As millions of Floridians look for replacement coverage, it’s worth asking…
…why are insurance companies leaving Florida?
If you’ve been paying attention to Florida’s insurance market, you’ve probably heard the term “crisis” more times than you’re comfortable with. Not only are home insurance rates increasing, homeowners are often forced to find replacement coverage.
The news is filled with stories of insurance carriers who have stopped writing new policies, pulled out of the state, or even gone out of business entirely. And these aren’t “mom and pop” insurance companies, either—Farmers Insurance, Nationwide, and Progressive have all announced major changes to their presence in the Florida market.
So what’s a Florida homeowner to do?
First of all, don’t panic! While we have seen some upheaval in the insurance industry, you do have options when it comes to insurance coverage.
Why Are Insurance Companies Leaving Florida?
In simple terms, insurance companies are leaving Florida because it’s best for their bottom line.
When an insurance company is paying out more in claims than it’s taking in, they run the risk of not being able to pay out any claims at all. Sometimes, pulling out of a particular market is the best way to stay in business.
But why are things so dire in Florida?
1. Lawsuits
Roughly 79% of home insurance lawsuits in the US occur in Florida, despite the fact that only 9% of home insurance claims happen here. That kind of litigation can take a huge financial toll.
According to the Insurance Information Institute, litigation is one of the biggest contributors to rising insurance premiums.
2. Fraud
Fraud is present in just about every industry, and insurance is no exception. From Assignment of Benefit agreements to homeowners filing fraudulent claims, there’s always someone looking to make a quick buck because (as they reason) “the insurance company can afford it!”
However, when millions of people all have the same idea, the insurance companies can’t always afford to pay them all. As a result, they’re forced to raise their rates to make up for the losses or leave the state.
3. Hurricanes
If you’ve lived through at least one hurricane season, you understand the impact that these storms have on Florida home insurance.
Cleaning up after a major storm is expensive; Hurricane Ian caused an estimated $109 billion in damage in Florida alone! As a result, insurance companies may sometimes decide to only write certain types of policies or pull out of the state altogether.
“Last Resort” Insurance
So what happens when your insurance company cancels your policy and rates are going through the roof?
For more than a million Floridians, the answer is to turn to the Florida property insurer of last resort: Citizens. However, the state-run, non-profit insurance company isn’t always the “lifesaver” that people think it is.
We’ve warned our clients to steer clear of Citizens Property Insurance in the past, due to their history of less-than-optimal coverage. Even Citizens CEO and President Barry Gilway stated that it was “unfortunate” that Citizens was becoming the first or only choice for some Florida homeowners.
What’s the Solution?
The good news is that there’s already a solution in play. In December 2022, Florida lawmakers passed Senate Reform Bill 2-A to address some of Florida’s most glaring insurance issues.
And while these changes are starting to take effect, it will take a few years for policyholders to feel the full benefits.
In the meantime, new insurance companies are starting to move into the Sunshine State. The Florida Office of Insurance Regulation (OIR) has already approved more than 30 new “take out companies” with an aim to remove policyholders from Citizens and Florida’s Chief Financial Officer Jimmy Patronis remains hopeful for the future.
How To Find Great Coverage
In better news, Florida homeowners who are looking for great coverage still have plenty of options.
Shopping the market through an independent insurance agent is by far the best way to get the coverage you need. Because they’re not tied to a particular carrier, independent agents can choose from a wide range of policies to find the one that best fits your needs and risk tolerance.
What’s more, they have helpful advice on how to lower home insurance costs without sacrificing coverage.
HLI Is Here To Stay!
As insurance companies leave Florida, it helps to know that you have an agent who is committed to keeping your property safe.
Over the last 30 years, Harry Levine Insurance has built a reputation of honesty, integrity, and loyalty to our customers. We stay at the forefront of the industry and take pride in staying ahead of the curve to make sure you and your family are protected.
Call today for a free quote.
