Hurricanes. Flooding. Sinkholes. Wildfires. Fraud. Inflation. Florida has it all. For years increasingly desperate lawmakers have tried a number of ways to keep insurers in the state and woo others back. The state cracked down on bad contractors. It limited the ability of policyholders to sue the companies. The state is backstopping insurers through a $2 billion reinsurance fund, and property owners with state-backed insurance are being pushed into the floundering private market. None of that, it seems, is working.
“The state of our homeowners market is really in dire condition," says Tasha Carter, Florida's Insurance Consumer Advocate. She represents the people waking up to notices of non-renewals in their mailboxes.
Farmers stopped writing new policies in February. It notified the state this week that it’s exiting altogether. The insurer joins a long list of others, big and small, who’ve bailed on Florida.
“Homeowners are very concerned about the state of the homeowner's insurance market from three perspectives: the first being availability of coverage. The second being the affordability of homeowners coverage. And the third is reliability. Of those three, property owners don't really have much faith in any of them.
Farmers’ high-profile withdrawal has brought renewed anxiety, handwringing, and finger-pointing over who, or what’s to blame. Bottom line: Florida is a hard state to insure. And it raises a question—is the state uninsurable? Or heading that way?
“No, I don't think we're uninsurable. And I don't think we're becoming uninsurable. I think, you know, there will always be insurance...for a price," says former state Sen. Jeff Brandes, who now runs a policy think tank and has turned his attention to trying to solve Florida’s prickly property premium problem.
Solutions are being tried. New laws are now in effect aimed at curbing historical problems like lawsuits and fraud, while trying to woo nervous companies back into the market. The reforms have been blasted by critics, and many Florida Democratic lawmakers as giveways to the insurance industry.
That’s likely not comforting news to property owners seeing their rates rise. And there’s growing concern that those rate hikes are beginning to price people out. Brandes gets the angst.
“I mean, listen, how many times can you afford one expense to go up, you know, [by]50%-100%? [And] I mean, that that in year after year after year... there are people who were paying $1,000 five years ago for property insurance that are paying $5000 today, or, you know, they were paying $2k and now they're paying 10k. I mean, that's simply not sustainable, especially for Florida's population that lives on a fixed income. They're making really tough choices right now.”
Some people will have to sell their homes. Others may be forced out of state. Brandes blames the state’s decade long refusal to act for part of the current problems within the market. He says when the state finally took action—last year and this one—it was really because it had no choice.
Insurance pain, tough choices and tighter wallets are likely Floridians’ new reality, and not a comforting one for many says Lisa Miller, a former deputy insurance commissioner who now runs a private firm.
“Is it painful. Absolutely. Are our rates through the roof? Absolutely. Can we do more as a state, the governor and legislature to make it better? Yes," she says.
Still there are small signs that the state’s property insurance market, while on life support, isn’t completely dead yet, and may, in fact, be getting better.
“You’re seeing some positive effect of the litigation scaling down," says Miller, "and I applaud the governor and legislature for trying to rebalance some of the litigation insanity. But it’s not going to happen overnight."
Another positive sign is that new insurance companies are starting to signal interest in Florida.
Market intelligence suggests the number of impacted Farmers customers is up to 100,000 but the majority of those policies are likely auto. According to the state’s database, Farmers had less than 6,000 property-based policies in force during the first quarter of this year. When Farmers filed its notice of withdrawal it marked the document as a trade secret—meaning the exact number of impacted policies isn’t known.
The company’s departure does means the state-run Citizens Property Insurance Corporation is poised to grow even bigger, despite lawmakers’ best efforts to shrink it. More rate hikes for Citizens customers are coming.
Citizens President Tim Cerio recently told the company’s Board of Governors that the rate increases are needed because Citizens now charges lower rates than private insurers.
“We have to return to being the state’s property insurer of last resort. Instead, we are the state’s largest property insurer with the lowest rates on top of that. That is going to continue to distort the market and impede recovery efforts," he said.
The company has more than 1.3 million policy holders. The number could grow to 1.7 million by the end of the year.
Carter, Brandes and Miller all say the same thing: change will take time. And It’ll be at least another year before rates stabilize. Floridians will continue to be in for a rough time until then.
