The insurer of last resort might become less affordable to people across the state.
Homeowners in Florida could soon find that even insuring themselves with Citizens Insurance, the last resort coverage in the state, will lead to higher premiums.
The state’s battered homeowners market is forcing policies into the state-backed insurer’s hands.
As a growing number of homeowners leave Florida or find themselves in liquidation, many property owners find that they don’t have a choice other than to turn to Citizens Insurance for coverage. This has left the insurer covering far more policies than its model is designed to handle. As a result, it might be forced to spike its premiums.
Unfortunately, as many of the homeowners there are already only just managing to keep up with coverage as it is, this additional cost could prove too much for them to afford. The market in the state simply isn’t providing the competition and coverage options necessary for healthy function.
Experts have been watching insurers in the Florida market fail one after the next. The more they fail, the lower the competition in the market, requiring a rapidly growing number of people to turn to the insurer of last resort.
Citizens Insurance simply isn’t meant to cover the number of policies it is now carrying.
Florida Senator Jeff Brandes (R-St. Petersburg) has said that the homeowners’ coverage situation in the state is out of control. “We’re beyond crisis. Crisis was three years ago,” said Brandes.
Rates paid by homeowners in Florida have almost reached the point that they are double the average national premiums. Last week, the insurer of last resort was a part of a hearing in which there was a proposal for an 11 percent increase for its own policyholders. Should this move be approved, then homeowners already paying a small fortune for their coverage will be paying substantially more starting in August.
“It’s like a snowball starting on top of the mountain and coming down a full-fledged avalanche,” said Burke, Bogart, and Brownell Insurance’s Lee Burke. He pointed out that it’s Citizens Insurance taking the brunt of the financial impact of this trend. As a result, he pointed out that the insurer “is no longer an option for a lot of people,” adding that the company “has lost tremendous amounts of money.”