Florida's insurance woes could further aggravate Ian's economic anger

Florida’s insurance woes could further aggravate Ian’s economic anger

ORLANDO — The economic devastation left by Hurricane Ian in Florida is likely to put additional strain on the state’s fragile insurance system.

According to the Florida Office of Insurance Regulation, about a dozen companies that provide homeowners insurance in Florida have gone insolvent in the past two years, leaving hundreds of thousands of homeowners scrambling to get coverage. Many Florida homeowners in flood-prone areas do not carry flood insurance, the Federal Emergency Management Agency said — despite the fact that many policies do not cover flood damage.

And as insurers assess the impact of the storm and assess future risks as extreme weather events become more frequent, coverage could be even further out of reach for Floridians.

Tracker: where Ian hit and where he’s heading next

“Obviously, this is going to be a multi-billion dollar storm, and with the insurance industry already collapsing, it’s going to be devastating,” said Sen. Jeff Brandes, a Republican.

An analysis by Fitch Ratings on Thursday estimated insured cost losses could be $25 billion to $40 billion in the state.

A unique confluence of factors makes Florida an exceptionally difficult place for private insurers to do business and for homeowners to find affordable comprehensive plans from private companies. As Ian has shown, the state is susceptible to severe weather events, which is likely to increase over time due to climate change. Insurance company risk models, which incorporate thousands of years of weather data, have proven unreliable when it comes to the most recent storms, said Danielle Lombardo, president of the global real estate practice. at Lockton, an independent insurance brokerage and advisory firm.

“This is the riskiest terrain in the world for insurers from a catastrophe perspective,” Lombardo said.

Hurricane Ian: Live Updates

Lawmakers and industry officials said Ian could condemn homeowners’ private insurers unless the state legislature steps in, while consumer advocates said residents risk being left out altogether of the market.

More than 400,000 Florida consumers have already lost coverage this year due to insurer failures or policy increases, according to Mark Friedlander, director of corporate communications for the Insurance Information Institute, a nonprofit organization. research and communication non-profit for industry.

Already, some consumers “are now in a position where they have to try to find new coverage, and they just can’t find an insurance company that’s willing to underwrite them,” said Tasha Carter, the Florida insurance company. consumer advocate.

Florida’s insurance litigation laws tend to favor plaintiffs, according to industry officials and independent experts, so insurance companies constantly face a barrage of lawsuits. According to the state’s Office of Insurance Regulation, Florida accounted for 76% of all landlord lawsuits nationwide in 2021.

Meanwhile, the state’s population has continued to grow, creating more demand, even as risk-averse insurers attempt to exit the market, driving down supply. All of this combines for higher rates for consumers.

Governor Ron DeSantis (R) called a special session in May to deal with the property insurance crisis, but many say the law he signed does nothing to help consumers now. And some of the pieces of the law, such as My Safe Florida Home, which is supposed to provide grants to homeowners who remodel their homes to add hurricane protection, are still not operational four months later.

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In an interview on Weather Channel this week, DeSantis said the goal was to avoid disputes over damages and get people back on their feet as quickly as possible.

“The goal is to get those claims as quickly as possible, so it’s basically leveraging the government to get everybody in line, and let’s get people back on their feet,” DeSantis said.

Florida residents rely on a state-created non-profit organization often referred to as an “insurer of last resort” – Citizens Property Insurance Corporation of Florida. Citizens will insure people who cannot find private insurance, and their rates are capped at 10% per year, which has kept them lower than some private insurers who have raised their rates astronomically.

Citizens have seen exponential growth in demand over the past two years, with 1.1 million insured, double from two years ago, spokesman Michael Peltier said. But there’s a catch: The legislature required citizens to operate without state funding, so when a big disaster hits and claims pour in, it imposes fees of up to 45% on its policyholders.

“The actual cost of a citizen’s policy can increase dramatically following a major disaster,” the company itself notes in its documentation.

Citizens face about 20,000 lawsuits, Peltier said.

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