Skyrocketing Home Insurance Rates in Florida
Florida homeowners are facing a crisis. Home insurance rates are soaring, and the state’s insurance market is struggling. This situation is exacerbated by the increasing frequency of extreme weather events. A 2022 report, jointly published by the Tampa Bay Times and Miami Herald, has brought attention to a troubling pattern within the industry. The report alleges that while insurance companies operating in Florida were reporting losses, their parent companies and affiliated entities were generating billions in profits.
The Alleged Financial Maneuvering
Between 2017 and 2019, when the homeowner’s insurance crisis in Florida began to unfold, insurance companies collectively reported a loss of $432 million. These losses were used to justify drastic rate hikes for homeowners across the state. However, the report indicates that these same companies were simultaneously transferring funds to their affiliate companies and shareholders, who were experiencing substantial financial gains.
Specifically, the affiliate companies reported a net income of $1.8 billion, and shareholders were paid approximately $680 million in dividends. The report’s author concluded that some insurers in Florida had taken actions counter to state regulations.
This financial strategy resulted in some insurers becoming financially vulnerable, sometimes leading to difficulties in paying out homeowner claims. Doug Quinn, executive director of the American Policyholder Association, commented on the situation, “> These companies are crying poverty in order to raise premiums or justify insolvency: ‘It’s litigation, it’s fraud.’ This is money shifting from their left pocket to the right, and crying poverty while their right pocket bulges.”
Climate Change and Coastal Vulnerability
The rising insurance costs are directly related to the increased risk of climate change impacts. Human activities, such as burning fossil fuels, contribute to global warming, which causes rising sea levels and more intense hurricanes. Oceans absorb roughly 93% of the excess energy from this warming. This, in turn, leads to more intense hurricanes and higher sea levels, which increases flooding in coastal areas.
Coupled with the growing population in coastal regions of the United States, these factors heighten the risk of damage to homes and other property, making homeowner’s insurance all the more crucial.
Calls for Investigation
In response to the findings, Democratic lawmakers in Florida are calling for action. They have urged Governor Ron DeSantis to convene a statewide grand jury to investigate the matter. Additionally, they are asking House Speaker Daniel Perez to form a committee to look into why the report was not received by lawmakers and to conduct a deeper analysis of the issues.
As House Minority Leader Fentrice Driskell stated in a released statement, “> This is outrageous, and the people of Florida need answers.”
