The Florida property insurance market is in trouble.
“For the past two years, private companies operating in Florida have had a total negative net income of $ 1 billion. So the market is fundamentally closing. “
It is also bad for homeowners.
“Consumers are supporting life right now. They … are paying more money for less coverage.”
When the market broke like this, something fundamentally went wrong. In Florida, it comes down to one thing: litigation.
“Florida has 8% of lawsuits and 79% of lawsuits, so there’s something very, very wrong with that.
“And I don’t think anyone could logically explain that kind of difference other than the abuse of the Florida charter.
today On the spot: Collapse of property insurance in Florida. Can it be fixed?
Mark Friedlander, Director of Corporate Communications at the Institute of Insurance Information, a non-profit non-partisan organization. (@ markfri09)
Jeff Brandes, a Republican senator from the state of Florida since 2012. Author Senator Jeff Brands calls for a special insurance session. (@JeffreyBrandes)
Mandy Wellshomeowner in Cape Coral, Florida
Joe Carluccico-owner of Brightway Insurance, an insurance agency in Jacksonville, Florida.
Transcript: A Florida Homeowner Fails to Collapse Property Insurance in Florida
MANDY WALES: Cape Coral is like copy-paste. It was as if the builders had just gone and built the same house over and over again.
MEGNA CHACRABARTY: Mandy Wells, her husband and son, moved to Cape Coral, Florida in 2017, and live in one of these copy and paste homes. The house with three bedrooms, two bathrooms and 1,600 square feet was modern and in excellent condition until October 2019, when Mandy noticed that the roof was leaking. Not good.
However, Mandy recalled seeing a rooftop ad on Facebook. It was from the Fort Myers-based Marlin Construction Group and their website says they are licensed and insured, and a red banner at the top of the house, the page says Marlin Construction Group, your satisfaction is our priority № 1. So Mandy them he shouted.
WALES: He’s coming. He makes me sign a document called a contract agreement. And then he also wrote on the back of my direct debit authorization that I had a leak in the front. He tells me the date of the storm, which is different from the date we meet, and even different from the date I saw the water.
And he says to me: Oh, this is from a strong wind. Down here, everything is like a strong wind. And then he sits next to me in front of the computer and helps me file an insurance claim.
CHACRABARTY: By the way, the contractor was not even on the roof to inspect it, but he wrote in the documents on December 20, 2018, the same day when the bad weather and the wind really hit Florida. But that happened more than a year before Mandy had a roof problem.
By the way, the offer contract that Mandy gave us has both an Angie’s List logo and a Better Business Bureau A-plus logo in the upper right corner. But Mandy, of course, didn’t feel like he was getting this A-plus service. So she spent the next few weeks pacing back and forth with this company, trying to put everything in order.
WALES: And this company never came back to do the job. They tried to use this document to get me to sign a power of attorney and transfer benefits. This was not until February 2020, when I asked them to simply cancel my file. No work was done in my home. The company has never been on my roof. My house was drinking water all the time.
CHAKRABARTI: Assignment of benefits, also known as AOB. This is very common in property insurance lawsuits in Florida. And here’s how it works. A contractor or lawyer forces the homeowner to sign their property insurance policy. So all the money raised in an insurance claim goes directly to the lawyer or the contractor, not to the policyholder. This is normal and legal. But here comes your turn in the plot.
In Florida, lawyers often sue insurance companies for much more than the actual cost of repairs. And because of this AOB they get extra cash. In fact, insurance companies have made $ 15 billion in payments in Florida since 2013, but less than 10 percent went to policyholders. More than 70% of them go to lawyers. Moreover, Sunshine State is exceptional throughout the country. More than 75%, three-quarters of all property insurance lawsuits nationwide, originate in Florida.
WALES: Construction companies are assisted by lawyers and they involve everyone in litigation. I can promise you that the owner has no idea what he’s getting himself into. They think, you know, this is the way to, you know, I’m going to save my house. I will have a healthy place to live. You know, I have mold in my house now. I have water stains on the ceilings.
CHACRABARTY: This is Mandy Wells again in Cape Coral. It took more than two years of legal battles with Marlin Construction Group and its insurance company. But Mandy will finally fix her roof in a few weeks. Meanwhile, her insurance premium has risen. A lot.
WALES: It has grown from $ 800 a year to $ 2,700 a year.
CHACRABARTY: More than three times since 2017. All the time, Mandy’s coverage has been declining. On top of that, her current insurance sent her a non-renewal letter for next year, which means she has to find a new policy by next month.
WALES: I used to have three or four companies to choose from. There was one company to choose from. That was it. But, you know, it’s like paying for gas. You just put your card in the machine and you just look away and you just do it, you know? So … the sting is over.
CHACRABARTY: But if insurance premiums continue to rise as they are, Mandy doesn’t know how much longer he can withstand this sting.
WALES: If it is going to triple every few years, I want to say that we are essentially almost a single-income household. Because I am a mother who stays at home with my son with special needs, who I do home school. We will have to consider making some change.
I don’t know how much longer we can afford to stay in the house. I guess maybe I’m just fixing up the house so someone else can move in. It’s just amazing. What is happening is amazing. It’s amazing that Tallahassee can’t do more for homeowners because we are who they are. … We lose. we lose.
Transcript: How insurance brokers are affected by the property insurance crisis in Florida
MEGNA CHACRABARTY: Joe Carlucci and his brother Matt own Brightway Insurance, a brokerage firm in Jacksonville. And they opened in 2013 and have experienced some ups and downs in the market. But they have never seen anything like it.
JOE CARLUCCI: We have never seen just the catastrophic event as it is now. I mean, we get hundreds of phone calls and emails about tariff increases, non-renewals, companies going out of business. So it’s really like fighting to try to keep people covered.
CHACRABARTY: I’ve talked about these doubling and tripling premiums, but the biggest problem, Joe says, is finding insurers who are even now ready to accept new customers.
CARLUCCI: We see very strict guidelines, as if we are not going to take a roof that is more than ten years old. This is almost becoming the norm. And it used to be 20. So that’s crazy. It is really difficult for people to replace a roof that is ten years old and is perfectly fine.
CHACRABARTY: And Joe told us that some companies will not insure customers whose homes were built before 2010, which, as you can imagine, eliminates many homeowners. And as a result, Joe has few opportunities for people, which makes his job very difficult.
CARLUCCI: While three years ago we offered people three or four options. We’re like, Hey, Company A is $ 1,000 a year, Company B is $ 1,500, but there’s a little better company. You know, people want to see what the options are. And at the moment there are simply no options. It’s like, hey, here’s your policy, here’s a quote you should have in the end.
CHACRABARTY: That means a lot of people go somewhere else. Because brokers like Joe Carlucci can’t find an affordable policy. And this place is the state insurance company of Florida. So here’s Barry Gilway, CEO and president of Citizens Property Insurance Corporation, the state-run insurance option.
BARRY GILWAY: I would say that very, very few additional companies are writing business. And you know, we’re the only place these insurers can go. We are, frankly, for these insurers, we are indeed the last resort, but we are becoming the only instance.
CHACRABARTY: Well, for Joe Carlucci and other insurance brokers like him, however, for anyone who goes to Citizens Property Insurance, that means losing a commission.
CARLUCCI: That’s not really good for the agents. This is not really good for the customers. This is not really good for insurance companies. So, you know, I mean, I guess people get paid on claims. So I think, you know, roofing workers are definitely making a solid living right now.