FSU professor gives insight into the Florida property insurance issues
TALLAHASSEE, Fla. (WCTV) - According to experts, the storm surge and flooding from Hurricane Ian is expected to create a financial burden on an already vulnerable home owner’s insurance market in Florida.
We spoke to an FSU professor about the impacts and how things have already gotten so out of hand.
Florida’s average property insurance rate is almost triple the national rate according to the insurance information institute’s latest analysis. How we got to this point dates back decades.
“Unfortunately there’s not a really short answer but if you go back to 1992 with Hurricane Andrew and what it revealed to insurance companies is the amount of catastrophic exposure they have,” shared FSU Associate Professor of Risk Management Insurance Chuck Nyce.
Dr. Nyce says this exposure led to major insurance companies condensing their footprint, while smaller companies came in to pick up the slack.
“These companies were pulling back. They didn’t leave the market, they just kind of cut back on what they wrote and the state incentivize other companies to form,” explained Dr. Nyce. “And these newer companies, who were mainly Florida, we call them Florida domestics, they’re mainly homeowner insurance companies.”
And with the impacts of storms like Hurricanes Michael, Irma, Hermine and Ian, some of these smaller companies have fizzled out, leading to higher rates from the bigger companies.
“It has to be that it generates enough of a return, risk and reward. And right now the risk is very high in the state and the reward doesn’t look that great,” broke down Dr. Nyce. “So it’s very difficult to get investors in the primary insurance market and it’s very difficult to get investors in the reinsurance market. That’s why it’s so expensive and it’s not available.”
Dr. Nyce believes Hurricane Ian may lead to the dissolution of even more small firms, leaving large companies like Citizens Property Insurance to carry the load.
“So citizens has to fill that need. I mean they are kind of the pressure relieve valve on the market,” shared Dr. Nyce. “So in 2019 citizen’s had 400,000 policy holders and today they’re well over a million.”
While he doesn’t feel there is a clear solution to fix the problem, Dr. Nyce believes the state should let these companies set the market and help those who can’t meet it.
“Let the insurance companies charge the appropriate rate. If it’s not affordable, and address it somewhere else,” said Dr. Nyce. We do EBT, we do SNAP, we do food stamps, let’s do insurance stamps.”
Regardless of how they plan to move forward, lawmakers say that any change may realistically take years to come to fruition.
Dr. Nyce says he doesn’t like to get into politics but does feel property insurance will continue to be a major sticking point going into November’s election, especially with the devastation of Ian still being accounted for.
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