I live in Florida and a ton of people are moving here. Even so, there are a ton of property insurance companies pulling out of the state. It makes no sense to me.
In: Economics
Hurricanes cause more damage than insurance companies take in. Some companies are leaving because it’s not profitable for them
Less competition means the remaining companies can charge more as they can’t lose business
Higher chance of destruction by hurricanes, most of the state is very low lying so higher risk of flooding, insurance fraud, long term outlooks aren’t great either with climate change and the water tables rising
The Florida government passed a poorly thought out law attempting to protect homeowners from BS insurance denials, but went too far and created a situation where it’s almost impossible for insurers to deny claims, and to fight claims they have to pay for the other side’s lawyers, so even if they “win” the legal fees outweigh the cost of just paying out even if they know it’s BS.
Companies that do a lot of insurance work, eg roofing companies, worked this out and go around before hurricanes setting up jobs with people who have roof replacement coming up and then put in a fraudulent roof damage claim.
So the entire industry is now plagued by mass fraud, so much so it’s often not worth insuring Florida residents anymore so these companies are either dropping clients over the smallest pretense, or jacking up rates so high clients cancel.
There’s been some efforts in the last year or so to reign this in, but seems like it may not be enough.
Florida is going to be impacted much more heavily than other states due to climate change.
The potential payouts are too high for insurers to do business in Florida.
Florida is incredibly vulnerable to hurricanes. Hurricanes cause tens of billions of dollars in damage. Forecasting suggests this will be a higher than typical hurricane season, and storms in general are getting more severe with effects of climate change. In addition to more liklihood of claims, building material costs, labor/trades costs are higher meaning that rebuilding, replacement, etc. will cost more for customers who experience losses. Insurance companies are not charities, so if they’ll have to pay out more claims, they’ll charge more in insurance premiums to cover those costs. Add in factors like risks/liability to improperly maintained condo buildings and the effects of salt water, etc. (eg. the condo collapse a couple years ago) and Florida is a place with high risks to property insurers.
Fraud and climate change.
Homeowner rates are driven by fraud.
But that’s not the whole story. You can’t get many carriers to even talk about commercial policies either. Those are weather related.
Same thing in TX, LA, etc.
That’s what happens when you outlaw the use of scientific data for construction. If they used it they would know the sea will rise. Kinda surprising anyone still would offer insurance.
It’s a combination of factors.
The big one is that despite Florida have 6.4% of the US population, and 9% of all house insurance claims, upwards of 79% of house insurance lawsuits are from Florida…
Florida has weird State laws regarding Insurance companies making it very hard for them to deny claims or fight against them.
Meanwhile Florida is being hit hard with climate change. Natural disasters (particular Hurricanes and flooding) are common place forcing rates to be higher. Insurance companies know full well that they can’t afford to pay out every house in a city if the mother of all Hurricanes hits.
The State is also a notorious hotbed for real estate and insurance fraud. People will often differ maintenance on their homes like getting new roofs and windows knowing that a Hurricane will hit eventually, then that they can blame it on a hurricane and get it paid out by the insurance.
Seeing as how much a nightmare it is to deal with Florida residents many insurance companies have resorted to just refusing to issue policies in the State, which further drives up the costs of insurance.
People (and politicians) are forgetting insurance is a business.
I can only speak from a similar situation as Florida as opposed to actually Florida itself so take my response with a grain of salt.
Florida sounds to from other comments have a huge amount of costs to recover to be profitable and businesses don’t have to offer services, especially if it isn’t possible to make money.
So they can set prices at what it reasonably costs to sustain themselves, but also have a fuck you go away price if they aren’t interested in really doing the work.
I’m concept though, insurers need to carry money to basically cover a large catastrophic event, which is suuuppeerrr pricey in the scheme of the world from reinsurers and overall we’ve globally had enough once in 100 year events over the previous decade all these accounts are less than healthy and in need of some downtime to recover which seems to not be happening.
Florida has been doing a great job at approving housing developments that never should have been built. They’re either on swamp land so the foundation cracks in a few years of construction or they are in areas affected by hurricane seasons or both. They made some laws to prevent insurance companies from denying claims but that just made it more expensive for insurance companies so they subsidize a lot of it. But now those subsidies are drying up so they need to increase rates to cover the difference.
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