July 9, 2024 – Florida's property insurance crisis could escalate if legislators don't act swiftly to address the situation before a major hurricane strikes, state Representative Hillary Cassel warned in a recent televised interview.
During her appearance on Local 10 This Week in South Florida, Cassel emphasized the urgency of the situation. "It's not a matter of if; it's a matter of when," the Democrat said. "We need significant changes here in Florida." Cassel, a former insurance attorney, highlighted the severity of the crisis exacerbated by excessive litigation, fraud, and the increasing frequency of extreme weather events driven by climate change.
Insurance Market Struggles and Insurer Exodus
Florida homeowners are grappling with soaring insurance premiums amid a crisis that has seen several private insurers either cut coverage or exit the state due to high damage claims. As a result, Citizens Property Insurance Corporation, the state’s insurer of last resort, has seen its policyholder numbers surge from 443,229 in late January 2020 to 1,167,579 by December 2023.
Despite efforts to reduce Citizens' policy load through a "depopulation" program, which aims to transfer 500,000 policies to private insurers, the state-run entity still holds the largest share of homeowner policies in Florida. This program allows private insurers to take on Citizens’ policies with a rate increase capped at 20 percent, but Cassel argues this strategy falls short of addressing the broader affordability issue.
Concerns Over Policy Affordability
Cassel criticized the depopulation program for its limited impact on long-term affordability. "While legislators may see this as progress, it’s merely a temporary fix," she said. "The 20 percent rate increase applies only for the first year. If rates climb higher afterward, policyholders may end up back with Citizens."
The legislator stressed the need for a more comprehensive solution, including increasing the number of independent agencies rating Florida's insurers, especially smaller domestic carriers not currently required to undergo such evaluations. This, Cassel argued, would provide homeowners with better insight into the financial stability of their insurers.
Expert Opinions on the Hurricane Season
Benjamin Collier, a risk management and insurance professor at Temple University, echoed concerns about the upcoming hurricane season. "Forecasters predict an especially strong season, and early signs like record-breaking Hurricane Beryl support these fears," Collier told Newsweek. "A major hurricane could devastate small insurers, particularly those serving lower-income homeowners."
Collier noted that if a small insurer becomes insolvent, policyholders may face lengthy delays in receiving claims from the state fund designed to cover such scenarios. "It’s a significant challenge for those trying to rebuild after a hurricane," Collier said. "The last thing homeowners need is further complications in securing their claims."
As hurricane season progresses, the need for urgent action to stabilize Florida's property insurance market becomes increasingly critical.
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