Florida’s insurance market is on the verge of failure, according to an Insurance Information Institute (Triple-I) analysis.
This man-made catastrophe is causing financial strain on resident consumers, as the annual cost of an average Florida homeowners insurance policy will skyrocket to $4,231 in 2022, nearly three times more than the US annual average of $1,544, it says.
“Floridians pay the highest homeowners insurance premiums in the nation for reasons having little to do with their exposure to hurricanes,” said Sean Kevelighan, CEO, Triple-I.
“Floridians are seeing homeowners insurance become costlier and scarcer because for years the state has been the home of too much litigation and too many fraudulent roof replacement schemes. These two factors contributed enormously to the net underwriting losses Florida’s homeowners insurers cumulatively incurred between 2016 and 2021.”
Two major hurricanes have made landfall in the state since 2016: 2017’s Irma and 2018’s Michael. No direct hits occurred in Florida over the past three hurricane seasons (2019-2021), but Florida is the site of 79 percent of all homeowners insurance lawsuits over claims filed nationwide while Florida’s insurers receive only 9 percent of all US homeowners insurance claims, according to the Florida governor’s Office.
To illustrate how lawsuits have weighed on insurer operating costs, JD Supra, citing the Florida Office of Insurance Regulation (OIR), reported $51 billion was paid out by Florida insurers over a 10-year period and 71 percent of the $51 billion went to attorneys’ fees and public adjusters.
The 2020 and 2021 cumulative net underwriting losses for Florida’s homeowners insurers totalled more than $1 billion each year.
“The state’s homeowners insurers have been forced to respond to these unfortunate market trends this year by restricting new business, non-renewing existing policies and even cancelling policies mid-term,” Kevelighan said.
“What’s more, four homeowners insurance companies have been declared insolvent since February–all while more Americans are moving to Florida than any other state.”
Florida, Insurance Information Institute