Although the house insurance industry in Florida has always been complex, recent issues are pushing it towards failure. Six property and casualty companies in Florida offering home insurance have shut down since 2017. In 2022, three more companies will be liquidated.
"The current state of homeowners insurance in Florida is a crisis; we are facing a serious situation where the private insurance market could collapse," said Mark Friedlander, director of corporate relations at the Insurance Information Institute.
Florida property insurers are expected to report a combined underwriting loss of $1.7 billion for 2021 due to soaring litigation costs. Despite accounting for only 9% of national home insurance claims, Florida is the center of 79% of all national home insurance lawsuits, as stated by Governor Ron DeSantis' office. Many of these cases are suspected to be fraudulent.
Net underwriting losses have exceeded $1 billion for two consecutive years, according to the governor's office. This explains why many companies are either failing or leaving the state before reaching that point.
Some companies are tightening their underwriting guidelines instead of completely withdrawing. Consequently, several companies, including Southern Fidelity, Progressive, and Universal, have chosen to continue operating in Florida but have not renewed tens of thousands of policies.
Only three out of Florida's 52 insurance companies were profitable last year, as per the Insurance Information Institute. "Every insurer is facing losses, and significant losses," added Friedlander.
State legislators are discussing a proposal that would prevent state-run Citizen Insurance from renewing coverage if a private company offers a premium within 20% of Citizens' rate.
