Written by Michelle Conlin and Matt Tracy
NEW YORK/WASHINGTON (Reuters) – For 32 years, Jim Tynan has had a homeowners policy with Allstate in his 1,200-square-foot apartment in Ponte Vedra, Florida.
In January, Tynan’s subsidiary, Allstate, told him it was letting him go. Tynan contacted 10 different agencies, “and none of them would cover me,” he said.
Finally, he found one that would. It costs 50% more.
Florida has been hit by four major hurricanes in the past four years, causing insurance premiums to skyrocket and causing some insurers to drop coverage. For residents who clean up after storms or live near water, they have another worry: Will they still have insurance?
Tynan said he was not directly hit by a tornado but was located about two miles from the ocean.
“I live in fear that I’ll get a letter from my new company telling me they’re going to get rid of me, too,” Tynan said, speaking after the recent hurricane. “It’s very scary.”
Six other homeowners contacted by Reuters in areas including the Florida coast and the Keys said they were concerned that successive hurricanes would lead to further price hikes and exclusions. Worse still, they feared they would lose their insurance entirely.
Allstate said it worked with regulators to protect as many customers as possible. For those who can’t be covered, “we work with other carriers to offer alternative coverage offerings.”
A number of Florida homeowners have faced a precarious situation of securing insurance. Average homeowners insurance premiums in Florida rose nearly 60% between 2019 and 2023. Some major insurance providers have reduced coverage. Meanwhile, the state insurance company, Citizens, has increased its business.
Analysts and insurance experts expect more nervousness for insurers in the wake of Hurricane Milton, which made landfall on Florida’s southwest coast just 12 days after Hurricane Helen made landfall on Florida’s northwest coast.
“This will certainly make insurers nervous about continuing to underwrite the market,” said Mark Ragin, assistant professor of risk management and insurance at the University of Georgia’s Terry College of Business.
Increased hurricanes could lead to increased reliance on the state-backed, nonprofit insurer of last resort.
Florida Gov. Ron DeSantis has in the past raised questions about how insurance companies pay claims in the event of major storms. Citizens spokesman Michael Peltier said the company would always be able to pay as it was structured to charge surcharges first on policyholders and then, if necessary, assessments on non-policyholders. He said about 80,000 claims have come in so far related to Milton, and it is expected to be able to pay them all without having to impose assessments on non-citizen policyholders.
DeSantis’ office said Wednesday that while Citizens will always have the ability to pay claims “this comes at the expense of all Florida policyholders.”
Citizens had more than 1.2 million policies in force as of June, according to data from the Florida Office of Insurance Regulation (FLOIR), up from about 1.14 million policies at the end of 2022.
“We could see a scenario where citizens once again have to adopt a lot of policies,” said Chai Gohil, global insurance analyst at Neuberger Berman Investment Management.
Insurance concerns
The storms, respectively, intensified concerns about rising prices.
“I think the hope for a softer market has just disappeared after Helen and Milton,” Orion180 founder and CEO Ken Gregg told Reuters in a written statement. Greg added that Milton will have an impact on the reinsurance market next season “in terms of capacity and pricing.”
Brian Schneider, senior director of insurance at Fitch Ratings, said higher rates by reinsurers are prompting “a lot of core insurers, especially on the commercial side, to increase the rates they charge for real estate businesses.”
The Florida insurance market consists of a mix of major players, new entrants, and nationals.
In addition, a number of insurance companies, including Orion180 Insurance, are taking existing insurance policies from citizens in the “Depopulation Program” to transfer policyholders to private insurance companies. Citizens spokesman Michael Peltier said it aims to reduce its policies in place to less than 1 million by the end of 2024.
Despite the severe storms, a number of private insurers said they remained committed to the market.
The largest include State Farm Florida Insurance and Universal Property & Casualty Insurance, according to the Florida Office of Insurance Regulation (FLOIR).
“State Farm plans to continue our presence in the Florida insurance market,” a company spokesperson told Reuters.
Arash Soleimani, chief strategy officer at Universal Property & Casualty Insurance, said the company is “deeply committed” to Florida. “Nothing has happened this year outside of our typical expectations.”
Security First Insurance, a Florida-focused insurer, said it remains committed to the market.
“Another hurricane like Milton for Security First will be an earnings event, not a capital event,” CEO Luke Burt told Reuters.
Of those that withdrew, many retained some exposure.
Progressive began reducing exposure in mid-2022 to focus on states with less exposure to disasters, though a Progressive spokesman said it continues to write real estate business in the state.
In 2023, Farmers Insurance exited its own-brand coverage in the state. A Farmers spokesman said it continues to serve customers through its Bristol West and Foremost brands.
Travelers have avoided underwriting in Florida because of the risks associated with the weather there, Michael Klein, head of personal insurance at Travelers, said on an April earnings call. The company did not respond to a request for comment.
“I think that while Milton and Helen are competing hard in the state of Florida, the larger insurers are in a great position to pay claims,” said Michael Carlson, president and CEO of the Florida Personal Insurance Association, which represents Florida’s personal insurers. The insurance companies are large in the state and do not see the big players leaving.
However, concerns are growing for homeowners.
“The reality is we may have to leave our home that we’ve lived in for 35 years,” said Sherri Hansen, who lives in the Florida Keys. “All our eggs are in this one basket.”
(Additional reporting by Matt Tracy in Washington and Michelle Conlin in New York; Editing by Megan Davis and David Gregorio)