Home News Florida’s property insurance crisis lingers as hurricane season nears peak

Florida’s property insurance crisis lingers as hurricane season nears peak

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orlando, florida – as peak of hurricane season is approaching, Florida is still dealing with a property insurance crisis.

Over the past two years, more than 400,000 Floridians have withdrawn their policies, and average premiums have more than doubled.

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Tom Cotton, owner of Hugh Cotton Insurance in Orlando, sat down with ‘The Weekly’ anchor Justin Warmos to analyze the impact of a major hurricane on a struggling market.

“The impact will depend on the intensity of the storm and the duration of the storm,” Cotton said. “Severe storms – Wilma, Andrew, things like that – could endanger several carriers.”


There are many reasons for the crisis, but the main cause is excessive litigation from roof repairs, Cotton said.

In 2019, Florida accounted for 8.16% of all homeowner claims filed against U.S. insurance companies.However, 75% of domestic lawsuits against insurance companies were filed by Floridians.

“If your roof is destroyed by a hurricane, even after all these years, you’re still entitled to a new roof,” Cotton said. It’s saying, ‘Let me check your roof.’ Oh, you’ve been hit by some storms. Go in and roll back until a super cell passes by, they’ll use it to get a new roof.”

When Pamela Kelley opened the latest notice from her property insurance company, her reaction was swift and decisive. Two years ago, Kelly’s premiums were $611 a year. By 2021, it will more than double to $1,552 annually.

Florida carriers posted more than $1 billion in underwriting losses in 2021, in addition to paying claims. As a result, five of his carriers that operated in the state went bankrupt this year, and many others have stopped making new policies.


“The government regulates insurers by their premium-to-surplus ratio,” Cotton said. “If their premiums are increasing, they must also increase their surplus. We are financially at risk.”

Governor Ron DeSantis Florida Legislative Special Session It passed insurance reforms in May after Demotech, the state’s main rating agency, warned about 20 companies would be downgraded.

“What they created was a RAP (Reinsurance to Assist Policyholders) program to prevent catastrophes,” Cotton said. “If Demotech downgrades the telcos, the real estate market will be closed, the mortgage market will be closed and we will be in real trouble.”


Legislators essentially passed a backstop where the Florida Insurance Guarantee Association (FIGA) provided additional reinsurance. This may have meant that the insurer could not have purchased or could not afford to pay when the reinsurance contract was renewed.

Rating agencies have postponed plans to downgrade more than 20 Florida-based property and casualty insurers in a move that could cost more homeowners with loans.

Businesses will also have access Citizen Insurance capital — A national insurance company covering more than 1 million policies.

“This is a temporary fix to prevent a downgrade crisis,” said Cotton. “Citizen was never meant to be a solution or a destination.

Watch the full interview in the video player above.

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