The Current State of the South Florida Home Insurance Market: Why Are Rates Increasing?
Recently, homeowners have been wondering why their premiums have been increasing. Property owners throughout Florida are seeing insurance rates rising between 12-31%. The increase is due to several factors. Mainly, the losses and negative income that insurance carriers have burdened in 2019 and 2020 is passed along to the buyers. This is an age-old rule of the market. What is unprecedented is the extremity of the rise in rates for the consumers. So, what’s driving this? Put simply, supply and demand. The strong demand for insurance outweighs the weak supply of viable insurance carriers, leading to a rise in the rate of insurance. This insurance supply is being affected by 3 main factors:
1) First and third-party lawsuits and litigations: there has been an upsurge in recent years for no-catastrophe water damage losses. In September of 2020, claims increased to 5,000, a 28% increase from the previous month; increases in claims such as these are unsustainable for insurance companies. This uses a lot of the insurer's resources, leading to income losses for the company—the cost of which is passed on to the consumer.
2) Reinsurance renewals: reinsurers are the companies that provide financial protection to insurance companies, handling risks that are too large for insurance companies to handle on their own. These are the companies that allow insurers to obtain more business they may not otherwise be able to. Reinsurers are at capacity due to the increase in litigations and claims, so much so that some reinsurers are unable to take on anymore business. Reinsures have responded to the Florida insurance market with the highest spike in renewal rates since 2006.
3) Fraud: recently, millions of Floridians have been affected by various insurance scams. The scam may start with someone knocking on your door, saying they are a repairman who can fix damage to your home and your insurance will pay. What you are actually signing up for is a lawyer. This scam is problematic because it is recorded in an insurance database like a credit report and your insurer can cancel you for being a risk. This will cause your next insurance policy to cost a lot more. Plus, all these lawsuits are also feeding into more third-party lawsuits, increasing rates and premiums.
Still have questions about rising insuring premiums? Feel free to reach out and connect with Amanda Castorino, a native South Floridian and an Insurance Agent for 19 years.
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Stonebridge Insurance Agency LLC.
3541 SW Corporate Parkway, Palm City, FL 34990
Stonebridge Insurance Agency offers solutions in Home Owners, Automobile and Business insurance in the ever-changing South Florida Insurance Market.
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