Newsweek: Damning Warning Issued Over Florida Insurance Market

Apr 14, 2024

The major private home insurers that have left Florida in the past couple of years are being replaced by smaller, lower-quality companies whose financial stability ratings wouldn’t meet the minimum requirements set by government guidelines, according to a recent study.

The study, led by researchers at Harvard University, Columbia University and the Federal Reserve Board, is yet to be peer-reviewed but was published on SSRN, a website for scholarly papers, in December. It states that new insurers which are replacing the traditional ones in high-risk areas are “less diversified, hold less capital, and 20 percent of them become insolvent.”

According to the researchers, the growth of these smaller, lower-quality insurers that are filling the gaps left by the exodus of bigger private companies can be traced back to “a lax insurance regulatory environment.”

The Sunshine State is undergoing a crisis in its home insurance sector, with residents currently paying some of the highest premiums in the country. According to the Insurance Information Institute (Triple-I), the average Florida homeowners’ premium already stands at $6,000.

What sent homeowners insurance premiums in Florida soaring in the past few years has been a combination of factors including excessive litigation, widespread fraud and the increased risk of more severe and more frequent catastrophic extreme weather events.

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