Condo Insurance in Florida is Going Up

Condo Insurance In Florida is Going up. The question is: Why is Condo Insurance rising?

There is no single reason, but rather a combination of reasons, like hurricanes and lawsuites.

Florida Realtors.org recently did a great article about the reasons for the rising rates, and this is a portion of the article:

 As home insurance prices are poised to increase sharply, the South Florida Sun Sentinel asked leading insurance experts to provide their views of the disintegrating state of the market. Here’s what they had to say. Responses have been edited for length and clarity.

Locke Burt, president and CEO, Security First Insurance Co.: Insurance cost drivers are well known and have been reported before – bad weather, increased reinsurance costs, shady contractors, aggressive plaintiffs with a favorable legal environment, water losses, fraud. What’s different is the trends seem to be accelerating and the Legislature has not done anything meaningful to change the trajectory of increased costs which, under Florida law, must be passed on to consumers in the required annual rate filings.

The private sector is shrinking and raising rates as fast as they can because the losses are not sustainable, and the providers of additional investment capital simply do not believe that the situation in Florida is going to improve for several years. That’s why the public companies are selling for 50 cents on the dollar.

This situation won’t change until legislators hear from their constituents and decide to do something, the weather improves, or the lawyers disappear.

Barry Gilway, president and CEO, Citizens Property Insurance Co.: The biggest issue, in my opinion, is the unprecedented withdrawal of private companies from large portions of the marketplace including southeast Florida, Tampa Bay and even the Orlando area.

We are entering the fourth year of losses for most private carriers. Because of continued losses, companies are unable to write new policies in less-risky areas of the state to shore up their finances. It is simply very hard to attract new capital to a market that is entering its fourth straight year of losses.

The only options private companies have are to leave markets, insure only newer homes and seek unprecedented rate increases to pay for increasing litigation, substantially increased reinsurance costs and social inflation that continue to increase the number of water losses and average severity of the losses.

For Citizens, that means there is a significant and growing price gap between us and them. (Our rates are capped at 10%.)

Gilway defined social inflation as trends that result in more litigation, broader contract interpretations and larger jury awards.

Kevin Walton, executive director of product and reinsurance, People’s Trust Insurance Co.: Loss creep – the steady increase in unforeseen costs of claims from Irma and Michael – is causing serial reinsurance rate increases of 20% and more annually that will need to be passed through to consumers plus expenses. This has been getting worse since 2018. Until Hurricane Mathew in 2016 and then Irma in 2017, we had not had a significant storm since Wilma in 2005. Reinsurance costs were trending down until 2018 and now they are trending up significantly.

Losses from Irma are now more than three times more costly than expected, which changes the pricing mindset of the reinsurers. One hundred percent of these increases are caused by public adjusters and attorneys inflating the cost of claims. The frequency of this activity (solicitation for fraudulent and inflated claims) is unprecedented. This is why consumers should be worried.

Consumers should call their legislators and demand change of legislation regarding one-way attorney fees that encourage attorneys to file unwarranted and frivolous lawsuits without risk.

The bottom line is that we are all subject to insurance increases, and you better be prepared!!!