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Disclosure – what’s disrupting Florida’s homeowner insurance market?

The Insurance Information Institute (Triple-i) has released a damning report that warns that Florida’s current homeowner insurance market is “on the verge of failure,” thanks to rampant fraudulent roof repair programs and excessive insurance lawsuits.

Revealed - what's tearing apart Florida's homeowners' insurance market?
Home insurance concept.

Triple-I found that thanks to the “man-made disaster” of roof repair fraud and excessive insurance litigation in Florida, the annual cost of an insurance policy for the average homeowner in the state is skyrocketing to $4,231 by 2022 — nearly three times the U.S. annual average of $1,544.

It’s also worth noting that while two major hurricanes made landfall in Florida since 2016 — 2017’s Irma and 2018’s Michael —none of the storms occurred directly during the past three hurricane seasons, from 2019 to 2021. However, Florida accounts for 79% of all homeowners. “Insurance lawsuits are filed nationwide, and insurers operating in the state receive only 9 percent of all insurance claims by homeowners in the United States, based on data from Gov. Ron DeSantis’ office.

Triple-I chief executive Sean Kevelighan said: “Floridians pay the highest premiums to homeowners in the country for reasons that have little to do with their being hit by storms.” “Floridians are seeing homeowner insurance become more expensive and scarcer because for years the state has been home to too many lawsuits and too many fraudulent roof replacement plans. These two factors contributed greatly to the net loss suffered by Florida’s homeowners insurance companies accruing between 2016 and 2021. . ”

Using data from the Florida Office of Insurance Regulation (OIR), 3D Supra reports that $51 billion was paid by Florida insurers over a 10-year period. Of the $51 billion, 71% is in attorney’s fees and public regulators. Accumulated net losses from 2020 and 2021 for insurers operating in the state amount to more than $1 billion per year.

Kevelighan commented: “State homeowners insurers have been forced to respond to these unfortunate market trends this year by restricting new business, not renewing existing policies, and even canceling mid-term contracts. Has been declared insolvent since February — all while more Americans moved to Florida than any other state. ”

Triple-I also caught the attention of Citizens Property Insurance Company, the last state-backed insurer, which has seen the number of its insurance policies rise to nearly 900,000 this month statewide.

The institute also noted that third-party ratings offices have downgraded the financial ratings of some insurers in Florida, which further puts pressure on the affordability and availability of homeowner insurance in the state.

Triple-I said a typical Florida homeowner would have paid $2,505 for coverage by 2020. But that amount has risen to $3,181 by 2021, based on OIR, the National Association of Insurance Commissions (NAIC) and Triple-I’s estimate of what insurers are paying for the cost of replacing homes.

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