The Insurance Journal posted an excellent article that has a wealth of information about Demotech's recent review of the financial strength of the homeowners insurance market in Florida. You can read more about that here.
While Demotech ultimately affirmed all but one company when it said as many as 18 companies may receive downgrades, it reminds us that Florida is a very different insurance marketplace than other parts of the country. Even within the state, there are dynamic changes happening that significantly affect the insurance market.
My thoughts about the changing landscape of Florida property insurance is pretty simple:
- The more the market relies on reinsurance, the more volatile insurance rates will be
- The higher usage of litigation in claims, the higher the insurance costs will be
- The more volatility in the marketplace due to higher rates and company insolvency, the more pressure it will put on Citizens to accept new policies
None of these trends are positive for the consumer. I am worried that premiums in Florida will create an expensive marketplace that will drive consumers to give up coverage to make premiums more affordable. On the backend, this will likely leave consumers unhappy with their claims experience which will lead to higher litigation. Higher litigation fuels the need for higher premiums and the cycle continues.
My recommendation for consumers will be this:
- Prepare to spend more money to properly insure your home
- Don't buy the cheapest policy
- Ask agents to compare quotes from other agents BEFORE you buy
- Ask questions about what the policy does and does not have
- Check in annually about the health of your insurance carrier and the marketplace
- Be prepared to make home improvements in order to qualify for discounts
If you want a health check on your current insurance coverage and compare it to other companies in the marketplace, click here to get started.