Hurricane season is officially upon us once again as Florida continues to deal with the impacts of last year’s Hurricane Ian, which caused $60 billion in insured damages making it the third-costliest weather disaster on record. Unfortunately, Hurricane Ian was just another blow to Florida’s already struggling property insurance market.
Prior to Hurricane Ian, consumers’ property insurance rates were already skyrocketing. According to the Insurance Information Institute, Floridians are paying among the highest average property insurance premiums in the United States – triple that of the national average – and property insurance rates in Florida are predicted to jump at least 40 percent in 2023.
Driving these increases in cost are an alarming number of homeowner insurance lawsuits that are causing many property insurance providers to go insolvent or leave the state. In 2022, the state placed six insurers into receivership because of insolvencies and added a seventh in February.
With fewer property insurance companies in the market, more consumers are having to turn toward Citizens Property Insurance Corporation, the state’s taxpayer funded “insurer of last resort.” Citizens is reaching a record-high number of policies with that figure moving up to 1.3 million policies as of late May. The more policies Citizens takes on, the greater the risk that Florida taxpayers will be hit with a massive “hurricane tax” to cover what Citizens cannot in the event of another hurricane or major storm. And, Citizens is not immune to the same problems plaguing the private property insurance market and has more than 20,000 open lawsuits pending.
Faced with the depth of these problems, our state leadership has taken decisive action. During the special session in December and the recently concluded regular legislative session, Governor DeSantis and the legislature have put into place reforms that will help curb the fraud and legal system abuse that have been threatening to collapse the property insurance market in Florida. All of these reforms will help stabilize our property insurance market.
Meanwhile, Florida needs to continue looking at additional opportunities to strengthen our insurance market. One of those opportunities is reinsurance. Sometimes called “insurance for insurance companies,” the highly regulated reinsurance industry enables property insurance companies to manage their risk, keep prices competitive, protect their capital and expand their coverage capacity. With reinsurance serving as a “back up,” property insurance companies in Florida will be better able to withstand the impacts of catastrophic events.
While Florida’s property insurance industry isn’t out of the woods yet and continues to face many challenges, the aggressive reforms championed by the Governor and our legislative leaders and the support provided by reinsurance provide some light at the end of the tunnel.
Julio Fuentes is the President and CEO of the Florida State Hispanic Chamber of Commerce.
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