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We knew it would be bad, but …OUCH

December 15, 2022
By Marcy Shortuse

In some cases, insurance premiums are up 400 percent on island homes for fiscal year 2022-23 

Everyone has been aware of the unavoidable insurance premium increase that would come after Hurricane Ian, but one Gasparilla Island couple was so flummoxed by their recent renewal premium, they see this as a game changer for many residents island-wide.

Josiah and Liz Hatch recently moved from the Cape Cod area of Massachusetts to Gasparilla Island’s north end and couldn’t wait to live here. For a year prior they had rented the house to the former owner. Just last month they moved into the house, after finding out that Ian had spared their home completely. They were relieved beyond measure about the fact they had to file no claims with their insurance company.

When they saw the former owner’s insurance policy, issued through Lexington Insurance Company, they saw a $12,000 premium on the policy. Josiah said when the former owners moved out he tried to go with Lexington but they wouldn’t insure it. Instead, the Hatch’s went with Lloyd’s of London/Orchid. That premium was $16,000. 

When they recently received their policy renewal letter for next year, they found their premium had jumped to $60,000. And they had to pay it in the next few weeks.

That’s a 400 percent increase. 

“Florida’s got an issue,” Josiah said.

Liz agreed, calling it out for what it is – price gouging.

“They are taking advantage of this,” she said. “This is a game changer for the entire island. The amount of the increase in the premium … that’s the price of a down payment on a house – $60,000. If people haven’t gotten their insurance bills yet, it will make an incredible impact on them.”

Liz urged everyone to call their insurance companies and find out what next year’s premium will be – don’t wait until the bill comes. She also plans on writing to Gov. Ron DeSantis. 

“I’m hoping that Gov. DeSantis can do something about this,” she said.

This week DeSantis is part of a legislative session that will consider some big changes in the state’s property insurance laws. There are several factors that will be discussed, including more prompt and fair payment for claims, as well as a way to create more options for homeowners to pay a reasonable amount for coverage.

“The goal we all share is for Florida to have a robust property insurance market that offers homeowners the opportunity to shop for insurance that meets their needs and budget,” said Florida Senate President Kathleen Passidomo, writing in regard to the filing of legislation HB 1A and SB 2A. These bills were written to – in a nutshell – reduce the time that homeowners can file new or re-open claims, shorten times for insurance payments, require insurance companies to begin their claim investigation within a week of the occurrence and creates something called the Florida Optional Reinsurance Assistance Program. That program, called FORA, would allow insurance companies to purchase reasonably priced reinsurance with monies from Florida’s general revenue fund and from premiums.

Two big items addressed include the prohibition of assignment of benefits and the elimination of the option for one-way attorney fees (which insurers have to pay if they lose in court).

There are more parts to both bills. Links to both are below. 

Between 2020 and 2022 more than a dozen insurance companies have been declared insolvent, with six falling under this year. One company FedNat, finalized their liquidation the day before Hurricane Ian hit Southwest Florida. FedNat canceled more than 540,000 in May and transferred 83,000 policies to other companies, such as Monarch Insurance, in June. In September, FedNat finally admitted they had “overstated their cash position” and could not meet their obligations. This past Monday they declared Chapter 11 bankruptcy.

More than 30 insurance companies are currently on the Florida Office of Insurance Regulation’s watch list. Of those, at least 17 have been downgraded in their rating, meaning their financial health is poor.

“We need change to happen,” Liz said. “Many people here self insure, and this increase will most likely spur property owners to make that hard decision. But at some point we won’t be able to live here. Right now we’re wondering, did we make a mistake?”