Florida's Home Insurance Crisis

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Working 9 to 5… forever!

Need some inspiration as you get ready for the work day? Dolly Parton says she never wants to retire, telling a radio host: “I’ll just hopefully drop dead in the middle of a song on stage someday, hopefully one I've written.”

Hopefully not anytime soon! But we’ll be blasting ‘9 to 5’ on our way into the the office.

Mosheh, Jill, & Courtney

🗞 INSURERS KEEP FLEEING FLORIDA

It’s a sign of the times: A fourth major home insurance company has pulled back from Florida this year over the increasing risk of natural disasters.

AND ANOTHER ONE
AAA announced Monday that it will not renew the auto and home insurance policies for some customers in Florida, joining a growing list of insurers dialing back their presence in the state.

AAA said in a statement: “Last year’s catastrophic hurricane season contributed to an unprecedented rise in reinsurance rates, making it more costly for insurance companies to operate.”

The company declined to say how many customers won’t have their policies renewed, but that the change will affect “a small percentage” of policy holders.

It comes in the wake of Hurricane Ian last year, which did $109 billion in damage to the state, the costliest storm in Florida history.

WHO IS NEXT?
Farmers Insurance recently said it will no longer offer coverage in the state, impacting 100,000 customers. Bankers Insurance and Lexington Insurance, a subsidiary of AIG, left Florida last year. And at least six insurers went insolvent in the state last year as well.

BY THE NUMBERS
Florida home values are only the 18th highest in the country, according to Zillow. That means pricey real estate isn’t the reason why Florida has the highest homeowners insurance rates in the nation, by far.

• Home insurance in Florida hit an average of $6,000 per year for 2023. That’s compared to just $1,700 for the nation as a whole, according to the Insurance Information Institute.

• Rates this year are expected to soar by another 40%.

• Florida premiums have jumped 42% in the last year alone, and by 206% since 2018.

• Some industry experts predict Florida rates could hit $10,000 annually within a few years. In some areas, they have already hit that.

LOOKING BEYOND FLORIDA
Climate-related disasters are leading top insurers to pull out of other states.

• CALIFORNIA: In the last year, State Farm, the top insurance firm in the state, and American International Group, both announced they were stopping sales in the state amid wildfire risk concerns.

• LOUISIANA: The state government is looking at ways to deal with insurers abandoning the state, after several massive storms in recent years. At least 50 firms have stopped writing new policies in the state’s hurricane-prone parishes.

• TEXAS: It is becoming increasingly difficult for homeowners on the Gulf Coast to obtain insurance and there are concerns about the state plan to backstop residents after the 2021 ice storm.

CATEGORY 5 FRAUD
Beyond the climate, the other major issue in Florida is insurance fraud. The state has long been a haven for scammers, with laws that made insurance companies especially vulnerable to lawsuits.

• Until recently, Florida had “one-way attorney’s fees,” which meant that insurers had to pay the legal fees of any policyholder who sued and won, while insurers had to pay their own legal costs even if they won.

• Another quirk of Florida law was the ability of policyholders to “assign” benefits to a third party, like a contractor, who would sue the insurer on their behalf, sometimes without the policyholder's awareness.

“This is a man-made catastrophe,” says Logan McFaddin, vice president of state government relations at the American Property Casualty Insurance Association. “It’s not just the weather. It’s frivolous litigation and fraud.”

A new Florida law enacted this year hopes to curb insurance fraud, but it is not clear if that will counteract the problems in the state.

Here’s one note Mo News received from a Florida resident Monday:

WHAT’S A HOMEOWNER TO DO?
The rising insurance costs are prompting many to question how long they’ll be able to afford to live in Florida.

Some say they’re trying to “self-insure.” That means they’re trying to save money to pay for possible damages, a huge risk and probably won’t work. Residents are calling on the state government to do more to protect homeowners.

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🗓 ON THIS DAY: JULY 18

• 1925: The first volume of Mein Kampf, the political manifesto written by Adolf Hitler that became the bible of Nazism, is published. It sells less than 1,000 copies in the first year. Less than 8 years later he is appointed chancellor.

• 1976: Nadia Comăneci of Romania became the first gymnast to ever be awarded a perfect score of 10 in an Olympic event during the Summer Games in Montreal.

• 1988: Aruba, Jamaica…….The Beach Boys release ‘Kokomo.’

• 1995: A little-known college professor named Barack Obama publishes a memoir called “Dreams from my Father.” 13 years later he is elected president.

• 2004: ‘Entourage’ premieres on HBO.