Another big rate hike for Florida homeowners?

Another potential rate hike awaits Florida homeowners with yet another insurer filing a proposal to increase its prices.

Cypress Property & Casualty Insurance Company, based in Jacksonville, Florida, is the latest insurer in the state to propose a rate increase. According to a filing, the Office of Insurance Regulation has scheduled a public hearing for April 3 at 2:30pm to discuss the company’s request.

The insurer is seeking to implement an 18.7% rate hike statewide on its Homeowners Multi-Peril for Condo Owners (HO-6) policies. This adjustment, if approved, would be applicable to both new and existing renewal business going back to September 9, 2023, and is expected to impact approximately 7,300 current policyholders.

The rate increase proposal was highlighted in a newsletter by Lisa Miller, a former Deputy Insurance Commissioner. The notice indicated that this “use-and-file” submission aims to adjust premiums for thousands of Floridians who rely on Cypress for their condominium insurance coverage.

According to its filings with the regulator, Cypress Property & Casualty Insurance Company also filed a document for a rate increase at the end of February, although that one was towards property/personal (dwelling fire) policies.

A mixed bag for the state

Homeowners’ insurance rate increases in Florida present a mixed bag of implications for policyholders and the insurance market.

On the positive side, higher rates can lead to a more stable insurance market, ensuring that companies have sufficient reserves to cover claims, especially in a state prone to hurricanes and other natural disasters. This financial stability is crucial for the long-term viability of insurers and can prevent sudden market exits that leave homeowners scrambling for coverage.

A recent report revealed that Florida insurers finally made money in 2023, a first in the last seven years; although this was mostly attributed to investment income and a mild hurricane season, a healthy rate environment cannot be understated.

On the downside, these increases place a heavier financial burden on homeowners, particularly affecting those on fixed incomes or facing economic hardships. The additional costs can strain household budgets and make homeownership less affordable, potentially leading to higher rates of underinsurance or forcing some to forego coverage altogether, increasing their vulnerability to financial ruin in the event of a disaster.

In particular, Progressive-backed homeowners have started to feel the heat, as the insurer’s non-renewal notices have started arriving on doorsteps. There is, however, some good news, as several other carriers – including the state’s insurer of last resort – have announced that they will be picking up the slack.

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