Fla. insurance crisis deepens as rates soar, companies fallThe ticking timebomb of Florida's way overleveraged state-created home insurer has just gone off and the repercussions and reverberations of this $100 billion plus hurricane is going to roil the markets for the foreseeable future. Or am I missing something?
Long known as the nation's most hurricane-prone state, Florida has achieved a new status that is aggravating hurricane anxieties and threatening real-estate values. Florida has the worst property-insurance market.
Four Florida insurance companies have declared bankruptcy since April, and others are canceling or not renewing policies. Hundreds of thousands of people have been forced to buy property coverage through the state-created insurer of last resort, Citizens Property Insurance Corp. The number of Citizens policies recently passed 1 million for the first time since early 2014 and could reach nearly 2 million by the end of 2023, according to a Citizens projection.
Floridians now have the highest property-insurance rates in the nation, according to the industry-funded Insurance Information Institute. The average premium is $4,231 - nearly triple the U.S. average of $1,544. "It's reached a point where Floridians cannot find affordable coverage for their homes," Institute spokesperson Mark Friedlander said. "It is going to eventually catch up with our booming real estate market and bring down values of property."
At the same time, from October through June, nearly 160,000 Floridians dropped the flood insurance policies they bought from the Federal Emergency Management Agency as it raised rates on some homeowners. Flood insurance is separate from homeowners' coverage.
Gilway, the Citizens CEO, said at a July meeting that Citizens has $13.6 billion in reserves to pay insurance claims. Citizens is not equipped to handle hundreds of thousands of claims that a major storm would generate.
"Citizens is selling insurance at a loss. There's no better way to say it," Friedlander of the insurance institute said.
The discounted rates have compounded the difficulties for insurance companies, said Ulrich of the insurance agents group.
"There are companies that would like to write business, but you simply can't do it when the Citizens premium is 30 to 40 percent less than what the voluntary market charges," Ulrich said.