(Airdate: 2023-12-07) FOX - WOFL - 500% Insurance Premium Increase Worries Residents
Published Date: 12/07/2023
Florida’s Condo Insurance Crisis: Understanding the 500% Premium Spike
For thousands of Florida residents, home insurance is no longer a safeguard—it’s a financial burden threatening their way of life. Nowhere is this more evident than in coastal condominium communities like Daytona Beach Shores, where property insurance premiums have skyrocketed by as much as 500% in a single year.
A recent FOX 35 News report captured the personal toll behind these numbers, featuring residents whose retirement dreams are now in jeopardy. The situation illustrates not only the fragility of Florida’s insurance market but also the cascading effects of climate risk, reinsurance costs, and dwindling competition.
In this analysis, we’ll explore what’s driving these unprecedented increases, what it means for condo owners and associations, and how the industry might stabilize in the years ahead.
A Perfect Storm: When Insurance Becomes Unaffordable
Patty Blaze, a retiree living in the Marbella Condominium on Daytona Beach Shores, represents a growing number of Floridians trapped between rising costs and limited options.
“I had budgeted for my monthly expenses to be a certain amount,” she told FOX 35. “I’ve got enough reserves to maybe ride out another season of this insurance, but otherwise I might have to sell the place.”
Blaze’s condo association saw its insurance bill jump from $40,000 to over $260,000 in a single year — a 500% increase. Her personal share of that cost now translates to $1,100 a month, roughly a third of her total living expenses.
For her and many others, that kind of expense is unsustainable. Some owners are considering selling their units, while others are seeking part-time work to cover the difference.
“This isn’t just an inconvenience,” one board member said. “It’s a financial crisis.”
Why Are Florida’s Insurance Rates So High?
According to insurance expert Karl Susman, who spoke to FOX 35, “A 500% rate increase is completely out of sorts — and it’s completely unsustainable.”
But to understand how this happened, we need to look at the key factors fueling Florida’s property insurance crisis:
1. Hurricane Losses and Catastrophic Claims
The 2022 and 2023 hurricane seasons left deep financial scars across the state. Major storms caused billions in insured losses, straining both local and global insurance markets. Even properties that avoided direct damage were affected because the cost of reinsurance—insurance that carriers purchase to protect themselves from catastrophic losses—rose sharply.
2. Shrinking Competition
Many national carriers, including State Farm and Farmers, have scaled back or withdrawn from Florida’s market altogether. This has left only a handful of companies willing to write coastal property coverage. As competition declines, remaining insurers can raise prices without fear of losing market share.
3. Litigation and Fraud Costs
For years, Florida’s insurance system has been plagued by an unusually high rate of lawsuits and fraudulent claims. Before recent legislative reforms, the state accounted for nearly 80% of all U.S. homeowners insurance litigation while representing just 9% of claims. These legal costs ultimately trickle down to consumers in the form of higher premiums.
4. Rebuilding Costs and Inflation
Construction materials, labor, and supply chain disruptions have driven up rebuilding costs. Insurers must account for these higher expenses when pricing policies, even if an individual property hasn’t suffered losses.
5. A Risk-Heavy Geography
Florida’s geography makes it uniquely vulnerable. With its long coastline, flat topography, and high population density near water, the state is ground zero for hurricane exposure. Climate change is only amplifying those risks with warmer seas and stronger storms.
Condos Hit Hardest
While all homeowners are feeling the pain, condo associations face particular challenges. Unlike single-family homeowners, condo boards must purchase master policies that cover the entire building’s structure.
For large properties like Marbella Condominium, the numbers are staggering. Their deductible alone is $1 million — meaning the insurer won’t pay for damages until losses exceed that threshold.
Jim Smith, president of the building’s board of directors, told FOX 35, “They’re never going to have to pay a claim here because our deductible is so high.”
That paradox — paying huge premiums for policies with high deductibles — underscores the dysfunction in today’s market. Condo associations are forced to buy coverage they can barely afford and can rarely use.
The Human Cost: Retirement Dreams on Hold
For retirees like Blaze, the emotional toll is as heavy as the financial one. “It’s just not fair,” she said, fighting back frustration.
She moved to the beach seven years ago after a lifetime of work, expecting stability in her retirement years. Instead, she now faces a decision between dipping into savings, selling her home, or taking on new work.
“I’m actually looking for part-time jobs,” she said, “to bring in some extra money to try to dampen the cost of these increases.”
It’s a story playing out across coastal Florida. For many fixed-income retirees, rising insurance rates are effectively pricing them out of the very communities they helped build.
Expert Insight: The Market Will Adapt — Eventually
Susman agrees that the situation is dire but remains cautiously optimistic. “We’re in for a rough ride for probably another year, maybe two years, worst case,” he said. “But the industry, as it always does, will adapt.”
That adaptation could come from several directions:
1. Legislative Reforms
Florida lawmakers have already enacted multiple bills to curb lawsuit abuse and stabilize the insurance market. The 2022 and 2023 legislative sessions introduced measures eliminating “one-way attorney fees” and tightening deadlines for claims disputes. These changes are expected to reduce costs over time, though the impact will take several renewal cycles to materialize.
2. Market Re-Entry by Private Insurers
As conditions stabilize and rates adjust, more insurers may re-enter the Florida market. Increased competition would help drive premiums down from current record levels.
3. New Risk Assessment Models
Insurance companies are turning to AI and catastrophe modeling—advanced tools that predict disaster risk more accurately and reward homeowners for mitigation efforts. While these models are still being refined, they could eventually help price risk more fairly across different regions.
4. Stronger Building Codes and Resilience Incentives
Florida already leads the nation in building code strength, but newer incentives — such as grants for wind mitigation or roof reinforcement — could further reduce losses. Over time, these improvements can attract insurers back into high-risk zones.
The Road Ahead: A Temporary Storm or a Permanent Shift?
While Susman predicts that prices will eventually “dip again,” he acknowledges that the road to recovery won’t be quick or easy. “For now,” he said, “residents will have to weather the storm.”
Many experts agree that 2024 and 2025 will be transition years. Reinsurance markets are expected to adjust to recent losses, while legal reforms begin to ease claim pressure.
Still, some long-term structural challenges remain. Climate volatility is likely to keep catastrophe exposure high, and the demand for coastal property shows no signs of slowing. As a result, even if rates fall, they may never return to pre-2020 levels.
What Condo Owners Can Do
While individual owners can’t control the global reinsurance market, there are steps they can take to mitigate costs and risk:
- Engage with the Board: Participate in condo association meetings to understand insurance decisions and explore competitive bids.
- Invest in Mitigation: Encourage the association to pursue building improvements that reduce premiums — like roof reinforcements, updated electrical systems, or impact windows.
- Evaluate Deductibles: Higher deductibles can lower premiums but may not be ideal for every association. Boards should balance affordability with adequate protection.
- Consider Alternative Financing: For communities facing immediate hardship, some associations explore short-term loans to spread out premium spikes.
- Stay Informed on Legislation: Keep track of Florida’s ongoing insurance reforms — new state initiatives could open up funding or discounts for condo safety upgrades.
Conclusion: Florida’s Insurance Market at a Crossroads
Florida’s insurance crisis is more than a story about numbers — it’s about the intersection of climate risk, economic pressure, and human resilience. For residents like Patty Blaze, it’s a fight to keep the homes they worked their whole lives to afford.
But as Susman and other experts emphasize, the insurance industry is cyclical. “The industry will adapt,” he said. “It always does.”
That may be little comfort to those facing 500% premium hikes today, but it suggests a glimmer of hope on the horizon. The challenge now is ensuring that the next phase of adaptation balances financial sustainability with fairness — so that Floridians can once again find security, not anxiety, in the promise of homeownership.
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