As home insurance prices are poised to increase sharply, the South Florida Sun Sentinel asked leading insurance experts to provide their views of the disintegrating state of the market. Here’s what they had to say. Responses have been edited for length and clarity.
Locke Burt, president and CEO, Security First Insurance Co.
Insurance cost drivers are well known and have been reported before — bad weather, increased reinsurance costs, shady contractors, aggressive plaintiffs bar with a favorable legal environment, water losses, fraud. What’s different is the trends seem to be accelerating and the Legislature has not done anything meaningful to change the trajectory of increased costs which, under Florida law, must be passed on to consumers in the required annual rate filings.
The private sector is shrinking and raising rates as fast as they can because the losses are not sustainable and the providers of additional investment capital simply do not believe that the situation in Florida is going to improve for several years. That’s why the public companies are selling for 50 cents on the dollar.
This situation won’t change until legislators hear from their constituents and decide to do something, the weather improves, or the lawyers disappear.
Travis Miller, insurance regulatory attorney, Radey Law
In Florida, we face unique but foreseeable challenges due to our substantial coastal exposures and the corresponding hurricane risk. Insurers anticipate these challenges and typically are well prepared to meet them. However, these challenges have been compounded in recent years by other issues that are not meteorological but instead are behavioral. Simply put, loss experience in Florida has deteriorated to a point historically unseen in this state and significantly worse than in other states following similar events.
The conditions in the current market just reflect how these concerns manifest over time if not addressed.