Insurance premiums aren’t likely to go down, and there’s little Florida lawmakers can do about it, according to a new report.
This is because the average insurance premium for a Florida homeowner is three times the national average.
The report lists factors that are driving up rates – starting with construction costs. Since 2017, the average cost of construction in Florida has increased by nearly 40 per cent. And it continues to rise.
“The cost of rebuilding is not going to come down in the near future,” said Tom Cotton, an insurance agent in Orlando.
Florida has experienced three major hurricanes in the last five years – Michael, Ian and Idalia.
The report cites scientific studies that point to an increase in the number of major hurricanes and the intensity of the storms.
The factors cited in the report as driving up premiums are beyond the control of Florida lawmakers.
“I really don’t think there’s much more they can do,” Cotton said.
Cotton says legislation passed by lawmakers last session will help in two years. It aims to reduce frivolous and excessive lawsuits that have driven up rates and driven out insurers.
“But that’s only going to affect about 40% of the rate setting equation,” Cotton said. “The legislature has done what it can to control the reinsurance component of the rate-making process. We will see that come down in the future. But if construction costs come down, then there will be a correlating, linear process, you’ll see a linear decline. But I don’t see that happening in the near future.
In the meantime, Cotton says, premiums in Florida will rise.
The report says the only way to mitigate these impacts is to retrofit homes to withstand storms and to implement stricter building codes – something Cotton says is already stringent.
“They’re talking about along the coast in particular. They’re talking about not letting you build a house where it’s going to be impacted by erosion and tropical storms,” Cotton said, referring to conversations about solutions.
The report comes days after some Florida lawmakers said they did not expect any major property insurance legislation in the upcoming session.
