Florida Property Insurance Market Remains Challenging Despite Special Session

Southern Fidelity Insurance Company is the latest property insurer to shut down in Florida.

"Effective July 15, 2022, all Southern Fidelity policies are going to expire," said Mark Friedlander of the Insurance Information Institute.

This is the fourth insurer ordered into liquidation so far this year, leaving an estimated 78,000 policyholders in Florida scrambling to find new coverage in 30 days, just as hurricane season gets underway.

"Because the Florida property insurance market is so unstable right now, it's very difficult to find coverage for your home," Friedlander said.

That's why Friedlander says most of those impacted will likely end up with Citizens, the state-created insurer.

"They have already surpassed 900,000 policies in place as of June 30th," he said. "They have become the largest home insurer in the state of Florida."

Dulce Suarez-Resnick, a vice president at Acentria Insurance in Miami, says finding new coverage for clients has been especially challenging because there are fewer options available, even after recent changes passed by the state legislature.

"What we're stuck in right now is a perfect storm," Suarez-Resnick said. "Companies are not writing certain territories in Florida or are not writing in Florida at all."

She said she has seen one positive change since the special legislative session.

"We all started receiving notices that they are rescinding non-renewals based on the roof age," she said, giving homeowners the option and time to try to work things out.

"In the way it was working, you'd get the non-renewal and you're done," she said. "Now, the way it's working under the new law is OK, you're 15 years, you need to get the report done. You have five years or better, you're good. Next year, you have to worry about it."

Still, many Florida homeowners are still facing higher premiums when they renew their policies, with the Insurance Information Institute still expecting double-digit increase -- on average -- this year.  And if Florida gets hit with a major hurricane this season, the uncertainty in the property insurance market could get much worse, Friedlander said.

"We're very concerned," he said. "We have heard from numerous sources that there are a half dozen insurers that are on what we call the financial bubble, that it wouldn't take much to push them into a state of insolvency and that means perhaps just one significant hurricane event could push five to six insurers in the direction of receivership and insolvency."

If you were insured by Southern Fidelity and you are waiting for a premium refund, Suarez-Resnick said it could take a while for the money to arrive. She said they just started seeing premium refunds arrive for Avatar Property and Casualty Insurance, which was ordered liquidated back in March.