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Florida's insurance crisis could worsen due to Hurricane Ian

The insurance market was already in crisis mode before the storm hit.
Hurricane Ian
Posted at 5:09 PM, Oct 25, 2022
and last updated 2022-10-25 17:09:31-04

Florida’s property insurance market was already in crisis for two years before Hurricane Ian slammed into Southwest Florida.

In the past year, six home insurers in the state were declared insolvent.

Another 27 companies were placed on a state watchlist due to concerns about their future funds.

“For the past several years the Florida insurance market has been facing a man-made crisis,” said Mark Friedlander, Director of Communications with the Insurance Information Institute.

Roof replacement fraud schemes and excessive lawsuits are the two biggest culprits, according to the III.

“The reason why these companies were in such a financial predicament is because of litigation expenses. That’s what drove six companies out of business,” Friedlander said.

“And unfortunately, there are many more that could fail after Hurricane Ian.”

Floridians already pay three times the national average in annual homeowner’s premiums.

The III estimates Hurricane Ian could end up costing $60 billion in damage, making it the second costliest storm in U.S. history behind only Hurricane Katrina.

Laura Wagner, the Executive Director of Floridians for Honest Lending, warns the impacts of Hurricane Ian could drag on for years.

“I think this may be the storm in Florida where you see the largest number of people leave the state,” said Wagner.

Wagner points out that if people are dropped from their homeowner’s insurance, or if their provider becomes insolvent, then homeowners might end up paying even higher premiums under so-called Force Placed Insurance, where the mortgage provider forces an insurance policy onto the customer.

“We have to bring more insurers into the market. We have to find a way to attract insurance companies so that we have a functioning market system,” said Wagner.

Federally backed mortgages are eligible to reduce or suspend their mortgage payments for up to 12 months.

During this temporary reduction or pause in payments, homeowners will not incur late fees and foreclosure and other legal proceedings are suspended.

Wagner and Friedlander both say the legislature has to make changes.

They call for an end to Assignment of Benefits, or AOBs, which they believe lead to fraud.

“There is no path to stability,” Friedlander said.

“We need significant actions taken in the legislature to help begin to stabilize our market here.”