Many Florida policyholders can expect to see yet another spike in their already high insurance rates at their next renewal. This rate increase is expected to take place even though a major hurricane hasn’t made a direct hit with the state in over seven years.
Yet despite our good fortune, statistics show the average Florida homeowner is paying twice the rates they were charged six years ago, and some are paying even more than that. Many in the industry place the blame on the number of claims submitted to the insurance companies; claims are up 17% over the past ten years, most due to non-catastrophic water damage like leaky toilets, and broken water heaters.
Others are blaming the increase on a lack of competition in the insurance business in Florida. The largest provider in the state, Citizens Property Insurance Corporation is often the only option for many homeowners who can’t obtain policies through private companies.
Citizen’s policyholders have seen an increase of 8.1% statewide in their rates over the last four years, and that trend doesn’t seem to be ending anytime soon.
Yet others argue simple greed is the root of the problem.
Some argue that insurance companies are all to quick to accept insurance premiums, but often times they are just as quick to deny legitimate claims in an effort to potentially maximize profits.
Citizen’s new President argues the company would have to increase rates on all its products by 16.4% to be comparable with the market rates a private company would charge. One Citizens’ board member blames the number of policies and the low rates, calling it a “competitive drag” for the state. Governor Scott agrees that more private companies may be willing to provide coverage if Citizens was reduced in size. Because private companies know they can’t compete with government, no matter what they’re selling. Even so, many homeowners currently insured by Citizens are being shifted to private companies as the corporation attempts to downsize, and many are left to wonder what kind of coverage they can expect from these private companies.
However, rates and coverage don’t seem to be the only issues. Some Citizen’s policyholders are apprehensive about switching to a private company because they believe that there’s more money available to Citizens so they’re more likely to receive a payout if a claim is necessary.
Until there is real meaningful reform this problem will continue to exist in Florida. And Floridians may not be so lucky when the next “big one” hits Florida. Please read our proposed list of reforms that we feel will only help to strengthen the insurance market as a whole.