Storm damage from Hurricane Idalia is expected to place increased strain on Florida insurers, deepening the state’s insurance crisis, where already more than two dozen firms have decided to stop providing homeowners policies in the state, including major players like Farmers. The state’s residents, meanwhile, face skyrocketing premiums – impacting not just household budgets, but the state housing market too.
Insurers argue Florida’s exposure to hurricanes has made the state too risky to do business in. The rapidly rising cost of reinsurance – a form of insurance for insurers that offsets their own financial risk in issuing coverage – has made operations in Florida tricky.
In December 2022, lawmakers in Tallahassee held a three-day special legislative session aimed at alleviating the state’s insurance crisis, worsened by an estimated $65 billion in insurance losses caused by Hurricane Ian which ravaged Florida. The legislature enacted major changes to Florida law, including earmarking $1 billion in taxpayer cash for industry reinsurance and restricting lawsuits against insurers. The new rules also ended state-controlled Citizens Property Insurance Corp coverage for an estimated 1.1 million Floridians in the hope that increased private sector competition would drive down insurance rates.
While the efforts appear to have failed in preventing the continued flight of insurers from state, their 2022 legislative changes almost certainly ended up increasing the cost of insurance premiums for homeowners. This year, Floridians faced homeowners insurance rates that are four times the national average. State Senator John Grant, chairman of the Florida Senate Insurance Committee, called for another special legislative session to address the crisis in early August.
Florida Governor Ron DeSantis, who has spent much of the summer outside Florida in his pursuit of the 2024 Republican presidential nomination, said he feels the 2022 special session didn’t go far enough in reforming the Florida insurance industry. On Monday , while discussing state preparations for Hurricane Idalia, DeSantis stated, “I’ve always wanted to do more than the Legislature wanted to do. We got the Legislature to do a lot more this year than we’ve ever had. So, whatever is down the pike that could be beneficial to the market, I’m all ears for it.”
