Florida Homeowners Face Another Insurance Rate Increase

Florida homeowners are about to see another increase in their insurance premiums after Citizens Insurance confirmed a 14% rate hike last month. This latest rise is part of an effort to stabilize Florida’s shaky insurance market and reduce the financial burden on the state’s insurer of last resort. Citizens has become the largest property insurer in Florida, holding about 14% of the market, although it has been working to transfer policies to private insurers recently.

Florida’s Ongoing Insurance Challenges

Florida’s unique location presents significant challenges for residents and insurers alike. With a large portion of the population living along the coast, the hurricane-prone region deals with threats of both wind and flood damage. As storms become more frequent and intense, more homes are becoming uninsurable by private insurers, pushing homeowners towards Citizens Insurance.

Trevor Burgess, CEO of Neptune Flood, highlighted the need for long-term policy changes to address Florida’s insurability crisis. “The real issue is a complex policy discussion around climate change, insurability, and whether we should invest in making these houses more resilient or consider if people should live in these vulnerable areas at all,” Burgess said. “Should we spend billions to harden homes or build infrastructure to reduce hurricane impacts? These are hard questions. Raising insurance prices for Citizens Insurance might help it survive a major storm in the next few years, but it doesn’t solve the underlying issues.”

The Need for Flood Insurance

Flood insurance is increasingly necessary for coastal communities in Florida due to the frequency and severity of hurricanes. However, only 13% of Floridians have this coverage, according to the National Flood Insurance Program (NFIP). For many homeowners, adding a $1,000 flood insurance policy becomes difficult when their home insurance jumps from $1,500 to around $6,000, the current average annual cost of home insurance in Florida, according to the Insurance Information Institute (Triple I).

Stabilizing Florida’s Insurance Market

Burgess believes that increasing competition may help mitigate costs for Florida homeowners and provide them with the flood coverage they need. “Stabilizing Florida’s homeowners’ insurance market and bringing in more competition should help reduce these prices in the long run, making flood insurance more affordable,” the CEO said.

Updating flood maps is also critical to bridging the insurance gap. Burgess pointed out that current flood maps are often decades old and don’t reflect current climate realities. “FEMA and municipalities need to work together to update these flood maps quickly. The science is clear on which areas are at risk, but the maps are outdated,” he explained. “For example, Broward County is updating its maps this Fall, adding nearly 100,000 buildings to high-risk zones, requiring flood insurance. Both federal and local levels need to invest in accurate floodplain measurement and management to produce new maps.”

Educating Insurance Agents

Educating insurance agents about flood insurance is also essential. Historically, agents only sold flood insurance when it was legally required for high-risk homes with mortgages. Insurers are looking to simplify the process, making it easy for agents to offer flood insurance with every home sale. “If you’re in a low-risk home, flood insurance might only cost a couple hundred dollars a year,” said Burgess.

This ease of access has allowed private insurers to grow quickly, but not fast enough to make up for the shrinking National Flood Insurance Program (NFIP). “We’re making up for some of the difference, but it’s going to take time to change agents’ behavior,” said Burgess. “There’s no easy solution. But we must face these difficult questions head-on if we’re to create a sustainable path forward.”

Conclusion

Florida’s insurance market is facing significant challenges, with increasing premiums and a growing need for flood insurance. Long-term policy changes, increased competition, updated flood maps, and better education for insurance agents are all necessary to address these issues. While raising insurance prices for Citizens Insurance might provide some short-term relief, it won’t solve the underlying problems. A comprehensive approach is needed to create a sustainable path forward for Florida’s homeowners and insurers.

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