No escaping Florida’s climate-driven insurance crisis | Fred Grimm
"Homeowner insurance rates have always been about risks, vulnerabilities and the heft of insured losses from previous storms," writes columnist Fred Grimm. "But lately, climate change and the too-warm ocean waters that supercharge hurricanes have distorted the formula."
The hurricane writer’s favorite cliche no longer fits. The bullet can’t be dodged.
A few years ago, we’d say “How awful,” trying to not sound relieved when a major storm headed for South Florida jogs north and slams some other coastal community.
“I am so, so sorry for those folks,” we’d lament when another hurricane curls around the peninsula and batters a luckless town on the Gulf of Mexico. All the while our ugly inner voice whispers, “Better there than here. Better them than me.”
The media inevitably declares that Fort Lauderdale or Miami or West Palm Beach or Boca Raton has dodged the proverbial bullet. As if storm-devastated communities like Fort Myers Beach, Mexico Beach, Punta Gorda and the Big Bend had lacked the necessary nimbleness to avoid disaster. Photos of wrecked homes and wretched survivors evoke flickers of guilt, but nothing that a $50 donation to the Red Cross Disaster Relief Fund can’t assuage.
But nowadays, it doesn’t matter if a major hurricane makes landfall in Pensacola or Jacksonville or Tampa Bay or Miami. We all pay. A big blow anywhere in Florida exacerbates the state’s escalating insurance crisis. A storm that never darkened the skies over South Florida can jack-up local insurance rates as if the tempest had rolled down Las Olas Boulevard.
Homeowner insurance rates have always been about risks, vulnerabilities and the heft of insured losses from previous storms, but lately, climate change and the too-warm ocean waters that supercharge hurricanes have distorted the formula. Along with coastal overdevelopment that fairly guarantees that any major storm making landfall anywhere in Florida becomes a multi-billion-dollar disaster. The Insurance Information Institute estimates that 2,362,323 Florida homes are located in coastal areas that would be inundated by storm surge if a Category 4 hurricane roared ashore in their vicinity.
After five major hurricanes in the last seven years, the cost of insuring a home in our subtropical paradise has become so expensive that 13% of Florida homeowners either can’t or won’t purchase property insurance (compared to a national uninsured rate of 7%).
The Insurance Information Institute estimates that Florida homeowners pay an average annual insurance premium of $6,000, the most expensive in the country. But a study released this week compiled from historic data and “real time quotes” by Insurify, an insurance rate comparison service, found that Florida homeowners paid an average $10,996 a year — 4.6 times more than the national average.
The Insurify study noted that the six most expensive cities in the nation for procuring homeowners insurance were all on Florida’s southeast coast: Hialeah, Miami, Fort Lauderdale, Hollywood, West Palm Beach and Port St. Lucie. Insurify Vice President Betsy Stella warned that “a hurricane season from hell could pile crisis upon crisis.”
Separate forecasts from Colorado State University’s Department of Atmospheric Science and AccuWeather both indicated that a season from hell might be in the offing.
The Colorado State report released Thursday predicted “an extremely busy” 2024 hurricane season with 23 named tropical storms, including 11 hurricanes.
The AccuWeather forecast issued a week earlier forecast “an explosive season” with 20 to 25 named storms out of the Atlantic basin, including from eight to 10 hurricanes. AccuWeather predicted that four to seven major hurricanes will form in the Atlantic.
AccuWeather expects from four to six hurricanes will make landfall during the 2024 season, which usually translates into more misery for Florida. The data-crunchers at First Street Foundation, a national risk assessment nonprofit, reported that the 20 American cities most likely to be pummeled by a major hurricane are all in Florida.
The experts all warn that Florida’s insured losses in 2024 could be massive. “The financial solvency of all insurance companies will be tested,” warned Insurify’s Stella. Her assessment included Citizens, the state’s beleaguered insurer of last resort that Gov. Ron DeSantis described last month as “not solvent.”
DeSantis and Republican state legislators have pushed through a number of insurance reforms since 2021, including a revised tort law meant to limit costly lawsuits — with no discernible effect. The cost of homeowners insurance increased 42% last year, suggesting the problem was far bigger than a bunch of greedy litigators.
But the governor faces a dilemma of his own making. His contention that climate change isn’t worth his consideration conflicts with his constituents biggest problem — finding the thousands needed to insure their homes against superstorms fueled by global warming.
A single major hurricane crashing into the wrong place could utterly undo Florida’s home insurance industry. If Hurricane Ian could ruin $109 billion worth of property crossing over southwest Florida, imagine the insured losses if the storm had jogged just a degree or two north and pounded Tampa Bay’s three million residents with 155 mph winds and a 13-feet storm surge.
No dodging that bullet.
Fred Grimm, a longtime resident of Fort Lauderdale, has worked as a journalist in South Florida since 1976. Reach him by email at leogrimm@gmail.com or on Twitter: @grimm_fred.