Crisis in insurance industry expands to Florida and southern states

When Hurricane Ian hit Southwest Florida in September, the insurance industry in the state was already struggling. Ian resulted in the second-highest insured loss in history, with damages estimated to be between $50 billion and $65 billion. Only Hurricane Katrina in 2005 caused more destruction.

Now, Florida Governor Ron DeSantis is working hard to attract more private insurance companies to his state in order to fill the gap in available policies for homeowners who are running out of options. In the past year, more than a half-dozen private insurers have become insolvent, while another half-dozen are struggling and some have even left the state entirely. This trend is similar to what is happening in Louisiana, where over the last two years, more than 20 companies have failed or withdrawn from the state, resulting in higher premiums or no coverage for hundreds of thousands of families. "We are definitely in a crisis," said Louisiana Insurance Commissioner Jim Donelon.

It is becoming increasingly difficult for Floridians to find affordable home insurance, and they are often forced to enroll in the state-backed insurer of last resort, known as Citizens Property Insurance Corp. These policies can cost up to $6,000 per year and do not include flood protection.

"It remains a problem and the cost then goes up because it's not only the $5,000 it's costing me; In a non-flood zone, I need flood insurance, in the event there is a flood it's another $750, it's almost $6,000," George Kyritsopoulos, a Jupiter, Florida resident, told FOX Business. DeSantis frequently cites one of the state's major insurance issues – lawsuits. Florida accounts for just 9% of claims in the U.S. but 79% of all home insurance lawsuits. The state legislature is trying to stabilize the insurance market and has passed several bills that aim to stop the proliferation of litigation.

One new rule eliminates the one-sided attorney fees that required insurance companies to pay plaintiffs if they lost a lawsuit, but not the other way around. Another significant change aims to prevent fraudulent roof claims that occur when homeowners give their "assignment of benefits" to a dishonest contractor who will file a lawsuit for non-existent repairs. That loophole has now been sealed.

But even insurers that have remained in Florida have made their eligibility requirements more strict, and in some cases, have dropped policyholders who do not meet the higher standards.

Florida's own insurance program now has over one million customers. In certain areas of the state, it is the only option available, resulting in an estimated 12% of Floridians not having any home insurance.

In five months, another hurricane season will begin and with Florida gaining hundreds of new residents daily, the lack of affordable home insurance could result in a devastating financial crisis if another major storm hits the Sunshine State.

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