Jeff Brandes, a former Florida Senator who submitted a petition urging the legislators to assemble this spring to improve the problematic property insurance market in the state, is calling for reforms in anticipation of another special meeting at the end of the current month devoted to this matter. Mr. Brandes, who represented a part of Pinellas County until his term expired, believes that this is the most urgent problem faced by Florida today.
The recently retired politician is still dealing with the real estate. Mr. Brandes is planning to establish an analytics center that will focus on some of the key problems faced by the state, including property insurance, which he calls the Achilles’ heel of the Florida real estate market. Unless the state solves this problem, its middle class will dwindle, as people cannot afford to buy a house.
Florida homeowners who insured their property in the private market report that the rates increased by about 33% year-on-year. In 2023, the growth is expected to reach 40%. Over a million insurers deal with the state-backed Citizens Property Insurance Corporation that offers rates at least 20% below the market value.
Private insurance firms are facing the harsh market reality, including excessive litigation and fraudulent claims. As a result, five such companies have been forced to leave the state this year, and more than a couple dozen are on the verge of bankruptcy. Mr. Brandes remarked that this became a number one problem in his community that his constituents have to handle.
The state legislators will meet in Tallahassee on December 12 – 16 to adopt additional laws aimed at improving Florida’s problematic property insurance market that suffered another blow after Hurricane Ian destroyed thousands of homes. In October, Governor Ron DeSantis convened a special meeting and signed an executive order granting property tax relief to residents affected by the Category 4 storm.
Paul Renner, Speaker of the House of Representatives, has recently hinted to journalists that the legislators are open to considering several potential solutions aimed at restoring the state’s ailing property insurance market. He assumed that the overwhelming majority of Republicans in the legislature would probably face a hard choice when it comes to the growing cost of reinsurance.
As insurers are leaving the market, homeowners are paying more for coverage. The Insurance Information Institute, a non-profit organization studying industry trends, believes that the rates will only continue to grow as a result of many drivers, from the continued problems with litigation abuse to losses from Hurricane Ian and higher reinsurance cost, as Mark Friedlander, representative of the Institute, explained.
Data from the Florida Office of Insurance Regulation shows that 76% of all homeowners’ claims to insurance companies across the country are filed in Florida, while this state accounts for only 8% of all suites in the USA. According to Mr. Friedlander, last year, 116,000 claims were filed against insurers. In 2022, this number has reached 130,000 even before Hurricane Ian. The market is unlikely to stabilize in the nearest future, given such a great amount of claims filed.