How ‘cherry-picking’ policies let one insurer win big in Florida’s insurance crisis

This is a major stain on DeSantis...

 

Seems the state has its head largely in the sand on insurance.

The premium on our beach place is up 500% since 2019, and when our broker bid it out this year there were maybe only 2 companies willing to quote.

Florida is about 1 bad storm away from having the state needing to take over the property and casualty insurance market, because everyone else is going to leave when that happens.

I guess Ron was just hoping to move his family to Dc before that happens.

 

Don’t know what the solution is. Our son and daughter-in-law’s home insurance jumped from 1600.00 to 6,000.00. North of Tampa.
from the article—-
“It’s a shock getting a letter that says you have to make this choice or we will make it for you and by the way it’s a [500] percent increase — it was alarming to say the least,” Rob said.
After doing research, they learned that they could stay with Citizens, and that is what they decided to do. But the Martins are now wondering if it’s worth living in Florida.

 

The other thing that’s happening is that most of the remaining insurers are conditioning their renewals on major structural replacements (ie mostly installing a new roof) before renewing, so not only are premiums skyrocketing they are now coincident with a huge capital expense.

Like your son, we are considering selling (and relocating our 2d home to the NC mountains).

 

Actually the mess was created by Bill Nelson as Insurance Commisdioner after Hurricane Andrew. But DeSantis and everyone since have failed to fix it.

 

I was talking with someone in the industry yesterday about the roof thing. And in hindsight it's obvious but I had never put two and two together before. Insurance is requiring the roof installs at renewal to get ahead of the roofing scam going on. Force homeowners to pay for the roof before they can claim it as damaged. Makes sense.

 

Well, that makes even more sense... I'll have to see more (links) to believe it.

 

Nelson did not effectively deal with the issue of companies wanting to pull out of Florida after Andrew in 1992. Insurance companies rolled him. The solution was raised rates. Now higher rates were necessary but better codes were what was really needed. Structures built closer to the water should all be elevated. It’s not popular but it’s very effective at limiting coastline destruction. Much more effective than windows and roof ties. Personally, I have never believed that the structures in south Florida were even in compliance with codes at the time. Too many failures in 165 mph winds. Hurricane Camille hit the Mississippi Coast in 1969 with higher winds over a wider path with less structure failure due to wind. It did have close to a 30 ft storm surge that did most of the damage either directly or through flying debris.

Can’t fault Nelson for the roofing scam. That came after his term and should have been addressed 10 years ago legislatively.

 

This piece really confirms with anyone with common sense should realize - 1-2 Major storms could cause immense economic damage to Florida, perhaps, collapsing the residential property market through multiple mortgage failures after many of the insurers have failed.

Leaders, especially but not only this group, just will not tell the public the truth, that our dense coastal building is unsustainable in this climate, and that we just cannot survive without massive losses unless we let insurers charge what risk tells them to, which would make it too expensive for most people to live here and greatly harm our economy, at least the way we have built it.

But the lack of foresight and attempting to gradually address the issue, doesn’t mean we’re not going to have to. We’re just going to have to all at once, in a catastrophic fashion, which means we won’t really be, addressing it, will only be reacting, and the Florida, as any of us have known it in our lifetimes, will be gone.


TALLAHASSEE — The vast majority of small insurers operating in Florida are considered so financially weak that they wouldn’t typically meet federal guidelines allowing them to back mortgaged homes. The study, by researchers at Harvard University, Columbia University and the Federal Reserve Board, has not yet been peer-reviewed. But it was posted on a website for scholarly papers in December and has caught the attention of national and state insurance officials and observers.

There are few independent studies of Florida’s insurance crisis, and the report offers insight into one of the state’s vulnerabilities: its reliance on about 50 small insurers, covering about 70% of policyholders, that are usually rated by a single company.

That ratings company, Ohio-based Demotech Inc., was the target of a round of public retribution in 2022, after Gov. Ron DeSantis’ administration accused it of threatening to downgrade 17 companies that year.

The downgrades posed a threat to the state’s housing market as DeSantis was seeking reelection and gearing up for a presidential run. The mortgage giants Fannie Mae and Freddie Mac require insurance from highly rated companies, such as those that receive an “A” from Demotech. If 17 insurers suddenly didn’t qualify, a million Floridians could have been left scrambling to seek insurance policies.


Insurers’ quality questioned
Insurers’ quality questioned - Tampa Bay Times

 

I tend to agree with you that a lot of the issues during Hurricane Andrew in South Florida were with code compliance as apposed to the code itself. I know a lot of designers, contractors & inspectors would disagree with me but in my years with Orange County I did damage assessments for both Orange County & FEMA after 4 hurricanes and 2 or 3 tornadoes. The failures I saw were houses where the wall sheathing was not nailed off properly. My opinion is that properly nailed sheathing will withstand just as much uplift as all the strapping and tie downs they use today. The two code changes that to me did help were wind tested garage doors and X bracing the gables. The garage doors I saw fail were the 70s & 80s style metal doors without bracing. 60s & earlier solid wood garage doors did just fine and of course the modern metal doors that are wind tested did just fine. The one thing I would like to see them change in the modern code is I think they should outlaw 3 tab shingles. Unless they have done something to change the makeup of 3 tab shingles since I retired I would never trust them in winds over 100mph. I've seen too many 3 tab shingles blow off.

 

I noticed alot of people replace their their shingle roof with sheet metal after Ian.

Presumably that should hold up better or is seen as an uograde over shingle, though you’d wonder in extreme winds if it might be more likely for even bigger chunks of the metal roof to be peeled off (exposing more of the underlayment)?

Tile roofs seemed to hold up pretty well even to 145mph, but when the storm gets stronger than that at some level it’s probably a bit of luck whether the roof lives to see another day. The strap keeps it tied down but the lifting action can still cause failure points. You just hope it holds up well enough to keep the water out at that point. I’ve seen metal tile companies claim 155mph protection. But again at that point and above the whole roof could be lifted and flexed even if it remains tied down, it’s not just about the outer material.

 

Maybe correct, but first time I've heard Nelson blamed for the insurance problem and I lived in SFla during and after Andrew, which was 30+ yrs ago.

Btw, the code was further tightened in SFla after Andrew and last I heard was the toughest in the state. Driving around Tampa Bay and central Fla I see a lot of new structures that will simply blow away if a cane hits. Reminds of Kendall.

That said most of the building industry, esp north of SFL fought the tighter codes till the end due to increased costs and "we don't need it, canes don't come this way".

Finally, I don't think Rick Scott helped the situation by off loading policies onto several newby, under capitalized companies, several of which failed leaving policy holders in the lerch.

 

It’s just not sustainable with the current premiums. In the end it will make Florida a place that’s not affordable to live.

 

It’s been going on for quite a while. They don’t want to insure a house with an old roof which makes sense.

Trouble is figuring out how much “useable life” a roof has is far from an exact science.
That’s why when I did a rebuild after a fire I paid up to have the best construction based on insurance, ie metal roof, impact windows, CB on BOTH stories and a hip roof.
Has likely saved me 5-10k already in insurance costs in just a few years.

 

I live here in Gainesville and our police also jumped by $2000. It's not just insurance increases, property tax increased, freaking electric from GRU is just plain stupid. Yet there's not really a slowdown in new homes being built.
GatorNorth pointed out if you live on the beach that's gotten even more ridiculous. I was going to get a condo in Crystal River for fishing and weekend getaways, but the monthly association dues were $800 a month, so it makes more since to just VRBO a place instead when we go

 

Yep, that's what we're doing

 

So, I called my agent and asked him if I was to put a new roof on now would it save me any money in premiums, he shopped with it showing me just put a new roof on and it still wouldn't change the cost or at least enough for me to justify re-roofing

 

You’re worried about a metal roof coming up?
We did metal and it’s supposed to handle winds much better than shingles.

 

Want to know what the design wind speed was in the early 90's? There was no Florida Building Code, we were still using SBCCI (Southern Building Code Congress International) which was used by all southern states including Mississippi. The max speed to design to was 90 MPH. Even after Andrew and Florida went to our own Florida Building Code in the mid-late 90's many of the other states still used SBCCI up until most states just went to a national code (ICC). Florida's is more stringent on a lot of things. California has extra requirements as well.