Florida Insurance Guaranty Association (FIGA) Issued an Emergency Assessment Fee of 1%

In another twist to the insurance nightmare in Florida, it is possible that Florida homeowners will be facing another insurance increase. Recently, the Florida Insurance Guaranty Association (FIGA) issued an emergency assessment fee of 1%, which will result in some homeowners facing an increase starting October 1.

The new increase was requested by FIGA and approved by Florida’s Office of Insurance Regulation. According to FIGA, the assessment is necessary to cover claims from companies that are on the verge of becoming insolvent. Companies that fall into this category include United Property and Casualty Insurance.

While an increase will make insurance even more expensive in the state of Florida, insurance experts claim it is the best option. “It is far preferable to the situation where we have market failure and there’s no availability of insurance,” Dr. Shelton Weeks, a real estate professor at Florida Gulf Coast University explained in a recent Fox 4 article.  “Yes, this is a bad thing. Especially if you’re looking at it from a standpoint of a budget as a household.”

According to Dr. Weeks in the Fox 4 article, adding the assessment is the only option. “This is the mechanism to keep the system functioning, otherwise we would deplete the reserves,” he said. “When you have an extreme event like this with catastrophic losses, this is our current mechanism to dealing with that, to avoid market failure.”

Florida’s insurance market has been in a free fall for years and while the Florida legislature has attempted to fix the insurance market, they have not managed to do so yet. There are numerous issues with the insurance marketplace that have made the assessment necessary. 

“A lot of systematic problems in the system. A lot of abuse and some bad behavior by a few of the actors have led us down this path,” Dr. Weeks explained in recent Fox 4 article. “False claims, the assignment of benefits where you may end up in situations with claims being greatly exaggerated.”

The fee is currently set to last until September 2024 but could be extended beyond that if necessary.