According to the Insurance Information Institute, premiums in Florida are expected to rise by an average of about 40% this year, even though Tallahassee lawmakers approved sweeping reforms in a special legislative session last month. That's enough to cause quite a shock if you're shopping for the first time, but Floridians may be even more dismayed when it's time to renew. The III also reports that the average percentage increase in homeowners insurance statewide is 30%. A report on the stability of property insurance published by the Insurance Information Institute supported Rollins' requests to increase rates in August, and the report said that “in states prone to hurricanes, renewals in the middle of the year showed increases of 5 to 15% in accounts exposed to disasters and affected by losses, but that “in Florida, increases reached 50%”.
While rising reinsurance costs are the main driver of rising home insurance rates in Florida, litigation costs are another problem that Florida insurance companies face when setting the price of homeowners insurance. Where you live in Florida can have an impact on the overall insurance market when considered in conjunction with how the homeowner has purchased their home. Instead, the legislation focused on making Florida's insurance business climate more attractive to companies and on reforming property insurance litigation to reduce costs for consumers. Insurance agents said property insurance help wouldn't come soon due to potential natural disasters this year.
He said that, while complicated, the problems faced by Florida homeowners boil down to how insurance policies are billed and what is affecting the increase in rates. Several property insurance providers have abandoned the Florida market or have gone bankrupt, where the OIR takes control and changes or supports policies and claims to ensure that coverage continues. Paul Handerhan is part of the Federal Association for Insurance Reform, a nonprofit, nonpartisan group whose mission is to provide affordable property insurance across the country. Some people without flood insurance will file damage claims with their property insurance company, arguing that the wind caused the problem.
Fortunately, the Florida legislature passed bills to create the Reinsurance Fund to Assist Insured Persons (RAP Fund) and the Florida Optional Reinsurance Program (FORA). Way said that while homeowners are experiencing exponential increases in the prices of their policies, insurance companies are seeing the positive effects of new insurance regulations passed during a special session. Florida insurance rates have nearly doubled in the past five years, but insurance companies are still losing money for three main reasons. This is the state-authorized organization dedicated to protecting insurance consumers in the event that an insurer cannot meet its obligations.
Most importantly, if Citizens runs out of money, they have the authority to impose a surcharge on everyone's policies, not just their own policies, but on insurance policies across Florida. In just one year, the number of policies of the state-backed insurance company went from 750,000 policies to more than 1.5 million homeowners in Florida, and the increase in the number of Citizen policyholders has caused some insurance premiums to double.
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