Why Florida Home Insurance Rates Are Skyrocketing

April 21, 2022

Why are home insurance rates increasing in Florida?

If you are a resident in Florida, you have likely noticed an increase in home insurance premiums. This is a state-wide issue, despite your insurance agency or carrier, and it is impacting thousands across Florida. “The Florida homeowner’s insurance market is currently in crisis and has been for years due to fraud and frivolous litigation,” said Kyle Ulrich, Florida Association of Insurance Agents (FAIA) President and CEO. While the increase in pricing may be out of your hands, here are a few insights that our team of insurance professionals have put together to help explain why home insurance rates are skyrocketing in Florida.

The three leading causes of premium spikes include:

Assignment of Benefits Fraud – An Assignment of Benefits (AOB) is an agreement that transfers a homeowner’s insurance claims rights to a third party. Signing an AOB form gives someone else the power to file claims, make repair decisions and collect insurance payments on the homeowner’s behalf.
Hurricane Irma – Hurricane Irma struck Florida twice in 2017 and caused close to $50 billion in damages, making it the costliest hurricane in Florida’s history.
Reinsurance Claims – Reinsurance protects insurance carriers from bearing the entire financial toll of a catastrophic event, like Hurricane Irma.

Despite legislative reforms passed during the 2021 Legislative Session, Florida’s homeowners have continued to see dramatic property rate increases. At the same time, the insurance industry is losing billions to unnecessary lawsuits from third-party contractors taking advantage of AOB’s.

So, what does this have to do with your property insurance rates going up? Everything.

Here are a few interesting facts we thought would help put it all in perspective:

In 2020, Florida’s homeowners paid $651 more than people in nearby states like Georgia and Alabama. This year, that gap is projected to grow to $866.
Florida’s insurance marketplace has been plagued by unscrupulous cottage industries whose business model is capitalizing on consumers’ insurance policies. Bad actors in the construction, roofing, public adjusting and legal industries have used abusive solicitation and marketing tactics to manipulate the claims process for their benefit.
Only 8.15% of all U.S. homeowner claims were opened in Florida in 2019. Yet, Florida accounted for more than 76 percent of property claim lawsuits in the U.S.
Between 2013 and 2020, Florida’s property insurers paid out $15 billion in claims costs. However, only 8% of that was paid to consumers, while 71% was paid to attorneys.

If you’re one of the thousands of homeowners in Florida who can’t afford property insurance increases, contact your elected officials today to ask for their help. Submit a complaint here.

Our team at Shepherd Insurance is happy to answer any questions you have regarding your insurance policy. Not a Shepherd Insurance client? Learn more about our Homeowners Insurance policies today.