Today’s News
For 32 years, Jim Tynan had a homeowners’ policy with Allstate for his 1,200-square-foot condo in Ponte Vedra, Florida. But in January, Allstate informed him they were dropping his coverage. Tynan reached out to ten different agencies, only to find none willing to cover him—until he finally secured a policy at a 50% higher premium.
Image Source: Bloomberg
This experience reflects a growing issue in Florida, where four major hurricanes in the past four years have caused insurance premiums to skyrocket and led some insurers to reduce coverage. As residents work to recover from these storms, many are left wondering if they will still be able to secure insurance in the future.
Tynan, who lives just two miles from the ocean but hasn’t been directly hit by a hurricane, now lives in constant fear of losing his new policy. “I live in fear I will get a letter from my new company telling me they are going to drop me, too,” he said, following the latest hurricane. “It’s very scary.”
Tynan isn’t alone. Six other homeowners from various areas of Florida, including both coasts and the Keys, expressed similar concerns about potential rate hikes, exclusions, and even the complete loss of insurance coverage.
Allstate, in response, stated that they have worked with regulators to protect as many customers as possible. For those who lose coverage, they try to coordinate with other carriers to offer alternatives.
Homeowners across Florida face a precarious situation when it comes to securing insurance. Average premiums in the state have surged nearly 60% between 2019 and 2023, and some major providers have reduced their coverage, leaving many residents reliant on the state-backed insurer, Citizens.
Analysts warn that following Hurricane Milton, which hit Florida’s southwest coast just 12 days after Hurricane Helene struck the northwest coast, there will likely be even more uncertainty in the insurance market.
“This is …certainly going to cause insurers to be concerned about continuing to insure in the market,” said Marc Ragin, an associate professor of risk management and insurance at the University of Georgia.
The state-backed nonprofit insurer, Citizens, is often seen as the last resort for coverage. Florida’s Governor Ron DeSantis has raised concerns about whether Citizens could pay claims if hit by large storms.
Citizens spokesman Michael Peltier assured that Citizens would meet its obligations, as the organization has mechanisms in place to levy surcharges on policyholders and, if necessary, assessments on non-policyholders. Peltier said that the 80,000 claims filed so far due to Hurricane Milton would be paid without needing to levy assessments.
Governor DeSantis’ office emphasized that while Citizens would always be able to pay claims, the cost would come at the expense of all Florida insurance policyholders.
Image Source: Reuters, edited by Doo Prime.
As of June, Citizens had over 1.2 million policies in force, up from around 1.14 million at the end of 2022. Analysts predict that the state insurer may need to take on more policies if private insurers continue to retreat from the market.
“The reality is we may be forced out of our home where we have lived for 35 years,” said Sherri Hansen, a Florida Keys resident, voicing the growing concern among homeowners. “All our eggs are in this one basket.”
For more insights, check out Doo Prime’s in-depth analysis on how Hurricane Milton is impacting major industries like insurance and real estate here.
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