home insurance

 Before Hurricane Ian, Florida residents already faced a pricey and challenging market for home insurance. Even for those who were lucky enough to avoid any damage, the destructive storm is likely to make things worse.

The nation's largest insurers have wished to have as little to do with Florida as possible for the better part of two decades, at least when it comes to home insurance.

home insurance:

Due to this, the market is now controlled by small, regional insurers with little financial means. Even before Ian, six of the businesses were deemed insolvent this year. According to data from the Insurance Information Institute, homeowners in the state were already paying nearly triple the national average for insurance – $4,231 annually per policy compared to a US average of $1,544.

Because of the dangers from hurricanes and tropical storms, national insurers may be hesitant to compete for business in Florida, according to Matthew Carletti, an insurance industry analyst with JMP Securities.

When was the last time Illinois saw a $30 billion to $40 billion loss? he questioned. “Never.”

Only a portion of the problem is being addressed by climate change and increased storm susceptibility. Additionally, Florida's "tort" laws, which the insurance industry claims promote many more lawsuits against insurers than those in other states, are to blame for raising prices.

The absence of adequate regulation, according to the trade association representing Florida's trial lawyers, is the issue rather than the sheer volume of litigation. They assert that the state is allowing the industry to set rates and the scope of coverage supplied, despite the fact that the Florida legislature imposed new litigation restrictions. Rates have risen despite these constraints.

home insurance:

According to Amy Boggs, head of the property insurance division of the Florida Trial Lawyers Association, "Florida's Insurance Commissioner, David Altameir, has given them handouts in the form of rate hikes and modifications that reduce consumers' coverage to the absolute minimum in order to maintain insurance company profits Less reliable insurance options are offered to consumers. and more difficult to use as Hurricane Ian bears down on Floridians.

The actual impact of Florida's declining insurance product market will be shown by this storm.

A "last resort" is no longer a state-owned insurer.

Citizens Property Insurance Corp., a state-run organisation, is the biggest home insurer in Florida. It was founded in 2002 to serve as an insurer of last choice for people who couldn't acquire coverage on the private market. Its number of insurance has increased by more than a factor of two during the past two years, reaching 1.1 million, or 13% of the state market. In other sizable counties, the company's market share is considerably higher: 39% of policies in Miami-Dade and 36% in Monroe County, which contains the Florida Keys. 27 percent of the insurance in Pinellas County, which includes St. Petersburg and was severely impacted by Ian, are with Citizens.

"Insurer of last resort" is not supposed to be that," Carletti remarked.

Only 8% of Florida's house insurance market is serviced by State Farm, and no other major national insurer has more than 4%. That represents a tiny portion of the market for automobile insurance in the state, which is dominated by the top five national insurers, who provide around 75% of the coverage.

Citizens asserts that it is confident it has the funds to cover Ian's anticipated damage claims.

If those claims require more funding than the firm has available, it may add assessments that could increase premiums for all of its clients and, if required, impose further assessments on all insurance clients in the state.

However, certain insurers in the state who are struggling financially could go bankrupt if they have trouble paying Ian's claims. Given the financial status of the Florida industry, that is a big problem.

Carletti remarked on Wednesday, just before Ian stormed ashore, "It won't matter how big a storm it is, it will be a problem since they're already on fragile ground."

home insurance:

When a homeowner's insurer is deemed insolvent, the Florida Insurance Guaranty Association is given control of their claims and backs them in the same way as the FDIC does for bank deposits. However, that might also result in higher insurance rates for clients of all the state's other insurers.

The fact that damage caused by flood waters is not covered by homeowner's insurance is one aspect in which Florida homeowners are similar to those in other states. The National Flood Insurance Program, a federal insurer run by FEMA, must be contacted with those claims.

More homes than any other state are protected by the NFIP, with approximately two out of every three such policies being written in Florida, according to Friedlander of the III. However, that still only accounts for 13% of all Florida residences.

Flood risk

Few residents purchase flood insurance unless forced to do so because most homeowners only do so if they reside in a designated flood plain and their mortgage lender stipulates that they must.

There are growing worries that Ian's heavy storm surge and significant rain may create flooding in numerous regions that are not designated as flood basins.

According to a recent analysis, there is an expanding disparity between the cost of the financial risk that flooding poses to homeowners and the insurance premiums some pay to cover that risk.

Nearly 4.3 million residential homes across the nation are currently significantly at danger of financial loss as a result of flooding. According to the paper, "significant risk" is defined as having a 1% annual chance of flooding.

More than 90% of flood insurance policies in the US are provided by the National Flood Insurance Program (NFIP), however not all of those homeowners are covered by it.