Immediate And Substantial Hikes On Florida Insurance Horizon

During recent years, Florida fl homeowners insurance has been a topic of high media profile and hot debate. Like property owners across the entire globe, Floridians are justifiably concerned about protecting themselves against major losses due to damage or the destruction of their largest economic investment. Like homeowners elsewhere, the primary means of acquiring such loss protection is via traditional homeowner’s insurance policies. Sunshine State dwellers have found their hopes significantly dampened for the past few years, however, due to an unfortunate combination of unenviable circumstances.


The primary problem Floridian landholders face is purely accidental. Due to accident of its physical situation, the Sunshine State is highly prone to all manner of major calamity, disaster, and destruction. High-speed winds with velocities in excess of 150 miles per hour visit the state frequently. Unlike other Floridian tourists, these visitors are not polite. Rather than generous tips and tons of bucks pumped into local economies, hurricanes leave behind souvenirs of a completely different character.


Insurance carriers are in business to earn a profit. Thus, they must realize sufficient income to absorb operating costs with an excess for discretionary purposes. Their main source of commercial revenue comes from the premiums they charge policyholders in exchange for agreeing to provide loss protection coverage. Premiums, of course, are directly proportional to policyholders’ relative levels of risk to the insurer. Inability to charge higher prices for correspondingly higher risks places insurance carriers in grave economic danger, due to claims payments that exceed premium income.

The Law – 2001

The Florida State Legislature enacted statutory limitations on maximum homeowner’s insurance premiums. Although the stated purpose of the law was beneficial, its practical effect proved quite detrimental. Immediately after its passage, many carriers ceased writing Florida fl homeowners insurance policies. The legislatively mandated premium levels were insufficient to offset the relatively higher risks of Florida’s actuarial landscape. During the next three to five years, several particularly serious hurricanes wreaked a trail of physical and financial devastation estimated at more than $30 billion USD. In response to these crises and persistent insurer lobbying of legislative and regulatory officials in the state, Florida lawmakers finally reconsidered their previous stance. Subsequently, state laws were amended to affect partial lifting of mandatory premium caps.

The Law – 2009

In 2009, Florida legislators finally came to full realization of the disastrous consequences they had wrought upon the state’s homeowners. Accordingly, they allowed insurers operating within the state to increase homeowner’s insurance coverage costs of up to 10 percent per annum. This legal initiative was imperative for insurers’ continued ability to thrive, prosper – and survive – within the Sunshine State. After all, they claim, such hikes were only fair in light of the substantial risk exposure that underlies sunny Floridian skies.

The Law – 2010

Last year, state legislators revisited the Florida fl homeowners insurance crisis. Upon making a comprehensive view of the entire scene, they concluded to reinstate ordinary market dynamics by doing away with premium caps altogether. Consequently, Floridian homeowners are likely to see substantial jumps that might amount to multiples of their present premiums. Insurers must impose such increases to sustain the feasibility of continued presence in the Florida property insurance market by making up for lost time – and income.