For insurers, Florida is one of the riskiest markets in the world to operate due to its high susceptibility to hurricanes. A recent article in The Atlantic, “What Your Insurer Is Trying to Tell You About Climate Change” cast the situation in stark relief:
Every state has some sort of a public insurance system… for homeowners who can’t get coverage on the private market. These systems of last resort, however, are becoming insurers of first resort. After Hurricane Ian led to devastating losses in Florida last year, smaller insurance companies went bankrupt trying to satisfy claims. And over the past two years, the state’s insurance system, Citizens Property Insurance Corporation, has doubled its number of policyholders. It now covers about 13 percent of the homeowner’s-insurance market in the entire state. Is this sustainable?
Further clouding this already fraught situation are the challenges posed by rampant fraud and the misuse of assignment of benefits (AOBs) which have led to a disproportionate amount of payouts going to attorneys and claims adjusters rather than claimants.
Nonetheless, there's great potential for insurance agents who understand the nuances of this market. Given the recent legislative reforms targeting fraud and legal system abuse, the stage is set for more stable coverage solutions. And that's where hurricane insurance comes in. Offering tailored, efficient hurricane insurance products can help Floridians protect their homes and assets, and help you to establish yourself as a trusted agent in a particularly challenging market.
Florida residents face some of the highest insurance premiums in the country leaving many to ask, "How much is hurricane insurance in Florida?" The average home premium in Florida is about $6,000 per year, whereas elsewhere the U.S. average is about $1,700.
Unfortunately, though reforms are slowly being enacted, premium costs aren't likely to decrease anytime soon. If anything, major U.S. insurers, in response to growing climate risks, have begun to exclude natural disasters from policies and have even stopped writing coverages in certain vulnerable regions. As a result, homeowners in Florida could increasingly find themselves without the necessary insurance protections. Indeed, in an article called "Home Insurers Cut Natural Disasters from Policies as Climate Risks Grow," The Washington Post quoted Carolyn Kousky, associate vice president of the Environmental Defense Fund, as saying, "The same risks that are making insurance more important are making it harder to get."
As an agent, it's important to guide your clients through the cost implications of hurricane insurance, explaining how much is hurricane insurance in Florida, what it covers, and how it could potentially save them from severe financial hardship in the long run.
Traditional claim processes in Florida have been hindered by bureaucracy, lawsuits, and slow payouts creating even more challenges for those with hurricane insurance in Florida. This can make an already stressful time even more challenging for policyholders dealing with hurricane damage. As an agent, it's your job to educate clients on how to steer through the claim process, including what documentation is needed, what timelines to expect, and how to avoid pitfalls such as fraud and misuse of AOBs.
Parametric hurricane insurance is an efficient alternative to traditional insurance coverage. Instead of relying on claims adjusters to assess damage after the fact, parametric insurance pays out when certain predefined conditions are met—like a Category 3 hurricane hitting a specific area. This makes the claims process faster, less contentious, and offers a financial lifeline when clients need it most.
This flexible financial tool allows clients to tailor their coverage to their specific needs. Given the inefficiencies and complexities of the existing insurance landscape in Florida, parametric hurricane insurance can be a game-changer for your clients.
Taking into account the unique challenges of the Florida insurance market, how do you choose the right product for your clients? Start by assessing their specific needs, risk tolerance, and budget constraints. Then explain the pros and cons of traditional versus parametric hurricane insurance, making it clear how each would affect them in various scenarios.
For more information on how to navigate this challenging landscape, contact us and let’s delve deeper into making Florida hurricane coverage work for you and your clients.
