Why are so many insurance companies pulling out of providing coverage in Florida?
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Insurance is this: You are betting a natural disaster happens, the insurance company is betting that it doesn’t.
Insurance companies are no longer willing to take that bet.
Why? Because they put billions into research and calculators to ensure they win the bet. BUT their research and calculators are telling them climate change is real, and things will be getting worse.
Florida has lots of natural hazards, which are increasing in frequency and severity. Construction costs are also way up. Prior to 2016, tropical storms were common but a large hurricane was less so. Since 2016 we’ve had Matthew, Irma, Michael, Ian and Nicole which were all huge loss events for insurers. Those storms tipped over the reinsurance market, which backstops larger loss events.
This is all in spite of being *the* most consumer unfriendly market for insurance regulation in the US.
The easy money is gone, so most of the market is, too.
For a long time, the cost of insuring homes has increased but states have wanted to protect homeowners from having to pay the real costs, and passed laws limiting the amount of money insurance companies could charge in premiums. This created a completely unsustainable market where the insurers were actually losing a lot of money. Since companies, for the most part, exist to create money, they did the logical thing and moved out of state.
In the end, the real problem comes down to too many people building too many homes in places that are dangerous. To fix it, a sustainability model needs to be in place. If you live in a hurricane zone, rather than keep rebuilding homes, people should be incentivized to move into areas where that isn’t a problem. This will never happen, though, because many people see it as their right to live wherever they want, regardless of the consequences.
Of course it has nothing to do with their shitty governor more concerned with wokeness and running for president than what he is responsible for
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