The aftermath of Hurricane Michael is seen in Mexico Beach, Fla., a week after the storm hit in October 2018. Joe Raedle/Getty Images

FL - Florida insurance crisis deepens as rates soar, companies fall

Long known as the nation’s most hurricane-prone state, Florida has achieved a new status that is aggravating hurricane anxieties and threatening real-estate values.

Florida has the worst property-insurance market.

Four Florida insurance companies have declared bankruptcy since April, and others are canceling or not renewing policies. Hundreds of thousands of people have been forced to buy property coverage through the state-created insurer of last resort, Citizens Property Insurance Corp.

“Every day, there’s another company that seems to be going insolvent,” Citizens CEO Barry Gilway said at a recent public meeting.

The number of Citizens policies recently passed 1 million for the first time since early 2014 and could reach nearly 2 million by the end of 2023, according to a Citizens projection.

Two years ago, Citizens insured just over 510,000 Florida properties.

Gilway called the policy growth “incomprehensible.”

Floridians now have the highest property-insurance rates in the nation, according to the industry-funded Insurance Information Institute. The average premium is $4,231 — nearly triple the U.S. average of $1,544.

“It’s reached a point where Floridians cannot find affordable coverage for their homes,” Institute spokesperson Mark Friedlander said. “It is going to eventually catch up with our booming real estate market and bring down values of property.”

At the same time, from October through June, nearly 160,000 Floridians dropped the flood insurance policies they bought from the Federal Emergency Management Agency as it raised rates on some homeowners. Flood insurance is separate from homeowners’ coverage.

The instability in the homeowners’ market is the result of a unique mix of circumstances including costly litigation against insurers and the exposure of Florida insurance companies to storm damage in nearby states.

Florida has not had a major hurricane since 2018. But since then, many Florida-based insurers expanded to cover properties in Louisiana, which has faced tens of billions in losses from Hurricane Laura in 2020 and Hurricane Ida in 2021. Insurers were hammered.

In late May, the Florida legislature met in a special session to address the insurance crisis and it enacted two laws aimed at strengthening industry finances in part by controlling costs arising from lawsuits filed by policyholders who challenge claims settlements.

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