Insurance crisis spreads to Florida, southern states
Gov. Ron DeSantis regularly cites one of Florida’s biggest insurance problems – lawsuits
Insurance premiums skyrocketing in the south due to severe weather
FOX Business’ Ashley Webster reports on the rising costs of home insurance for residents in southern states like Florida and Louisiana due to devastating storms.
When Hurricane Ian roared into Southwest Florida last September, the state’s insurance industry was already at breaking point. Ian caused the second-biggest insured loss in history with damage estimated at between $50 billion to $65 billion; only Hurricane Katrina in 2005 caused more destruction.
Now, Florida Gov. Ron DeSantis is doing his best to attract more private insurance companies to his state, to plug a gaping hole in available policies for homeowners who are running out of options.
More than a half dozen private insurers have already been declared insolvent in the past year, another half dozen are teetering and others have just thrown in the towel and left the state. The trend mirrors what is going on in Louisiana as well. In the last two years, more than 20 companies have gone under or withdrawn from the state, forcing hundreds of thousands of families to pay higher premiums or go without coverage.
"We are certainly in a crisis," said Louisiana's Insurance Commissioner Jim Donelon.
A home burns on Sanibel Island, Florida, in the wake of Hurricane Ian, Sept. 29, 2022. (Wilfredo Lee / AP Newsroom)
For Floridians, it’s becoming increasingly harder to find affordable home insurance, and they’re often forced to enroll in the state-backed insurer of last resort called Citizens Property Insurance Corp., with policies that can run up to $6,000 per year and don't include flood protection.
MORE INSURANCE COMPANIES PULL OUT OF LOUISIANA: 'WE ARE IN A CRISIS'
"It remains a problem and the cost then goes up because it's not only the $5,000 it's costing me; In a non-flood zone, I need flood insurance, in the event there is a flood it's another $750, it's almost $6,000," George Kyritsopoulos, a Jupiter, Florida, resident told FOX Business.
DeSantis regularly cites one of the state’s biggest insurance problems – lawsuits. Florida accounts for just 9% of claims in the U.S. but 79% of all home insurance lawsuits. The state legislature is trying to stabilize the insurance market and has passed several bills that aim to stop the proliferation of litigation.
Rep. Bob Rommel is hugged by Rep. Josie Tomkow after the property insurance bill he cosponsored passed in the state House in Tallahassee, Florida, on Dec. 14, 2022. (Phil Sears) (AP Newsroom)
One new regulation ends the so-called one-way attorney fees that forced insurance companies to pay plaintiffs if they lost a suit but not the other way around. Another key change targets fraudulent roof claims that are made possible when homeowners sign over their "assignment of benefits" to an unscrupulous contractor who will sue for repairs that don’t exist. That loophole has now been closed.
INSURANCE COSTS SKYROCKET IN SEVERAL STATES AFTER SEVERE WEATHER
But even insurers that have stayed in Florida have made their eligibility requirements more stringent and in some cases dropped policyholders who don’t meet the higher standards.
Clouds are reflected on a flooded street in the Orlovista neighborhood of Orlando, Florida, following Hurricane Ian on Oct. 1, 2022. (Bryan R. Smith/AFP via / Getty Images)
Florida’s own insurance program now has more than 1 million customers. In some parts of the state it’s the only game in town and as a consequence, an estimated 12% of Floridians have no home insurance at all.
CLICK HERE TO GET THE FOX BUSINESS APP.
Another hurricane season begins in five months and with Florida attracting hundreds of new residents every day, a chronic lack of affordable home insurance could lead to a crippling financial disaster if another monster storm takes aim at the Sunshine State.
FOX Business’ Rebekah Castor contributed to this report.