ST.
JOHNS, Fla., June 23,
2022 /PRNewswire/ -- With its overabundance of
unneeded new roofs on homes, and flashy lawyer billboards at every
turn claiming massive settlements on claims, Florida's insurance market is on the verge of
failure. Even more, this manmade 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 U.S. annual average of
$1,544, according to an Insurance
Information Institute (Triple-I) analysis.
Floridians pay an average of $4,231 for home insurance, nearly three times
more than the U.S. annual average of $1,544.
"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 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). Florida, however, 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 U.S. 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 totaled 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 canceling
policies mid-term. 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" Kevelighan stated.
Citizens Property Insurance Corp., the state-backed property
insurer of last resort in Florida,
has seen its policy count rise to nearly 900,000 this month
statewide. Its policy count figure stood at about 420,000 in
October 2019. Citizens provides
insurance coverage to homeowners unable to find a private-sector
insurer willing to sell them a homeowners insurance policy.
Placing further pressure on the affordability and availability
of homeowners insurance in the state, third-party rating bureaus
have downgraded the financial ratings of some homeowners insurers
who operate in Florida.
The typical Florida homeowners
insurance policyholder paid $2,505
for coverage in 2020, the Triple-I found, and that figure rose to
$3,181 in 2021. Triple-I's analysis
was based on data and analyses from Florida's OIR, the National Association of
Insurance Commissioners (NAIC), and Triple-I's estimates of what
insurers are paying today for home replacement costs (e.g.,
lumber).
During a special Legislative session in May 2022, Florida state lawmakers passed Senate Bill
2B. It was signed into law by
Gov. Ron DeSantis and is aimed at
easing homeowners insurance premium increases and reducing
excessive litigation.
To help Floridians and others residing in natural disaster-prone
states better manage risk and become more resilient, Triple-I
launched a few years ago its Resilience Accelerator
initiative, Kevelighan said. The Resilience Accelerator's goal is
to demonstrate the power of insurance as a force for resilience by
telling the story of how insurance coverage helps governments,
businesses and individuals recover faster and more completely after
natural disasters.
"The insurance industry's focus on resilience is starting to pay
dividends as more Americans recognize the very real risks their
residences face from floods, hurricanes and other natural
disasters," Kevelighan concluded.
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SOURCE Insurance Information Institute