Florida Homeowners Insurance Rates Expected to Increase in 2021

Homeowners in Central Florida will most likely be seeing higher property insurance premiums next year, these increases are the result of a record hurricane season as well as lawsuits. 

Insurers have requested rate increases from the Florida Office of Insurance Regulation (FOIR) that exceed 30 percent for next year. This year, the skyrocketing premiums are not just happening in coastal cities, experts are warning that this time the increases will hit communities across the state. 

Alexis Bakofsky, director of communications for FOIR, said in a recent Orlando Sentinel article that the “increases are the results of busy hurricane seasons combined with higher costs for reinsurance and litigation.”

This year saw a record for named storms in the Atlantic as well as for named storms making landfall. As insurers turn to reinsurance to help cover the cost of these storms and decrease their exposure to catastrophic storms, the cost of reinsurance has been heading up. Reinsurance is the insurance that insurance companies purchase to help cover claims after a major storm or other catastrophic incident. 

“Unfortunately, these developments have presented challenges not only to our property industry but also to our consumers,” Bakofsky said in the Sentinel article. “After multiple years of rate decreases, FOIR is seeing an increase in proposed average annual premium increases for Florida homeowners’ rates.”

As an example of rate increases being asked for, Capitol Preferred Insurance, asked FOIR for two rate increases this year, one for 47 percent in February and another 26.2 percent increase in August. First Community Insurance Company asked for one of the more reasonable rate increases this year, requesting a statewide rate increase 24.6%. Insurers in Florida don’t have to ask for permission if their rate increase is less than 15%.

Lawmakers looking for solutions

State Senate President Wilton Simpson recently said that lawmakers would look for proposals that limit lawsuits and payouts over property insurance claims, which should help lower premiums, or at least slow down the increases.  

“The rates are going up 20, 30, 40% in the last year and certainly are going to go more if we don’t do some things in that arena,” Simpson said to reporters at the annual organizational session in Tallahassee.

He claimed that lawmakers would look at bills that have been brought forward in recent years but did not pass. These bills would limit multiplying attorneys’ fees in complex cases and reducing the amount of time to file a claim after a storm hits. It would bring that down from three years to one year.

However, those bills have failed in the past and it is not clear why they might pass now. These bills face heavy lobbying from trial attorneys and some legislators are concerned that these laws could impact a homeowner’s ability to sue insurers if they deny a claim or delay paying out claims.

In the Orlando Sentinel article, Attorney Mark Nation, with law firm Morgan & Morgan, said that “Measures aimed at reducing attorney involvement will mean insurance companies will lose the incentive to pay on claims. You think there are a lot of denials now? Think about if people like me didn’t exist.”

While insurers have been complaining about lawsuits for fraudulent claims for years, they are now saying that lawsuits are reaching “crisis levels” which will result in double digit rate increases for Florida homeowners insurance across the state, even in inland areas. 

“It’s exploding, and it’s really taking a toll on the cost of the claims,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida in the Orlando Sentinel article.