Shining a Federal spotlight on Florida’s Insurance Crisis

How bad is Florida’s homeowners insurance crisis? The federal government wants to know. Lawmakers dove into that question to gain a greater understanding and explore the growing insurance problems across the country.

It’s something Deborah Wood knows all too well. Rising insurance premiums have forced Wood to sell several times in search of a place less likely to be hit by hurricanes.
The other big concern is whether she and her family can afford the price of insuring their home. Earlier this year, she decided no.

“We have reluctantly made the decision that we will not be buying a home in Florida. We learned there’s no escaping the insurance problems,” added Wood. “Weather disasters are becoming more and more prevalent even in previously safe areas like Tallahassee.”

U.S. Senators and insurance experts discussed how climate change has impacted insurance companies, your rates, and the rest of the country for two hours. Florida took center stage.

“In Florida, national insurers have reduced their exposure as a significant proportion of the insurance market has moved to Citizens or smaller insurers with limited capital that are heavily dependent on reinsurance,” said Rade Musulin, an Actuary and the former Advisory Council Chair of the Florida Hurricane Catastrophe Fund.

The Fund was created after Hurricane Andrew, which hit the state in 1992. It reimburses insurance companies some of the money they spend paying out your hurricane claims.

“A major hurricane hitting a densely populated area like Miami could trigger large and long-lasting post-assessments or even exceed the system funding capacity,” he explained.

He discussed how the Catastrophe Fund and Citizens, the state’s insurer of last resort, are not sustainable approaches to homeowners insurance.

“To date, Florida’s system has been successful in meeting its claims obligations while improvement in building codes has reduced exposure. However, for a variety of reasons, including exposure to hurricanes, claims cost, inflation, and litigation, Florida’s insurance costs are the highest in the nation,” said Musulin.

Senators from wildfire-plagued areas mentioned they are starting to deal with policy non-renewals and increasing rates in their states.

Experts wondered if building zones across the country should be changed, expecting that insurance coverage will be expensive if you build in a high-risk area. Regardless, the discussion doesn’t help Wood and her family.

“We haven’t decided what our next step will be, but at this stage of our lives, we are not willing to risk our financial well-being by buying a home that one day may be uninsurable or craters in value in a housing market fueled by the homeowners’ insurance crisis,” she explained.

A Citizens Property Insurance spokesperson sent WINK News Consumer Investigator Andryanna Sheppard the 7-page letter the CEO sent the committee chair in April.
It reads in part that “Citizens is structured and has the mechanisms and resources in place to always be able to pay the claims of its insureds without the need for federal assistance.”