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Yahoo
5 hours ago
- Business
- Yahoo
Florida Homeowners Get an Insurance Break—and Condo Owners Are the Biggest Winners
Relief may finally be on the horizon for Florida's long-suffering homeowners—at least for some of them. Florida Peninsula Insurance, one of the state's largest private property insurers, revealed last week that it was looking to significantly lower insurance premiums for its roughly 170,000 policyholders. The company has filed a request with the Florida Office of Insurance Regulation seeking approval of a statewide average decrease of 8.4% for homeowners' premiums and a 12% reduction for condominium owners. If the state insurance regulator greenlights Peninsula's plan, the company says most of its clients will be seeing a "significant premium decrease" later this year or in early 2026. It will also mark the insurer's largest rate cut ever. This should come as welcome news for Florida's homeowners, who have been forced to pay some of the highest insurance premiums in the U.S., driven in part by the state's geographic exposure to destructive hurricanes and flooding, surging reinsurance costs, and litigation activity. Hopeful signs for homeowners Experts suggest that Peninsula's planned rate cut might be an early indicator that Florida's distressed insurance industry is finally on the road to recovery. "This is a good sign that the market conditions have not only stabilized but are improving," Charles Nyce, interim executive director of Risk Management & Insurance Center at Florida State University, tells "As all of the old litigated cases close, I do expect to see other insurers reduce premiums." But Nyce warns that some things are beyond insurers' control, no matter how well-intentioned they may be. "There are still two factors that are really outside the control of Floridians: the reinsurance market and storm activity," notes the risk management expert. "These two things are highly related. If we can avoid major storms (which will help keep reinsurance costs down), competition can continue to reduce rates for Floridians." Coincidentally, the North Atlantic hurricane season is currently in full swing, with Hurricane Erin, a powerful Category 4 storm, currently churning past the Bahamas. The National Oceanic and Atmospheric Administration says the likelihood of a more intense-than-typical hurricane season is 50%, with the agency expecting up to 18 named storms with winds of at least 39 mph. Between five and nine of the storms could become hurricanes with winds of 74 mph or higher. Of those, 2 to 5 could escalate to major hurricanes with winds of 111 mph or more. The first hurricane of the 2025 season, Erin is not expected to make landfall in the U.S., but it will generate dangerous rip currents up and down the East Coast. What it means for Florida's condo sector When it comes to the Sunshine State's hard-hit condominium owners, the insurance relief could not come fast enough, having struggled for years with soaring premiums, property taxes, and homeowners association fees. senior economist Jake Krimmel says all these additional housing costs have made Florida condos a much less desirable purchase, causing prices in that real estate sector to collapse. "Because Florida has so many condos, trends in the condo market have important spillover effects to Florida's overall housing market as well," says Krimmel. According to data, median list prices for condos were down 3.6% from a year ago in Florida, compared to just a 1.5% decline in Florida's single-family home market. And since July 2022, median condo list prices plunged 17.7%, compared to just a 1.5% decline in single-family list prices. "Anything that could backstop such strong price slides would be very important for current condo owners, many of whom may be close to going underwater on their mortgage if they bought after 2021," says Krimmel. "Lowering insurance costs is a step in that direction, providing relief to current policyholders while also making condo ownership marginally more attractive for future buyers. But the economist warns that cutting insurance rates alone "is not likely to reverse the trend in Florida's condo market." A look at Florida's insurance crisis According to Bankrate, Floridians paid on average about $5,730 in annual home insurance premiums for $300,000 home coverage, more than double the national average. Another estimate, from MoneyGeek, placed the average cost of homeowners insurance in Florida at more than $8,770, or more than four times the national figure. To make matters worse, many Florida homeowners have been unable to buy coverage from any private company, not even at these inflated prices, forcing them to turn to the state-run, not-for-profit insurer of last resort, Citizens Property Insurance Corp. By 2023, Citizens was managing a staggering 1.4 million policies, making it the state's single largest property insurer. However, over the past two years, more than a dozen smaller carriers have entered the Florida market, allowing the overloaded state-backed insurer to transfer out nearly half of its policies, slashing its caseload to 777,592, as of June 20. At the same time, state lawmakers in Tallahassee have been busy adopting legislative reforms aimed at stabilizing Florida's teetering insurance sector. Florida Peninsula Insurance President Clint Strauch has credited these changes with making it possible for his company to lower rates at this time. "The legislative reforms have contributed to a measurable drop in frivolous lawsuits and inflated claims, providing us the ability to pass on the savings from the law's changes to our policyholders," said Strauch. "This rate reduction shows that the legislative reforms have successfully addressed the root cause of increasing insurance premiums in Florida." Nyce, with Florida State University, agrees that the legislative steps have done much to shore up the property insurance market. "We have seen a significant increase in the number of new companies competing in Florida, and we have seen the existing insurers increasing their capacity in the market," he says. "The legislative changes, the increased competition, and a reduction in reinsurance costs are finally starting to lead to reductions in premiums." Solve the daily Crossword
Newsweek
3 days ago
- Business
- Newsweek
Florida Insurer Plans Biggest Rate Cut In Its History
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. One of Florida's largest property insurers has moved forward to cut its homeowners' insurance premiums, in a move that could make coverage significantly cheaper for tens of thousands of policyholders in the state. Florida Peninsula Insurance, the state's ninth-largest property insurer, has requested the Florida Office of Insurance Regulation (OIR) to approve a statewide reduction of 8.4 percent in its homeowners' premiums and of 12 percent in its condo owners' premiums. The proposal comes as Florida's property insurance market is showing strong signs of recovery after years marked by skyrocketing premiums and shrinking coverage across the state. These include the fact that home insurers in the Sunshine State collected more premiums than paid out claims last year for the first time since 2015. A Swift Reversal After Years Of Increases In the years following the pandemic, Florida's property insurance industry was thrown into a crisis by a combination of growing catastrophe exposure for carriers, higher property values, excessive litigation, and widespread fraud. Rising expenses caused several major carriers in the state to go insolvent between 2020 and 2023, while others cut coverage in the most disaster-prone areas of the state to avoid paying claims beyond what they could financially sustain. As a result, homeowners in the state faced shrinking availability, higher premiums, and more risks. A destroyed home is seen in the aftermath of Hurricane Milton in St. Pete Beach, Florida, on October 11, 2024. A destroyed home is seen in the aftermath of Hurricane Milton in St. Pete Beach, Florida, on October 11, 2024. GIORGIO VIERA/AFP /AFP via Getty Images But a series of reforms and interventions by state regulators to fix the state's broken home insurance sector in the last couple of years seems to have paid off. Between 2022 and 2023, Tallahassee lawmakers introduced tort reform measures that successfully reduced litigation in the state. And over the past year, several new, smaller carriers were approved to enter the market. "The financial position of the Florida insurance industry has improved dramatically over the past two years due to legislative actions which addressed the two factors that led to the risk crisis: legal system abuse and claim fraud," Mark Friedlander, senior director of media relations at the Insurance Information Institute (Triple-I), told Newsweek. "Not only have premiums stabilized (reporting a 1.75 percent average increase in 2025, the lowest in the U.S.), but 14 new carriers have entered the market, existing insurers are growing their market share—including major national insurers—and state-backed Citizens Property Insurance Corp. has cut its risk exposure in half due to depopulation," he added. Relief Could Be On The Way For Over 170,000 Floridians Florida Peninsula Insurance counts over 170,000 policies in the Sunshine State, according to its latest data. Most of these policyholders are likely to benefit from the company's requested premium cuts, should they be implemented, paying lower premiums starting this year or in early 2026. The company has attributed the requested cut to the legislative reform introduced by Florida lawmakers in recent years. "The legislative reforms have contributed to a measurable drop in frivolous lawsuits and inflated claims, providing us the ability to pass on the savings from the law's changes to our policyholders," Florida Peninsula president Clint Strauch said in a statement reported by several insurance news media. "This rate reduction shows that the legislative reforms have successfully addressed the root cause of increasing insurance premiums in Florida." Newsweek contacted Florida Peninsula Insurance for comment by email on Friday. The rate drop would be particularly welcome to Florida homeowners, who despite the recent stabilization in premiums still pay some of the highest in the nation. According to Bankrate, the average annual premium for $300,000 dwelling coverage is $5,728 in Florida, much higher than the national average of $2,397.
