Florida-Based Insurers Charge More for Property Coverage
A recent analysis by the South Florida Sun Sentinel found that Florida-based property insurers charge significantly higher rates per $1,000 of insured value compared to companies headquartered outside the state. The analysis examined data from over 85 insurance companies overseen by Florida’s insurance regulators.
The average cost to insure single-family homes in Florida was $5.29 per $1,000 of insured value, while condominium units cost $10.27 per $1,000. Florida-based companies, which insured more than twice as many policies as out-of-state companies, charged an average of $6.01 per $1,000 compared to $3.59 per $1,000 for out-of-state insurers.
The disparity in costs is attributed to various factors, including the types of properties insured and the level of risk associated with different regions. Florida-based insurers tend to cover more homes in high-risk areas like South Florida and the Orlando metro region, which contributes to their higher costs.
Experts say that the cost per $1,000 metric doesn’t tell the whole story, as it doesn’t account for differences in market factors, such as the percentage of homes insured near the coast, home characteristics, and reinsurance costs. Reinsurance costs, which can eat up 30% to 50% of every premium dollar, are a significant factor for Florida-based insurers.
The analysis also found that companies participating in Citizens’ depopulation program, which encourages private insurers to take out policyholders from state-owned Citizens Property Insurance Corp., charged an average of $6.50 per $1,000, higher than the average for Florida-based companies.
Insurance executives argue that the cost per $1,000 comparison is not always apples-to-apples, as it doesn’t consider various market factors unique to each insurer. Some critics question whether reinsurance costs and litigation expenses are the primary drivers of the cost increases, suggesting that other factors, such as business models and profit distribution, may be at play.
The findings highlight the complexity of the insurance market in Florida and the need for greater transparency in insurance pricing.
