Fraudulent claims, frivolous lawsuits, and an increasing number of natural disasters have triggered a major crisis in Florida’s homeowners insurance industry.
Licensed Realtor with 10+ years in personal finance content
Contributor to Nasdaq and USA Today
Daria is a licensed Realtor and resort property manager specializing in personal finance, real estate, and insurance topics. In her spare time, she practices photography.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
Mark FriedlanderDirector, Corporate Communications
Corporate communications director for Insurance Information Institute
20+ years in insurance and communications
As Director, Corporate Communications for Triple-I, Mark serves as the non-profit’s national spokesperson, sharing information and education on a wide array of insurance issues.
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Florida homeowners face serious obstacles when it comes to homeowners insurance. Many insurers have reduced their exposure in Florida through non-renewals and limited writing of new business. A few companies have voluntarily withdrawn from the state. Several years of market volatility have left homeowners saddled with higher costs and a tough time finding the coverage they need.
Proprietary data from Insurify reveals that Florida homeowners already pay an average annual insurance premium of $7,799 per year. This is the highest of any state, and rates are likely to rise even more next year.
The state of home insurance in Florida
As of August 2023, more than 400,000 Florida homeowners have been dropped by their insurance company or not had their policies renewed since the beginning of 2022, according to the Tampa Bay Times.[1] Numbers fluctuate, but more than a dozen companies either stopped writing new policies in the state, reduced their risk exposure by not renewing existing policies, or began the process of voluntarily withdrawing from the market, including:
Farmers Insurance: Citing the need to manage its risk exposure, Farmers Group will begin non-renewing Farmers-branded home, auto, and umbrella policies managed by its captive agents. However, 70% of Farmers Group Florida business will remain through its subsidiaries represented by independent agents. [2]
Progressive: Is discontinuing some coverages and non-renewing policies for high-risk homes, but will still have a significant presence in the state.[3]
Bankers Insurance: Announced in July 2022, several months prior to a special legislative session to address insurance market issues, that it would voluntarily withdraw from the state's home insurance market, citing failure by lawmakers to take decisive action to reduce fraud and lawsuits.[4]
Lexington Insurance: An AIG subsidiary that specialized in insuring high-value homes with $1 million-plus dwelling coverage limits, Lexington began to withdraw from Florida and other states in 2022.
AAA: Is opting not to renew some “higher-exposure” policies to reduce cost.[5]
Heritage Insurance: Non-renewed 74,000 Florida home policies over the past year as it focuses on reducing its home insurance risk while growing its commercial residential (master condo association policies) book of business in the state.
Seven companies have been liquidated since January 2022, according to the Florida Insurance Guaranty Association.[6] The Florida Office of Insurance Regulation lists 12 companies currently in some stage of receivership.[7]Their policies have been canceled, leaving homeowners scrambling to find new coverage.
Most of the displaced policyholders have landed with Citizens Property Insurance Corp., the state-backed insurer of last resort. Citizens is now the largest home insurer in Florida, with more than 1.2 million customers as of December 2023.
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The roots of the Florida insurance crisis
Multiple factors have led to Florida’s homeowners insurance crisis, and industry observers say it’s been decades in the making. Insurance claim fraud, frivolous lawsuits, severe weather events, including Hurricanes Ian and Nicole in 2022, and inflation have all driven up insurance companies’ costs. These expenses have then been passed on to consumers.
Now, the dwindling number of insurers leaves consumers competing for coverage, which drives prices up even more.
Fraudulent claims
The insurance fraud contributing to Florida’s insurance crisis takes many forms. In one recent example, people posing as licensed public adjusters and a mold remediation company owner filed claims on behalf of an unwitting homeowner for non-existent water and mold damage from an air conditioning unit.[8]
Roof scams are also common. Unscrupulous contractors go door-to-door offering free roof inspections, lie about finding storm damage, and then promise homeowners a free roof with no deductible if they assign their benefits to the contractor. This allows the contractor to be paid directly by the insurance company. Some shady contractors have even been caught intentionally damaging roofs to justify claims.
In other cases, damages are real, but the repair costs are grossly inflated by contractors who might ask the homeowner to assign them their benefits. Rather than risk being sued, the insurers sometimes settle out of court to avoid a drawn-out legal battle that would rack up high expenses, regardless of the validity of the claim.
Lawsuits
While Florida generates less than 10% of homeowners insurance claims, 79% of homeowners insurance lawsuits are filed here, according to the Insurance Information Institute (Triple-I).[9]
In 2017, the Florida Supreme Court ruled that in suits against insurance companies, courts could award plaintiffs’ attorneys up to 2.5 times their hourly billing rate when courts ruled in the plaintiffs’ favor. This means even simple lawsuits can rack up hundreds of thousands of dollars in attorney fees, the III noted.
Exacerbating the lawsuit issue is “legalized fraud,” in Triple-I’s words. Claims adjusters might catch contractors who inflate the cost of repairing damage and ask policyholders to assign over their benefits. When the insurer reduces or denies the claim, the contractor sues in the hope that the insurance company will settle rather than risk having to pay exorbitant legal costs if a judge rules against it.
Legislators passed a reform bill in December 2022 to end one-way attorney fees, the prime generator of frivolous lawsuits, and to eliminate assignment of benefits for home policies, hoping to reduce contractor fraud schemes.[10] Insurers are starting to report a decline in lawsuits due to the reform package, according to Triple-I.
Severe weather and natural disasters
From 2020 to 2022, Florida suffered 15 billion-dollar weather and climate disasters, totaling $100 to $200 billion. It has also suffered five severe weather events totaling nearly $15 billion more in 2023 so far, including Hurricane Idalia in August.[11]
Most experts expect risk factors to continue to escalate in Florida. In fact, the frequency and expense of weather and climate disasters in the United States is increasing. This is due to increased exposure (value of at-risk assets), vulnerability (intensity in a given location), more people living in harm's way (population shifts to coastal areas), and increasing frequency of some types of extreme weather due to climate change, according to the National Oceanic and Atmospheric Administration’s Climate.gov website.
And risks extend beyond hurricane season. For instance, some counties in Florida are at heightened risk of having structures destroyed by wildfires due to warmer temperatures, the First Street Foundation reported. And non-tropical flood events are also a year-round risk in Florida. For example, April 2023 saw an historic rainstorm pour 2 feet of rain on Broward County in 24 hours.
The dwindling number of insurance companies writing policies in Florida has made it difficult for homeowners to find coverage through private insurance. The situation is so dire that Citizens Property Insurance Corporation, Florida’s insurer of last resort, is now the biggest insurer in the state, according to “The 9th Annual National Risk Assessment” from First Street Foundation.[12]
Premiums from Citizens are 37.5% below the private market average, Citizens CEO and president Tim Cerio told WINK News. However, the state is bringing in new private insurers and requiring homeowners to make a switch at renewal time if the private company offers a premium up to 20% more expensive than the Citizens renewal rate.
Such a move might be necessary because Citizens lacks the reserves to pay claims for a major hurricane. But the law allows Citizens to collect an emergency surcharge on homes — not only on the homeowners it insures, but on non-Citizens policyholders, too. What’s more, state regulators approved an average rate hike of 11.5% for Citizens.[13]
Inflation
For two decades, nationwide insurance premiums have risen faster than inflation, according to a November 2023 research brief from the Insurance Research Council. Contributing factors include natural disasters, increasing home-repair costs, supply chain disruptions, and migration of populations into disaster-prone areas, the IRC noted.
Florida ranked second among the least affordable states. In 2020, household expenditures on homeowners insurance reached 3.79% of the state’s median income. Compare that to the least expensive state, Utah, where insurance premiums were 0.92% of the median income.
How the insurance crisis affects Florida homeowners
Florida’s property insurance crisis has had a profound effect on homeowners in the following ways.
Increasing rates
Premiums for homeowners insurance policies have risen more than 40% this year for many Florida homeowners, according to Triple-I. With rates about 3.5 times the national average, some Floridians have been priced out of the market.
Homeowners with a mortgage loan have to keep their homes insured, so some homeowners are paying off their mortgages and canceling their policies in favor of self-insuring. However, that’s a risky move for anyone who lacks the cash to rebuild their home — or an acceptable version of it — from the ground up in the event of a catastrophic loss. WESH, an NBC affiliate in Orlando, reported that up to 20% of Florida residents have resorted to self-insurance. according to analysis from the Triple-I.
Other homeowners simply have given up and moved out of state.
Fewer options
With insurance companies failing or fleeing the state, Florida homeowners are left with few options. People who can’t find insurance from a private homeowners insurance company must turn to Citizens, the residential insurer of last resort.
Citizens insurance is lower-priced than insurance policies from private companies, but it’s under tremendous strain and looking to reduce its policyholders and its exposure, WINK News reported. If it implements the surcharge, which some refer to as a hurricane tax, its premiums could increase by up to 45%.
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State government actions to address the crisis
Florida’s state government has taken a number of actions to address the insurance crisis. Laws legislators passed this year include:
Senate Bill 7054: Enacted sweeping consumer protections pertaining to deductible limits, risk mitigation discounts, claims handling requirements, and claims filing deadlines for deployed military members.
Senate Bill 1002: Provides for expanded oversight of Florida insurance companies by the Office of Insurance Regulation.
House Bill 1185: Establishes consumer protections related to how public adjusters may charge and who is responsible for paying their fees.
House Bill 881: Expands the My Safe Florida Home Program, which provides free home wind mitigation inspections and grants for home-hardening, such as fortifying roofs, doors, and windows.
House Bill 837: Changes the way courts calculate attorney fees and bans one-way attorney fees in several specific circumstances, which could reduce frivolous claims.
Last year, the Florida Office of Insurance Regulation also implemented a temporary market stabilization arrangement to substitute for acceptable financial ratings for policies with mortgages backed by Freddie Mac and Fannie Mae. The measure helped prevent consumers from losing coverage during hurricane season.
The future of home insurance in Florida
Insurify’s 2023 home insurance report forecasts a 9% nationwide rate increase in 2023 as a result of the same key factors driving up rates in Florida, including climate-exacerbated natural disasters, inflation, and increased fire risk, for example.
Florida Gov. Ron DeSantis and state lawmakers have enacted legislation addressing the crisis, but as the Miami Herald reported, the efforts thus far have been geared toward stabilizing the insurance industry, not reducing rates.
As of August, Florida regulators approved six new property insurers to write business in Florida, with most beginning in the first quarter of 2024. Additionally, Citizens has moved more than 200,000 policies back to the private market via a depopulation program (through November).
Navigating Florida’s home insurance crisis can be an exercise in frustration for homeowners. But the more you know, the better prepared you’ll be to find a workable solution for protecting your home.
Who insures the most homes in Florida?
The state-backed Citizens Property Insurance Corporation currently insures more homes than any other insurer in the state — more than 1.2 million policies as of December 2023. Citizens is Florida’s insurer of last resort — it’s for residents unable to find coverage from a private company. Its rates are comparatively low but on the rise.
How many home insurance companies have left Florida?
Over the past two years, more than a dozen Florida property insurers have either stopped writing new business, reduced their risk by non-renewing policies, or implemented a voluntary withdrawal from the state. In addition, seven companies have become insolvent since February 2022, and their policyholders have had to find new coverage, either with Citizens or a private insurer.
Can you reduce the risk of getting a non-renewal notice?
If your insurance company stops writing policies in your state, there’s nothing you can do except seek insurance elsewhere. However, Florida insurer Del Toro Insurance notes on its blog that implementing wind mitigation recommendations, paying premiums on time, and completing repairs, especially to your roof, can help reduce your risk of non-renewal.
What should you do if your insurer cancels your policy?
The Consumer Financial Protection Bureau has several suggestions for consumers whose insurance has been canceled. First, ask your insurer to reconsider. If it won’t, shop around for new coverage. If you’re unable to find it, you can get insurance through Citizens Property Insurance as a last resort. Inform your mortgage lender of the change to avoid potentially expensive force-placed insurance.
Six new property insurers will begin offering home coverage in Florida in 2024, providing Florida consumers an opportunity to comparison shop for coverage and get competitive quotes, which will hopefully lead to better pricing, according to Triple-I.
How much will home insurance rates rise this year?
Insurify data suggests a 9% increase nationwide for 2023. Whereas some states would see smaller increases, others, such as Florida, have already experienced surging prices and could see further increases.
Daria Uhlig is a freelance writer and editor with over a decade of experience creating personal finance content. Her work appears on USA Today, Nasdaq, MSN, Yahoo Finance, Fox Business, GOBankingRates and AOL. As a licensed Realtor and resort property manager, she specializes in real estate topics, including landlord, homeowners and renters insurance. In her spare time, Daria can be found photographing people and places on Maryland's Eastern Shore. Connect with her on LinkedIn.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
Mark FriedlanderDirector, Corporate Communications
Corporate communications director for Insurance Information Institute
20+ years in insurance and communications
As Director, Corporate Communications for Triple-I, Mark serves as the non-profit’s national spokesperson, sharing information and education on a wide array of insurance issues.
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