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Home / Insurance / Triple-I blog | Fraud, litigation are driving Florida’s insurance market to the brink of collapse

Triple-I blog | Fraud, litigation are driving Florida’s insurance market to the brink of collapse



With its abundance of unnecessary new roofs on homes – and flashy lawyer signs at every turn claiming massive bargaining claims – Florida’s insurance market is on the verge of failure. This artificial disaster is causing financial strain on consumers, as the annual cost of average homeowners insurance in Florida will skyrocket to $ 4,231

in 2022, nearly three times the annual average in the United States of $ 1,544.

“Floridians pay the highest homeowners’ insurance premiums in the country for reasons that have little to do with their exposure to hurricanes,” said Triple-I CEO Sean Kevelighan. “Florida homeowners ‘insurance is becoming more expensive and scarce because the state has been home to too many litigation and too many fraudulent roof replacement systems for years. These two factors contributed hugely to the net insurance losses that Florida homeowners’ insurance companies incurred cumulatively between 2016 and 2021.”

Two major hurricanes have landed in the state since 2016: 2017’s Irma and 2018’s Michael.

No direct hits occurred in Florida during the last three hurricane seasons.

Florida, however, is the site of 79 percent of all homeowners ‘insurance claims over claims filed nationwide, even though Florida insurance companies 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 insurance companies’ operating costs, JD Supra reported, citing the Florida Office of Insurance Regulation (OIR), that $ 51 billion was paid out by Florida insurance companies over a 10-year period, and 71 percent of the $ 51 billion went to legal fees and public adjusters. The 2020 and 2021 cumulative net insurance losses for Florida homeowners’ insurance companies amounted to more than $ 1 billion each year.

“State homeowners’ insurance companies have been forced to respond to these unfortunate market trends this year by restricting new business, not renewing existing insurance policies and even canceling insurance in the medium term,” Kevelighan said. “In addition, four homeowners’ insurance companies have been declared insolvent since February – all the while more Americans are moving to Florida than any other state.”

Citizens Property Insurance Corp., the state-owned property insurance company in the last resort in Florida, has seen its number of insurances increase to nearly 900,000 this month across the state. Its figure for the number of insurances was about 420,000 in October 2019. Citizens provide insurance coverage to homeowners who cannot find a private insurer who is willing to sell a homeowners insurance to them.

By putting additional pressure on the affordability and availability of homeowners insurance in the state, third-party rating agencies have lowered the financial ratings of certain insurance companies operating in Florida.

The typical Florida homeowners insurance policyholder paid $ 2,505 for coverage in 2020, Triple-I found, and that figure rose to $ 3,181 in 2021. Triple-I’s analysis was based on data and analysis from the Florida OIR, National Association of Insurance Commissioners (NAIC). )), and Triple-I’s estimates of what insurance companies pay today for home compensation costs.

During a special legislative session in May 2022, Florida lawmakers passed Senate Bill 2B, which Governor Ron DeSantis signed into law. The measure aims to ease homeowners’ premium increases and reduce excessive litigation.

To help Floridians and others living in natural disaster-prone states better manage risks and become more resilient, Triple-I launched its Resilience Accelerator initiative a few years ago, Kevelighan said.

The Resilience Accelerator’s goal is to show the power of insurance as a force for resilience by telling the story of how insurance coverage helps governments, companies and individuals recover faster and more fully after natural disasters. “The insurance industry’s focus on resilience is beginning to pay off as more Americans realize the very real risks their homes face from floods, hurricanes and other natural disasters,” Kevelighan added.


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