Florida Insurance Crisis

If you've received your renewal notice from your insurance company lately, you're probably just as shocked as I was when I got mine. This is the biggest problem affecting the real estate market right now, and it affects everyone, including renters with insurance rates expected to go up on average, 40% in 2023. Hi, I'm Andy with the Mandel team REM Max, and if this is your first time for the channel, make sure you like and subscribe so you can stay up to date on the local South Florida housing market. When I bought my house in 2019, my original insurance bill was only $3,200 per year, and my house has all impact windows and a roof from 2003, so it's not new by any means, but at 20 years old, it should have at least five years of life left, if not more. After a couple years of increasing premiums, my renewal that I just received is now at $8,900, and that's with me shopping it around and increasing my hurricane deductible from 2% to 5%, meaning that if a storm comes that I have a hurricane related claim, I'm gonna be out of pocket a lot more money before insurance kicks in.

Now, farmers, bum, bum, bum Bum is the latest insurance company to leave the state of Florida issuing notices of non-renewal to almost a hundred thousand people. At least 10 other companies have stopped doing business in Florida in the midst of the state's relentless insurance crisis, which has led to skyrocketing premium increases. Last year, fed Nat merged with Monarch and dropped the combined 64,900 policy holders who had to scramble to find new insurance carriers. United Property and Casualty canceled around 73,000 policies. Southern Fidelity had nearly 24,000 policy cancellations and St. John's went and solved it, but most of their policies were transferred to a new company called Slide. Slide is now limiting coverage for water claims, increasing premiums, and making some other changes to their policy terms. For those homeowners that are staying with Slide, I just wanna point out before going any further, this affects everyone.

If you're wealthy and you own a home, you can likely afford the increase, but it's still expensive and annoying, but these increases really squeeze the middle class that's less able to afford these massive increases. If you're renting, I promise you these costs are getting passed down to you in the form of rent increases, so you don't avoid the issue entirely by renting. Many of these issues stem from excess litigation In Florida, Florida has 9% of all the insurance claims in the country, but 79% of all insurance claim related litigation, 51 billion was paid out by Florida insurers over a 10 year period, and 71% of that went to attorney's fees and public adjusters. I have personally seen public adjusters take a small roof leak on a 25 year old roof that probably needed to get replaced anyway and turn it into $150,000 claim that the insurance company pays to the homeowner. I've also seen roofers knowing that the insurance company's paying and not the homeowner, they've upped the cost, inflated the cost of a new roof so that the roofer takes a little more and kicks some back to the homeowner for playing along. Now, this may sound like a great deal for the homeowner, but this kind of fraud drives up costs for everyone. The legislature has passed a few laws recently to help reduce litigation, including limiting attorney's fees, changes to how public adjusters can operate, making it illegal to advertise

Certain things about getting a free new roof and subsidizing reinsurance costs for these insurers to the tune of $3 billion. But nothing seems to be working so far. Reinsurance is a critical part in the insurance market that companies buy to protect them from huge payouts and other catastrophes. It's basically insurance for the insurance companies and the cost of reinsurance in Florida has been skyrocket. As Florida legislators pass these bills, they say it's gonna take 18 to 24 months to see any effects. I'm assuming that means that they predict that the insurance companies need to make a couple years of large profits before they're more willing to write new policies or new companies are willing to enter the state and bring out more competition. This remains to be seen as it hasn't changed anything yet, but hopefully it will help soon. Now, if you're watching this video and hoping that I come up with a solution to this problem, I'm sorry, but I'm just not that smart. I think these steps that we're taking to curb fraud and abuse are steps in the right direction, and I'm hopeful that in the next few years if we don't have a major hurricane, we will see some new carriers open in the state and that will hopefully drive down prices, but only time will tell. And in the meantime, trust me, I'm just as frustrated with it as everyone else.