Florida is at the center of a swirling storm with a property insurance market that has been described as in freefall.
At the end of August, we celebrated the 30th anniversary of Category 5 Hurricane Andrew making landfall in South Florida. At the time, Andrew was the costliest natural disaster in US history. More recently, parts of Florida were devastated by Hurricane Ian, a powerful Category 4 hurricane that will join the ranks of the costliest Atlantic hurricanes and, unfortunately, one of the deadliest hurricanes to ever hit Florida.
Simply put, Hurricane Ian is a crisis on top of a crisis.
As Floridians, we know it isn’t as there is a hurricane, but when. This season, like every hurricane season, we must do our part to prepare, harden our homes and businesses to mitigate potential damage, and plan for the worst outcomes. Catastrophic storms not only bring devastation and suffering to those affected, but increase rates that consumers must pay and have recently only exacerbated our man-made property insurance crisis. In 2021, Florida generated 7.03% of property insurance claims statewide, but accounted for 76.32% of the nation’s homeowners insurance lawsuits filed. These numbers are especially alarming considering that until Hurricane Ian, Florida had not had a major storm hit our coast since 2018.
Unfortunately, due to our bottom-five legal climate (according to the FloridaScoreCard.org, compiled by the Chamber Foundation’s Community Development Partnership Board) that has caused unnecessary litigation and fraud, Florida’s property insurance rates have skyrocketed to three times the national average. Additionally, non-catastrophic claims and the incentive to litigate have led many property insurers to go out of business or reduce their coverage in Florida. Recently, Citizens Property Insurance Corp., the taxpayer-funded “insurer of last resort,” reached more than 1 million policies, putting all taxpayers at risk of a massive “hurricane tax” if a major storm used up their reserves. Before Hurricane Ian made landfall last week, Barry Gilway, president and CEO of Citizens, bluntly said “the industry is on life support.”
To address this crisis, Governor Ron DeSantis wisely called a special legislative session that convened in May. The reforms that passed are a significant step forward, but like previous attempts to fix the market, the trial lawyers and fraudsters are fighting to stay one step ahead of policymakers and reforms, so we have much more work to do.
We need to stabilize the market by limiting fraud and abuse by bad actors and eliminating the incentive to over-litigate. We need to create competition in the market by welcoming new capital and addressing Citizens Property Insurance’s below-market, taxpayer-subsidized rates. The ultimate goal is to reduce insurance premiums for hard-working Floridians and protect Florida taxpayers.
Named storms that hit our coasts directly are exacerbating our man-made insurance crisis and testing the limits of our struggling property insurance market. In addition to the destruction of homes, businesses and lives, hurricane damage claims result in increased premiums and possible windfall payments by taxpayers through “hurricane taxes”, higher payouts by insurance companies, more litigation and possibly even more insurers not able to. to maintain their presence in Florida. This ultimately reduces competition and capital in Florida, furthering the crisis in the insurance market.
As we begin the long road to recovery from this storm and encourage Floridians to do their part in preparing for the next one, it is imperative that policymakers begin to consider additional reforms to stabilize Florida’s property insurance market, incentivize insurance capital that Florida comes, and immediately improves our bottom five legal climate.
Mark Wilson is president and CEO of the Florida Chamber of Commerce. This opinion is reprinted with permission of the Florida Chamber. It previously ran in the Orlando Sentinel. The Chamber will host a property insurance summit Dec. 5-7 in Orlando.
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