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Florida is trying to organize its property and casualty insurance companies. No matter how you look at it, it looks like it’s going to collapse. The country has already been rocked by two hurricanes in recent months, with Hurricane Milton, which hit Tampa, potentially causing more than $60 billion in insured losses.
The problems with Florida’s homeowners insurance department are well known. For the first few years of this century, the state avoided being hit by major hurricanes. But that fortune has changed, and climate change appears to have made the storms more powerful.
Florida has 1,350 miles of developed coastline and a total population of more than 20 million people. Additionally, property and casualty insurance claims in the Sunshine State have historically been frequently litigated, making fraud more likely and increasing costs.
The results were so unacceptable that Florida enacted legal reforms to modify the legal process surrounding insurance claims in an effort to curb junk lawsuits and prohibitive attorney fees. Eight new private insurers recently entered the market, and state insurance regulators say Florida insurers will break even on underwriting in 2023 after heavy losses the previous year. .
In the middle of all this is Citizens Property Insurance Corporation, created by the state of Florida in 2022 as a “last resort” insurance company that is increasingly becoming the only option for many Florida residents. is. Despite “depopulation” efforts, or attempts to shift policyholders to private insurers, Florida has more than 1.2 million homeowners insurance policies out of a total of more than 7 million. It has swelled up to.
The 2024 budget forecast is for a net income of $1.5 billion and a surplus of $6 billion, one of the factors combined with reinsurance that will determine Citizen’s ability to pay claims. However, if it were a once-in-a-century event, the paper said, it would result in an $18 billion loss and a negative surplus. Under Florida law, in order for state residents to use up their surplus or other insurance, they must impose additional fees on their customers and other policyholders in the state.
The world is full of capital seeking profits. However, it may not be possible to address global warming at an acceptable cost.
It’s ironic that Florida may have become uninsurable just as its population boomed, driven by wealthy refugees who wanted a warm climate, low taxes, limited regulation, and a high-growth economy. is. Perhaps some of this skilled group will be able to design insurance systems that work in a changing climate.
sujeet.indap@ft.com
