Another busy storm season and rising claims litigation explain insurer policy premiums hikes.
Florida homeowners insurance rates will be heading upward for policyholders across the central part of the state next year. Insurers point to consecutive active hurricane seasons and a steadily rising claims litigation trend to explain the rising prices.
Insurance companies face higher expenses due to the continual record-setting hurricane seasons.
The state has suffered damage from several record-setting hurricane seasons. Between those damage claims and the rising lawsuits regarding those claims, insurers are raising Florida homeowners insurance rates, particularly in the central regions. Some insurance companies have already filed their requests with the Florida Office of Insurance Regulation (OIR). Those filings include an effort to increase some premiums by over 30 percent in 2021.
Though this type of trend is quite familiar to residents of coastal cities, in this case, the rate hikes are headed inland as well. The rising legal costs as policyholders sue their insurers after making a claim is leading to rate hike requests across the entire state.
The rising Florida homeowners insurance rates are headed to regions typically unaffected by large hikes.
OIR director of communications, Alexis Bakofsky, explained the reasons for the requested rate hikes. Bakofsky added that beyond the storm season itself and the litigation, insurance companies are also facing higher reinsurance costs. Essentially, insurers are finding it more expensive to cover themselves.
The increasingly active and record-breaking Atlantic storm seasons are forcing insurers in the United States to rely more heavily on their reinsurance to cover catastrophic exposure. As these natural disasters such as tropical storms and hurricanes making landfall continue to become more expensive, so is the price of reinsurance.
“Unfortunately, these developments have presented challenges not only to our property industry but also to our consumers,” said Bakofsky. “After multiple years of rate decreases, OIR is seeing an increase in proposed average annual premium increases for Florida homeowners’ rates.”
Lawmakers have been making attempts to rein in the need for increased Florida homeowners insurance rates. For instance, Senate President Wilton Simpson (R-Trilby) is hoping lawmakers will accept a proposal meant to limit lawsuits and payouts regarding property claims in order to help keep higher premiums under control.