New report: Florida Property Insurance Premiums won’t drop
A new report shows a dooming outlook for Florida’s insurance crisis.
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Insurance premiums will likely not drop, and there’s little Florida lawmakers can do about it, according to a new report by Karen Clark and Co., a Boston-based risk assessment and management firm.
This is because a Florida homeowner’s average insurance premium is triple the national average.
The report lists factors that are driving rates to increase— beginning with construction costs. The average construction cost in Florida has increased nearly 40% since 2017. It continues to go up.
Read: Florida homeowners with Citizens insurance to see double-digit rate hike
“Reconstruction costs are not coming down anytime in the near future,” said Tom Cotton, Orlando insurance agent.
Florida has seen three major hurricanes in the last five years— Michael, Ian, and Idalia.
The report mentions scientific studies that point to an increase in major hurricanes and the intensity of the storms.
The factors in the report driving premiums are out of Florida lawmakers’ control.
Read: Citizens customers could see costly policy switch if they miss this important letter
“I really don’t think there’s a lot more that they can do,” Cotton said.
Cotton says legislation passed by lawmakers last session will help two years down the line. It aims to reduce frivolous and excessive lawsuit claims that were hiking up rates and pushing out insurers.
“But that’s only going to impact about 40% of the rate-making equation,” Cotton said. “The legislature did what they did could to control the reinsurance component of the rate-making process. We will see that come down in the future. But if construction costs come down, then there will be a correlating, linear process, you’ll see a linear decrease. But I don’t see that happening in the near future.”
Cotton says until then, Florida will see premiums increase.
Read: What Florida’s property insurance rate hikes mean for deals, markets
The report says the only ways to mitigate these impacts are retrofitting homes to withstand storms and putting more stringent building codes in place— something Cotton said is already stringent.
“They’re particularly talking about along the coast. They’re talking about not letting you build a house where it could be impacted by erosion and tropical storms,” Cotton said, referencing conversations about solutions.
This report comes days after some Florida lawmakers said they did not expect major property insurance legislation this upcoming session.
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