Ian deals blow to Florida’s teetering insurance sector

Oct 4, 2022, 10:21 AM | Updated: Oct 5, 2022, 3:48 am
FILE - A road is completely filled with a tall pile of debris from destroyed beachfront homes and b...

FILE - A road is completely filled with a tall pile of debris from destroyed beachfront homes and businesses, two days after the passage of Hurricane Ian, in Fort Myers Beach, Fla., Sept. 30, 2022. Florida's home insurance market was already on shaky ground. It now faces an even mightier struggle after the damage caused by the hurricane. (AP Photo/Rebecca Blackwell, File)

(AP Photo/Rebecca Blackwell, File)

              FILE - Men walk past destroyed homes and debris as they survey damage to other properties, two days after the passage of Hurricane Ian, in Fort Myers Beach, Fla., on Sept. 30, 2022. Florida's home insurance market was already on shaky ground. It now faces an even mightier struggle after the damage caused by the hurricane. (AP Photo/Rebecca Blackwell, File)
            
              FILE - Household belongings and debris lie scattered in a trailer park, two days after the passage of Hurricane Ian, in Fort Myers Beach, Fla., Sept. 30, 2022. Florida's home insurance market was already on shaky ground. It now faces an even mightier struggle after the damage caused by the hurricane. (AP Photo/Rebecca Blackwell, File)
            
              FILE - A road is completely filled with a tall pile of debris from destroyed beachfront homes and businesses, two days after the passage of Hurricane Ian, in Fort Myers Beach, Fla., Sept. 30, 2022. Florida's home insurance market was already on shaky ground. It now faces an even mightier struggle after the damage caused by the hurricane. (AP Photo/Rebecca Blackwell, File)

Daniel Kelly and his wife bought a 1977 doublewide mobile home in May for about $83,000 at Tropicana Sands, a community for people 55 and older in Fort Myers, Florida. But he ran into roadblocks when he tried to insure it.

Managers at Tropicana Sands told him he likely wouldn’t be able to find a carrier who would offer a policy because the home was too old. He said he checked with a Florida-based insurance agent who searched and couldn’t find anything.

“I can insure a 1940s car, why can’t I insure this?” Kelly said.

Kelly was lucky that his trailer was largely spared by Hurricane Ian aside from some flood damage. But for many Floridians whose homes were destroyed, they now face the arduous task of rebuilding without insurance or paying even steeper prices in an insurance market that was already struggling. Wind and storm-surge losses from the hurricane could reach between $28 billion and $47 billion, making it Florida’s costliest storm since Hurricane Andrew made landfall in 1992, according to the property analytics firm CoreLogic.

Even before Ian, Florida’s home insurance market was dealing with billions of dollars in losses from a string of natural disasters, rampant litigation and increasing fraud. The difficult environment has put many insurers out of business and caused others to raise their prices or tighten their restrictions, making it harder for Floridians to obtain insurance.

Those who do manage to insure their homes are seeing costs increase exponentially. Even before Hurricane Ian, the annual cost of an average Florida homeowners insurance policy was expected to reach $4,231 in 2022, nearly three times the U.S. average of $1,544.

“They are paying more for less coverage,” said Florida’s Insurance Consumer Advocate Tasha Carter. “It puts consumers in dire circumstances.”

The costs have gotten so high that some homeowners have forgone coverage altogether. About 12% of Florida homeowners don’t have property insurance — or more than double the U.S. average of 5% — according to the Insurance Information Institute, a research organization funded by the insurance industry.

Florida’s insurance industry has seen two straight years of net underwriting losses exceeding $1 billion each year. A string of property insurers, including six so far this year, have become insolvent, while others are leaving the state.

As of July, 27 Florida insurers were on a state watchlist for their precarious financial situation; Mark Friedlander, the head of communications for the Insurance Information Institute, expects Hurricane Ian will cause at least some of those to tip into insolvency.

The insurance industry says overzealous litigation is partly to blame. Loopholes in Florida law, including fee multipliers that allow attorneys to collect higher fees for property insurance cases, have made Florida an excessively litigious state, Friedlander said.

Florida currently averages about 100,000 lawsuits over homeowners’ insurance claims per year, he said. That compares to just 3,600 in California, which has almost double Florida’s population.

The Florida Office of Insurance Regulation said the state accounts for 76% of the nation’s homeowners’ insurance claims lawsuits but just 9% of all homeowners insurance claims.

“Plaintiff attorneys in Florida have historically found ways of circumventing any efforts at reining in legal system abuses, making it likely that ongoing reforms will be needed to further stabilize the insurance marketplace,” said Logan McFaddin of the American Property Casualty Insurance Association.

But Amy Boggs, the property section chair for the Florida Justice Association — a group that represents attorneys — said the insurance industry is also at fault for refusing to pay out claims. Boggs said homeowners are driven to attorneys “as a last resort.”

“No policyholder wants to be embroiled in years of litigation just to get their homes rebuilt,” she said. “They come to attorneys when their insurance company underpays their claim and they can’t rebuild.”

Rampant fraud — particularly among roofing contractors — has also added to costs. Regulators say it’s common for contractors to go door-to-door offering to cover homeowners’ insurance deductible in exchange for submitting a full roof replacement claim to their property insurance company, claiming damage from storms.

Things have gotten so bad with insurance that Florida Gov. Ron DeSantis called a special session in May to address the issues. New laws limit the rates attorneys can charge for some property insurance claims and require insurers to insure homes with older roofs — something they had stopped doing because of rising fraud claims.

The legislation also includes a $150 million fund that will offer grants to homeowners to make improvements to protect against hurricanes. But that program has yet to be launched, and experts say it will take years to reverse the damage to Florida’s insurance market.

In the meantime, the crisis has pushed more homeowners to Citizens Property Insurance Corp., the state-backed insurer that sells home insurance for those who can’t get coverage through private insurers.

Citizens had more than 1 million active policies as of Sept. 23, before Ian hit, according to Michael Peltier, a spokesman at Citizens. In 2019, that number was roughly 420,000. He said the company had been writing 8,000 to 9,000 new policies per week, double compared with a few years ago. Citizens has $13.4 billion in reserves and predicts it will pay 225,000 claims from Ian worth a total of $3.7 billion.

Even if they have homeowners’ insurance, many Floridians could still be facing financial ruin because of flooding. Flood damage isn’t typically covered by homeowners’ insurance but can be costly; Florida’s Division of Emergency Management says 1 inch of floodwater can do $25,000 in damage.

Friedlander said just 18% of Florida homeowners carry flood insurance, either through the federal government’s National Flood Insurance Program or private insurers. In some coastal areas, more than half of homeowners have flood insurance, but in inland areas — where flood waters continued to rise even after the storm had passed — it’s closer to 5%.

Kelly, whose trailer in Fort Myers was saturated in 4 feet of salt water and sewage after Hurricane Ian, could have benefitted from flood insurance. He thought he might not be able to get it because he didn’t have homeowners insurance, but that’s not the case — flood insurance is completely separate and can even be purchased by renters, experts say.

“I kinda let it lie when I originally couldn’t find someone to insure it,” he said. “It’s a costly oversight on my part.”

___

Associated Press writer Steve LeBlanc in Boston contributed to this report.

___

For more coverage of Hurricane Ian, go to: https://apnews.com/hub/hurricanes

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Nancy Faeser, Federal Minister of the Interior and Home Affairs talks to members of the press in Em...
Associated Press

German government seeks to ease rules for naturalization

BERLIN (AP) — Germany’s socially liberal government is moving ahead with plans to ease the rules for obtaining citizenship in the European Union’s most populous country, a drive that is being assailed by the conservative opposition. Chancellor OIaf Scholz said in a video message Saturday that Germany has long since become “the country of hope” […]
1 day ago
Lilia Kristenko, 38, cries as city responders collect the dead body of her mother Natalia Kristenko...
Associated Press

Ukraine works to restore water, power after Russian strikes

KYIV, Ukraine (AP) — Ukrainian authorities endeavored Saturday to restore electricity and water services after recent pummeling by Russian military strikes that vastly damaged infrastructure, with President Volodymyr Zelenskyy saying millions have seen their power restored since blackouts swept the war-battered country days earlier. Skirmishes continued in the east and residents from the southern city […]
1 day ago
FILE - Palestinian soccer fans wave Qatari and Palestinian flags as they watch a live broadcast of ...
Associated Press

Flashes of Arab unity at World Cup after years of discontent

DOHA, Qatar (AP) — For a brief moment after Saudi Arabia’s Salem Aldawsari fired a ball from just inside the penalty box into the back of the net to seal a World Cup win against Argentina, Arabs across the divided Middle East found something to celebrate. Such Arab unity is hard to come by and […]
1 day ago
FILE - MGM Grand Macau casino resort is closed in Macao on July 11, 2022. Macao has tentatively ren...
Associated Press

Macao awards casino licenses to MGM, Sands, Wynn, 3 others

BEIJING (AP) — Macao has tentatively renewed the casino licenses of MGM Resorts, Las Vegas Sands, Wynn Resorts and three Chinese rivals after they promised to help diversify its economy by investing in non-gambling attractions, the government said Saturday. The announcement is positive news for owners who have invested billions of dollars to build the […]
1 day ago
FILE - Local authorities inaugurate the Christmas lighting in the streets of Vigo, Spain, Nov. 19, ...
Associated Press

Sober or bright? Europe faces holidays during energy crunch

VERONA, Italy (AP) — Early season merrymakers sipping mulled wine and shopping for holiday decorations packed the Verona Christmas market for its inaugural weekend. But beyond the wooden market stalls, the Italian city still has not decked out its granite-clad pedestrian streets with twinkling holiday lights as officials debate how bright to make the season […]
1 day ago
Associated Press

Today in History: November 26, the NHL is founded

Today in History Today is Saturday, Nov. 26, the 330th day of 2022. There are 35 days left in the year. Today’s Highlight in History: On Nov. 26, 1950, China entered the Korean War, launching a counteroffensive against soldiers from the United Nations, the U.S. and South Korea. On this date: In 1825, the first […]
1 day ago

Sponsored Articles

SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.
Ian deals blow to Florida’s teetering insurance sector