S.
Home insurance premiums in Florida have exploded over the past few years, swallowing the national average several times over. The Sunshine State has the highest home insurance premiums in the country, according to the Insurance Information Institute (Triple-I). Most homeowners are paying about $6,000 per year for their home insurance premiums, a 42% increase from last year.
Florida insurers are leaving the Sunshine State
Progressive announced in early October that it planned to send out non-renewal notices to roughly half of its home insurance policies in December. The move would impact an estimated 100,000 homeowners as the company said it sought to “rebalance” its exposure in Florida.
Progressive Home is one of the largest homeowner insurers in the state by direct premiums written, making up 3.9% of the market share, according to Triple-I.
Progressive’s announcement comes after AAA sent out a similar batch of non-renewal notices for some of its homeowner policies and Farmers Insurance announced it was leaving Florida entirely.
Progressive to non-renew home policies: Progressive plans to non-renew 100K Florida home insurance policies. What to know
AAA is still writing policies, but the company said it will not renew its package policies that combine home, automobile and optional umbrella coverage. AAA says a "small number" of customers will be affected.
The Florida Department of Financial Services has a list of 14 companies that are in liquidation. This means that the Office of Insurance Regulation determined there are grounds for the Department of Financial Services to proceed with charging these companies for delinquency.
14 Florida insurance companies are in liquidation:
American Capital Assurance Corporation
Avatar Property and Casualty Insurance Company
FedNat Insurance Company
Florida Specialty Insurance Company
Guarantee Insurance Company
Gulfstream Property and Casualty Insurance Company
Physicians United Plan, Inc.
Southern Fidelity Insurance Company
St. Johns Insurance Company, Inc.
United Property and Casualty Insurance Company
Universal Health Care Insurance Company, Inc.
Universal Health Care, Inc.
Weston Property & Casualty Insurance Company
Windhaven Insurance Company
Here are four reasons why insurance rates are rising in Florida
The driving factors behind Florida’s rising home insurance premiums is complicated and involves several compounding issues.
A population boom that started in July 2021 made Florida the fastest-growing state in the nation, according to the Census website. There are now significantly more people living in the state than at this time two years ago, which has resulted in a steady increase in the state’s cost of living and the highest inflation rate in the nation, according to data collected from the U.S. Bureau of Labor Statistics in a WalletHub assessment of inflation in 23 major metropolitan cities.
There has been a steady increase in insurance payouts due to changes in the climate for decades, according to reports from the National Flood Insurance Program. Stronger and more frequent storms, tornadoes, hurricanes and heat waves, combined with more people living in Florida, means a higher probability of insurance companies having to make huge payouts – particularly during hurricane season.
Costs for building materials and repairing property both increased by more than 30% during the pandemic, according to a 2022 report on building costs by the National Association of Home Builders.
Lawsuits between insurance companies and contractors or insurance companies and policyholders. According to the Insurance Information Institute, only 9% of the nation's home insurance claims come from Florida. But 79% of the nation's homeowners' insurance lawsuits come from the state.
Citizens Insurance depopulation letters
To make matters more complicated, Citizens is aggressively pursuing its depopulation program to shudder the number of policies it has acquired in the wake of rising premiums. Created in 2002 as the state’s insurer of last resort, Citizens Insurance has become a temporary haven for homeowners looking to acquire home insurance at a much cheaper rate than what’s offered in the private market.
But the company has already sent out nearly 300,000 depopulation letters notifying some of its policyholders that it had found comparable coverage in the private market and would be transferring policies to “takeout” companies unless the policyholder was eligible to opt-out. Homeowners not interested in going with the takeout offer then needed to submit a form to Citizens indicating they were opting out within 30 days of receiving the letter.
The Citizens Depopulation Program is a requirement of Florida law that works to offer private-market coverage to its policyholders. The program is necessary because it helps Citizens minimize its risk of having to levy heavy assessment fees against its policyholders and the private market if a severe storm causes more damage than Citizens can payout.
Citizens Insurance historic rate hike Citizens Insurance gets OK for historic 12.3% rate hike for personal lines
Citizens Insurance gets approval for historic rate hike
Citizens Insurance policyholders can expect to see higher premiums when they receive their next renewal letter after the Citizens Board of Governors approved a double-digit rate hike on Wednesday.
The historic average 11.5% increase for homeowners with the most common type of policies comes after regulators ordered the company to revise its previous request to increase rates by an average of 13.3%.
The revised hike averages out to 12.3% when averaging personal lines. Commercial lines will see an average 10.2% increase. The personal lines rate increases will take effect Dec. 16, while the commercial increases will take effect Nov. 20.
What Florida is doing to tackle home insurance issues
The Florida Legislature had a busy session this year, passing hundreds of laws that caught national headlines, but when it came to Florida’s insurance crisis, it was decidedly mum. The Legislature’s wait and see approach was likely the result of legislation passed during a three-day special session in December last year that lawmakers hoped would help revive the state’s failing insurance market.
The bill passed last year restricted lawsuits against insurers and provided $1 billion in taxpayer money for industry reinsurance. Lawmakers were hopeful that its effects would be felt within a year to 18 months, but nearly 11 months later, there’s been no relief in sight.
There is some potential good news ahead, however. Lawmakers have agreed to convene for another special session on Nov. 6, and the proclamation claims that the gathering will include “lowering the costs of homeowners’ insurance,” though there were no immediate details available to elucidate the statement.
This article originally appeared on Pensacola News Journal: Florida home insurance recap: What’s driving rates up, what’s next?
