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Hurricane Helene has wreaked havoc across the Southeast, from Florida to the Carolinas. Estimated property damage ranges from $15 billion to $26 billion, with an additional $5 billion to $8 billion in lost economic output.
What happenedHurricane Helene has left a trail of destruction in its path, further underscoring the precarious nature of Florida’s property insurance market. According to a recent report from the Florida Policy Project, insurance premiums increased by as much as 45% between 2017 and 2022.
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Florida Governor Ron DeSantis (R) has declared a state of emergency in 41 counties and ordered evacuations in some coastal communities. He has also urged residents to prepare for the hurricane, which has led many to board up their windows, place sandbags in their homes and fuel their cars.
The average annual premium for a Florida homeowner is now $5,500, a figure about 140% higher than the average U.S. insurance premium of $2,285, according to Bankrate. This increase in costs has left some residents without insurance altogether, with some reporting rates as high as $20,000 per year.
Even before Hurricane Helene, Florida’s insurance market was in turmoil, with companies questioning their ability to weather the state’s frequent superstorms. Moody’s has expressed concerns about rising premiums and an increasing number of property owners canceling coverage or moving out of state.
Standard homeowners and renters insurance policies do not cover flooding, leaving those without flood insurance to bear high rebuilding costs. The government-run National Flood Insurance Program, the primary source of flood insurance in the U.S., is also under increasing financial pressure as disasters increase.
According to a report from CBS News, traditional insurers have scaled back their home insurance offerings in Florida, especially in disaster-prone regions, leaving Citizens Property Insurance Corp. and newer insurers need to fill the gap. However, these insurers face higher rates from reinsurance companies, which offer insurance to insurers.
Jeff Brandes, founder and chairman of the Florida Policy Project, told the newspaper: “Florida, far more than any other state in the country, is exposed to the global reinsurance market.”
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Recent reforms to Florida’s insurance market may provide homeowners with some relief. Governor Ron DeSantis signed a property insurance bill into law in 2022 intended to deter frivolous lawsuits and limit insurer costs.
Florida’s home insurance crisis has escalated over the past year, with insurance premiums reaching the highest in the nation.
The crisis has hit South Florida particularly hard, where homeowners paid an average of more than $10,000 in annual premiums in 2023.
The arrival of Hurricane Helene threatens to worsen this crisis, potentially leading to higher insurance premiums and financial instability for smaller insurance companies.
Why it matters: Florida’s escalating insurance costs underscore the broader issue of climate change and its impact on insurance markets. As extreme weather events become more common, homeowners in high-risk areas will likely face rising insurance premiums.
The situation in Florida is a stark reminder of the potential financial impacts of climate change, with the state’s property insurance market particularly vulnerable due to its exposure to the global reinsurance market.
Recent reforms may provide some relief, but the long-term prospects remain uncertain.
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This article exposes the fragility of Florida’s home insurance market after Hurricane Helene originally appeared on Benzinga.com
