Why Florida Insurance Is Heading For Another Rate Increase

We can all agree that insurance rates are a moving target. Some years the rates increase, some years they decrease. While there is no crystal ball to tell the future I will offer a few reasons we should hope for the best but plan for the worst.

1. Fraudulent Claims

Criminals look for opportunities to take advantage of unknowing homeowners as well as exploit loopholes. The Coalition Against Insurance Fraud (CAIF) estimates that home insurance fraud costs each family approximately $950 annually. Assignment of Benefits and Roof Scams are two fraudulent activities that we see regularly.

2. We Can’t Be Lucky Forever

In 2004 and 2005 a total of six hurricanes made landfall in Florida causing an estimated $22 billion dollars in damage. The result was a 1.3% fee on all home insurance policies that continued until January 2015 to pay back the state. Florida has had an extraordinary run of over 10 years since its last hurricane impact (Hurricane Wilma in 2005), the longest hurricane-free streak for the Sunshine State in records dating to 1851. The carriers and their reinsurers know that the house of cards will fall eventually and they want to be better prepared this time.

3. Carriers Are Buying More Reinsurance

Many Floridians are unaware that their home insurers carry insurance for catastrophic events. This insurance for carriers (reinsurance) allows carriers to better plan for the future and remain financially stable through an expensive storm season. If the Florida Catastrophe Fund moves to buy more reinsurance, a rate increase of 3.2 percent would result.

The good news is we can fight back. To reduce your insurance rates check out a previous blog post 6 Ways to Reduce Florida Home Insurance Rates. To report suspected fraudulent activity visit The Division of Insurance Fraud’s website. Together we can mitigate rate increases while sustaining a healthy, stable marketplace.