As Floridians braced this week for Hurricane Idalia’s landfall, insurers kept an anxious eye on the storm that could result in claims for billions of dollars in damages.
Hurricane Idalia hit the Sunshine State a little over a month after Farmers Insurance announced that it was leaving Florida–the fourth insurance firm to pull out of the state’s market in the past year.
Then Idalia hit, lashing at Florida’s Gulf Coast. Early estimates for insured losses range from $3 billion to around the $9 billion mark. And although these figures are not as high as was expected just 24 hours before the storm made landfall, Idalia’s fierce winds and pounding surf seem an apt metaphor for the situation insurance companies and homeowners are facing across the Sunshine State.
A Looming Catastrophe
One reason the state’s insurance industry can absorb potential losses is because insurers have policies from reinsurance companies that cover some of their risks. However, the average cost of reinsurance increased 40-70% this hurricane season, which means that insurance companies will likely have to charge customers higher premium rates moving forward even as rates have already skyrocketed in the past few years.
RELATED: Farmers Insurance Pulls Out of Florida, Leaving 100,000 Homeowners to Scramble for Alternatives
“I already can’t afford homeowners insurance,” Sergio V. León, a homeowner in Miami, told Floricua. “My rate doubled, plus my house needs a new roof. So, when I heard about Idalia, I was petrified.”
This time, the storm’s path took it north and South Floridians were spared. But León knows it is only a matter of “when” the next one will hit.
“This time it didn’t hit in my area. But who knows what will happen next time,” he says. “The suspense every year gets tougher. This is one reason why so many of us are thinking of leaving.”
A Whopping Increase
On average, Florida residents are spending $6,000 on their home insurance policies this year. This is four times more than the average $1,700 annual premium nationwide. Mark Friedlander, a spokesperson for the Insurance Information Institute (III), told USA Today that this represents a whopping 42% increase over last year.
Those increases have come as the DeSantis has become increasingly cozy with the industry.
Since its formation in 2018, the governor’s committee and the Friends of Ron DeSantis PAC has raked in $3.9 million from the insurance industry, according to a report by Hedge Clippers, a campaign organized by the Center for Popular Democracy. The report also argues that DeSantis’ industry donors have greatly benefited from his administration’s policies.
For example, in December of 2022, DeSantis signed legislation that stripped policyholders of the ability to recover legal fees when suing insurance companies that refuse to honor legitimate claims. More worrisome, according to Mother Jones, the legislation also narrowed eligibility for Citizens, Florida’s state-run nonprofit insurance company, which provides insurance to people who cannot find affordable coverage on the regular market.
Under the new restrictions, if homeowners receive a policy offer from an authorized insurance company on the regular market that is less than 20% higher than what Citizens offers, they are not eligible for Citizens plans. Furthermore, before a Citizens policy expires and homeowners seek renewals, Citizens will look for offers from private-market insurers, and if any of them offer a rate that is less than 20% more expensive than Citizens, that customer will be forced off Citizens’ rolls and have no choice but to sign up for the private company’s plan.
Given the high costs of premiums in Florida, these changes could cost homeowners hundreds—potentially thousands—of dollars a year.
Additionally, under the new law, Citizens policyholders must buy flood insurance privately from 2023 through 2027, which will likely further raise their costs.
Together, these changes could potentially make it harder for Floridians to rebuild after a storm like Idelia, that has flooded streets, blown out windows, torn siding off buildings, and uprooted trees.
DeSantis’ Culture Wars
While DeSantis has been present during and after the storm and has tried to mount a robust response this week, his critics claim that the Republican governor has long been focused on his bid for the 2024 GOP nomination and fighting divisive cultural wars instead of making housing and insurance more affordable.
“Our governor is busy protecting us from ‘woke’–whatever that is–that I don’t need protecting from, but what has he actually done for Floridians, to make our lives better?” asks León. “I feel abandoned by our governor.”