A year ago, everyone in Florida knew property insurance rates were skyrocketing out of control.
The insurance industry’s own trade group said homeowners’ rates in Florida were the highest in America, averaging $4,231 a year — nearly triple the national figure.
Most Floridians were feeling the pinch. A disturbing number were opting to “go naked,” meaning they simply wouldn’t have insurance if a storm or fire wiped out their home. Some decided they couldn’t afford to live here anymore.
So, after years of ignoring the mounting crisis to wage culture wars with Disney and drag queens, Florida’s governor and Legislature finally staged a couple of special sessions on insurance, vowing relief.
And they provided some … to the insurance companies, anyway, passing laws that make it harder for you to sue your insurance company if the company denies you a claim.
The theory: Shielding insurers from costly litigation would make rates drop. Now let’s talk about what’s really happened.
The Insurance Information Institute says average premiums in Florida are now $6,000, representing a 102% increase over the past three years. Some new companies are entering the market. But some are offering to take policyholders off the state-run Citizens Property Insurance Corp. with rate hikes of 70% or 80%. The state’s insurance commissioner said some companies wanted hikes of 300% to 500%.
How’s that for “relief”?
We’ll talk more about the efforts to shrink Citizens. But first, let’s get real: Insurance in Florida is still a mess. The “reforms” passed so far are just nibbling around the edges. Real reform — to significantly lower rates — requires the kind of hard work lawmakers have so far dodged.
The harsh reality is that Florida has big insurance problems. We’re a hurricane-prone state surrounded by rising seas.
I trust insurance companies as little as the next guy. But obviously, we’d have more of them here if they thought Florida was a stable, potentially profitable market.
So the state can do one of three things:
1. Massively invest in and expand Citizens so that it becomes like Medicare for property insurance, state-run insurance most everyone can access.
2. Subsidize the market in other ways, like using taxpayer money to underwrite the cost of reinsurance for private companies.
3. Just allow rates to continue to skyrocket. And if Floridians can’t afford it, so be it.
Here’s the problem: Nos. 1 and 2 involve serious investment and hard work — neither of which GOP lawmakers have been willing to make or do. So we’re heading toward No. 3.
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The last time I wrote about this issue, I huddled with a former GOP lawmaker from St. Petersburg, Jeff Brandes, who agreed the state hasn’t done enough.
This time, I consulted Democratic State Rep. Hillary Cassel, a South Florida insurance attorney who’s so well respected that one of Gov. Ron DeSantis’ top aides hired her firm to fight a battle against his own insurance company. (The irony.)
Cassel describes the GOP-led Legislature’s “reform” so far as little more than “a $3 billion handout to the insurance industry” that has done little to help homeowners.
Cassel says Florida homeowners haven’t really had advocates, noting the state’s last insurance commissioner left to become a lobbyist. And she says Republican lawmakers have largely ignored the Florida-specific problems posed by climate change and flooding. “We are ground zero for climate change, for flooding,” Cassel said. “We have to come to terms with that. We can’t continue to live in Fantasyland.”
If you want proof that things in Florida are going off the rails, consider a December report from the Miami Herald that said as many as 13% of all Florida homeowners were choosing to “go naked” with no insurance at all, according to the Insurance Institute. That’s double the national average. That’s a disaster waiting to happen.
The latest nibbling-around-the-edges solution involves Florida’s efforts to reduce the number of people relying on the state-run Citizens program. And the early news was troubling. Residents were getting snail-mail letters that told them they would automatically default to a private insurer charging 70% or 80% more if they didn’t take action, which seemed like an opportunity to gouge.
Ultimately, the state moved about 100,000 customers off Citizens to private insurers, with most paying less than 20% more. That seems reasonable. And those who defaulted into higher rates will get another chance to stay with Citizens when their first bills arrive.
But again, this is still mainly nibbling around the edges. A few more companies are coming in. Citizens is shedding a fraction of its 1.3 million policies. But prices are still rising. That’s why we need the big stuff.
Either big solution — investing more in Citizens or market subsidies — should be accompanied by serious restrictions and protections. Subsidies, whether provided through reinsurance or any other way, should be coupled with demands for transparency and lower rates. And any additional Citizens policies should include coverage caps and not go to houses being built in known high-risk areas.
Still, the solutions are there in a state where the budget has been flush. But only if lawmakers start doing the real, hard work.
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