A confluence of issues have caused residential and commercial insurance premiums to rise in Florida, sometimes by 40 or 50 percent. As the frequency of disasters increased over the last few years, insurance companies had to cover the higher payouts, leading some insurance companies to leave high-risk states like Florida, said Bradley Cassidy of Franklin Street Insurance Services, which offers property and casualty insurance programs.
“The profitability margins for the premiums the insurance companies have been collecting have not been sufficient to be profitable in the claims that they’ve paid out,” he told Commercial Observer. “Therefore numerous insurance companies have pulled out of the market. They no longer offer insurance in highly exposed states such as Florida, leaving a minimal amount of carriers willing to quote properties.”
Add to that higher replacement costs in light of supply chain issues, and it’s a recipe for runaway rates. “Due to claim activity, rising cost of construction, less capacity — meaning less insurers willing to quote — and insurance company tightening undersigning: those are the four most impactful immediate drivers of rising premiums,” said Cassidy.