The lure of sunshine, low taxes and low housing prices has drawn people to Florida for decades, but high insurance premiums are beginning to reverse the trend. The U.S. Census Bureau shows that nearly 276,000 people left Florida in 2022, and it’s believed that skyrocketing insurance premiums motivated many of the departures.
The study found that most former Floridians stayed in the Sun Belt, moving to states such as North Carolina, Georgia, Tennessee and Texas. These states offer similar advantages to Florida in terms of low housing costs and tax rates. What they also have in common is that they are not currently experiencing the insurance rate crisis that has gripped Florida in recent years.
Premiums rising and insurers pulling out of the market
The Sunshine State’s insurance industry has suffered for many years from a combination of more frequent and more dangerous hurricanes, which have driven up claims costs. Since 2017, four hurricanes have made landfall in Florida, three of which were Category 4 or 5. The total damage was in the tens of billions of dollars.
They have come so fast and so often that insurers have barely recovered from the cost of covering claims from one hurricane when the next one comes along. To make matters worse, as property values have soared, so have the costs of claims. Insurance companies are not set up for this.
Insurers cover their potential losses by buying something called reinsurance, an insurance policy that insurance companies buy to protect themselves in the event of a natural disaster. The cost of recent hurricane losses has caused reinsurance rates to skyrocket, resulting in an unprecedented increase in home insurance premiums for Florida home and business owners. Worse still, it’s causing many insurance companies to leave the state altogether.
Sticker shock of a different kind
According to the Insurance Information Institute, insurance premiums in Florida have risen by 300% in the last five years. The average cost of home insurance in the United States is $1,700, while Floridians pay more than $4,200 a year, if they can get insurance at all.
Instead of renewal notices with higher premiums, many Floridians are receiving notices that their insurance company is leaving the state and their policy will not be renewed. Retirees are hit even harder, as premiums eat up large chunks of their fixed incomes, contributing to the exodus.
Having insurance is only half the battle
Even those Floridians lucky enough to be able to afford their insurance premiums are struggling. In addition to property damage, each hurricane leaves behind thousands of lawsuits between angry homeowners and insurance companies. The cost of fighting these lawsuits is another factor motivating insurers to leave Florida.
A problem without a solution?
The exodus of insurers from Florida has left Citizen’s Property Insurance Corporation as one of the largest insurance providers in the state. The problem with this equation is that Citizen’s is a government insurer that was never intended to be more than a last resort for people in the insurance market. For many Floridians, it’s becoming the first option.
The idea of a state that doesn’t collect income taxes being on the hook for millions of home insurance policies is problematic. If another storm with the force of Hurricane Andrew hits Miami or Tampa, paying claims could potentially bankrupt the state. That is why so many Floridians are choosing to become ex-Floridians.
