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The Florida home insurance market continues to reel despite the government and sector’s moves to shore up the business.

Since the beginning of this year, many insurers and the reinsurers who back their policies have announced they are either scaling back their business or discontinuing their coverage in Florida entirely. An increasing number of Florida insurers have also fallen into insolvency.

The result has been a sharp escalation in insurance policy rates for many Florida homeowners and uncertainty over the future solvency of more of the state’s providers.

“This is a widespread problem; it’s affecting tens of thousands of homeowners in Florida,” says Danny Sands, owner of Brightway Insurance, an insurance agency based in Jacksonville, Florida.

“We’ve never seen this number of insurance companies go out of business in such a short period of time,” adds Sands. “And when one of the insurance providers goes insolvent, we only have 30 days to rewrite all the policies. Agents end up working around the clock to try to get it done.”

A number of insurers still offer homeowners insurance in the state, including State Farm, Travelers, First Florida, and Nationwide. But news that your homeowners insurance company has pulled out, or said it’s planning to exit, is unsettling.

To help guide you, Insurance.com has put together the following guide, listing insurers that have left the state, the reasons why they left, and steps you can take if your insurer decides to no longer serve Florida.

KEY TAKEAWAYS
  • An unprecedented number of home insurance companies have pulled out of Florida or gone out of business in 2022.
  • Policyholders often have only 30 days to get new coverage, leaving agents and homeowners scrambling to find a policy.
  • New legislation to bolster reinsurance companies and reduce the cost of lawsuits has yet to impact the home insurance crisis in Florida.

What should you do if your home insurer pulls out of Florida?

Here are some helpful steps to help you take action should you receive notice that your insurance policy is being canceled.

  1. Call your insurance company. Speak to a representative or agent and find out the reason for the cancelation. Find out how long you have to get new coverage. A company going out of business vs. one pulling out of the state may have different timelines.
  2. Start getting quotes. It’s important to start gathering new quotes right away. Many other Florida homeowners are in the same situation, all trying to get new coverage at once. To make sure you have time to choose the best policy, start looking immediately.
  3. Complete any repairs. Finding new coverage will be easier if your house is in good condition. Florida home insurance companies will also look at any weather-proofing work you have done.
  4. Consider getting help. If you think you’re being treated unfairly or are struggling to get new coverage, contact the Florida Department of Insurance Regulation (FLOIR). They can also be of assistance in helping you find new coverage.

For more information on the steps you can take, see Insurance.com’s guide to what happens if your homeowners insurance gets canceled.

Why are home insurers pulling out of Florida?

In June, Southern Fidelity was ordered into liquidation, causing some 80,000 Florida homeowners to scramble for new home insurance coverage. In early August, Weston Property & Casualty Insurance of Coral Cables was placed into receivership, forcing the company to cancel all policies effective Sept. 7, 2022, and in late August, United Insurance Holdings Corp. (UPC) announced it had filed plans to pull out of the Florida, Louisiana and Texas markets.

UPC had just over 200,000 policies in force in Florida according to its last Annual Report

On September 23, 2022, FedNat followed other companies into insolvency just ahead of the onslaught of Hurricane Ian, a few months after reducing it's business in the state due to financial trouble.

The reasons behind the home insurance crisis in Florida are complicated, but several key factors have a big impact.

No. 1 is the impact of soaring litigation costs. The Insurance Information Institute (III) published a brief on the Florida insurance crisis in August. It noted that a 2017 State Supreme Court decision allows courts to award a plaintiff's attorneys 2-2.5 times their hourly billing rate when courts rule in favor of policyholders. The result is more lawsuits; Florida is on pace to have more than 130,000 property policy suits filed this year.

In fact, III says Florida accounts for 79% of insurance lawsuits filed, with only 21% in the rest of the country.

A second but related factor is the increasing number of reinsurers who have chosen to retreat from the state in the face of rising litigation. UPC CEO Dan Sneed says this was the key factor in his company’s decision to leave the market.

“Due to significant uncertainty around the future of reinsurance for our personal lines business, I believe placing United P&C into an orderly run-off is prudent and necessary to protect the Company and its policyholders,” he says.

Further contributing factors include the fact that the Florida market is home to several smaller insurers who rely heavily on reinsurers and the booming housing market along coastal counties, which are more prone to flooding and hurricanes. Although the past three hurricane seasons have not been a significant factor, hurricanes in the past have been costly. III has said the insurance payout for Hurricane Andrew, which hit Florida in August 1992, was $15.5 billion at the time

The bottom line? Florida homeowners are projected to pay an average of more than $4,000 in the near future, nearly three times the U.S. average, according to III.

State measures taken to address the issue

In May, Florida Governor Ron DeSantis convened a special session of the state legislature to bring forward measures to address the crisis. Among the provisions approved were a $2 billion injection into a Reinsurance Assistance Program (RAP), a crackdown on skyrocketing attorney fees to discourage frivolous claims, and a new program to help Florida homeowners make their homes safer and more resistant to hurricane damage.

Despite those steps, more Florida insurers fell into insolvency or announced intentions to scale back their business in the state over the summer.

Which companies are leaving Florida?

Each month seems to bring news of another insurer choosing to exit or significantly scale down business in the Sunshine State.

The tally includes Bankers Insurance, Lighthouse Property Insurance, FedNat Insurance, Avatar Property and Casualty, Lexington Insurance, and St. Johns Insurance, in addition to the previously mentioned Southern Fidelity, Weston, and UPC.

One of the nation’s largest insurers, Progressive, announced in 2021 that it planned to non-renew about 60,000 Florida policies. In a financial statement, it said it had begun this action starting in the second quarter of 2022.

What insurance companies are still operating in Florida?

While the situation in Florida is alarming for homeowners, fortunately, many insurers still provide overage in the state. They include recognizable names like State Farm, Travelers, First Florida, and Nationwide.

To help Florida homeowners find insurance, Insurance.com provides a comprehensive look at the Florida home insurance market along with an analysis of insurance rates and top providers.

Charles Nyce, a professor at the Florida State University College of Business specializing in catastrophic-risk financing and corporate-risk management, says that the measures introduced by State legislators in May could begin to ease the Florida insurance crisis. But it’s pretty likely to get worse before it gets better.

“The difficulty is, there are no easy fixes,” says Nyce. “The measures (that the State introduced) are going to help, but it’s tough to turn the market around quickly.

In the meantime, Nyce worries that a bad hurricane season, if it were to happen, could overwhelm a fragile market. “I honestly think we’re one bad hurricane away from an entire market collapse,” warns Nyce.