Steadily Rising Florida Property Insurance Rates May Be Leveling Off
June 4, 2014
Florida property insurance rates are among the highest in the country. Property insurance in this context means insurance that homeowners buy to protect themselves in case of damage to their homes. In recent years, property insurance premiums in Florida have been steadily increasing. Now, they seem to be falling slightly.
The potential hurricane threat has traditionally been the driving force in high insurance rates in Florida. But, Florida has not been hit by a hurricane since 2005. That is eight hurricane free seasons. So why are rates still increasing? Insurance companies have blamed sinkhole and water damage claims for driving rates up in recent years. They have also cited litigation seeking higher insurance payouts as a contributing factor. The truth seems to be that this is a normal trend. In 2004 and 2005, multiple storms caused the rates to go up. Later, fraud and other factors were the named culprits.
In the past few months, rates have been dropping slightly. Insurance companies were actually forced to lower rates after their reinsurance numbers were made public. Reinsurance is extra coverage that insurance companies purchase to cover claims in the event of catastrophes. As reinsurance costs are decreasing, many insurance companies are submitting requests to lower property insurance rates.
How much does this really help Floridians? Florida Chief Financial Officer Jeff Atwater says the small decrease in rates is not enough. Florida’s average property insurance premium is more than double the national average. Atwater believes that Floridians are in need of relief from high insurance premiums and need to be able to protect their homes. He is happy about the slightly receding rates but says that they are still not where he would like them to be. He hopes the rates will continue to decrease making property insurance more affordable for the people of the state.
Despite the recent small rate cuts, Florida’s property insurance rates are still astronomically high. Unfortunately, this limited decrease in rates likely won’t make much of a difference for Florida homeowners. As rates jumped about 11% in 2013, it will take a lot more than this slight change to bring them back down to a manageable level.
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