BY ALEJANDRO DE LA GARZA
GOOD QUESTION
IN FLORIDA, IT WON’T BE JUST THOSE with homes and businesses hit by Hurricane Idalia who might be stuck picking up the pieces. Thanks to a broken home-insurance market, a particularly bad hurricane could spread financial fallout throughout the state, leaving residents from Pensacola to Key West paying repair bills for years.
Beset by hurricanes made more severe and more frequent by climate change, as well as rampant fraud and tides of frivolous lawsuits, dozens of insurers in the state have closed up shop or stopped selling new home-insurance policies in recent years (Farmers became the most recent big insurer to pull out of the state in July). Residents have increasingly turned to Citizens Property Insurance Corporation, a public entity established by the Florida government as the state’s so-called insurer of last resort for people unable to find affordable rates from private insurers. But for many, Citizens is becoming the first and only option, especially for those with coastal homes at particular risk from hurricanes. In 2019, Citizens had about 400,000 home-insurance policies on its books; today, it has more than 1.3 million, about twice as many as the state’s next-largest insurer.
With so many homeowners using Citizens policies, each hurricane season becomes a financial roll of the dice for almost every Floridian. When a normal insurance company takes big losses, it goes bankrupt. But if hurricane winds destroy too many homes covered by Citizens policies and the insurer faces bigger bills than it can afford to pay, the public company won’t go belly up. Instead, such an event can trigger what is known as an “assessment,” wherein state law mandates that Citizens imposes fees on private insurance policies across the state in order to cover its payouts. And it’s not just property-insurance policyholders that may have to pull out the checkbook. If you live in Florida and have auto insurance, but can’t afford to own a home, you can still be stuck contributing to funds that pay for homeowners to rebuild after a big storm. “We have many low-income households that are literally living paycheck to paycheck,” says Mark Friedlander, a spokesperson for the Insurance Information Institute, a trade group. ��
