Florida's Property Insurance Crisis Deepens as Hurricane Season Kicks Off

Florida Insurers Face Insolvency Amidst Hurricane Season

As the 2022 hurricane season begins, Florida's property insurance crisis is worsening, with three insurers already declared insolvent this year due to their failure to obtain full reinsurance. Mark Friedlander, communications director at Triple-I, warns of a potential 'massive failure of Florida insurers, probably the worst on record.' The $2 billion reinsurance fund created by Gov. Ron DeSantis may not be sufficient, and private reinsurers are withdrawing from the market due to high property claims and litigation.

Reinsurance Fund Insufficient for Hurricane Season

Friedlander argues that the reinsurance fund should have been at least double the allocated amount and open to other perils. This inadequacy is highlighted by the recent withdrawal of financial stability rating for Southern Fidelity Insurance Company by Demotech. The insurer's inability to secure enough reinsurance led to a moratorium on new business and renewals, eventually resulting in the OIR ordering it to 'wind down operations.'

Fourth Insurer Failure in 2022

Southern Fidelity's failure could make it the fourth Florida residential insurer to fail this year, following the liquidations of St. Johns, Avatar, and Lighthouse. This trend underscores the severity of the crisis and the urgent need for comprehensive reform. According to the Insurance Information Institute, Florida accounts for 79% of U.S. homeowners' insurance lawsuits, despite having only 9% of the nation's insured homes, indicating a disproportionate level of litigation.

For readers, it's crucial to review their insurance policies and ensure they are adequately covered, especially in high-risk areas. Staying informed about the financial stability of their insurers and considering options like federal flood insurance can also provide additional protection.