Insurance rates lead to major softening of Florida Real Estate market

I love FL but anything coastal is becoming unsustainable from an insurance standpoint.

20% of homes are already self insured and owners are seeing increases YOY of 40% with some condos getting 100% increases. The lack of underwriters added to interest rate hikes are going to make it a cash only real estate economy and that’s just not sustainable in the face of prices doubling or more since Covid.

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when the insurance industry continues to run amok

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It’s not the insurers, they would love to write policies on those expensive properties, the issue is the underwriters have left the space.

State Farm isn’t really an insurance company, they’re a marketing firm that resells policies to underwriters who hold most of the risk in return for a percentage of the policy. If the underwriters exit their business model doesn’t work and you’re left with small time insurers who write without underwriting for a much higher rate and who face much higher risk of failure because their risk pool is much smaller and more locally focused.

The out of control litigious situation has to be addressed to make the market more appealing, then the claims process needs to be fixed so owners don’t get screwed when claims are filed and all of that will require the legislature to get involved asap before the bottom drops out.

And yes, some properties that are in flood or risk zones will need to be remediated to lower the risk of catastrophic claims. For example a house built to S FL wind codes can basically get hit by a small tornado and be fine while a poorly built home would be a total loss from the same storm.

Think we end up seeing only houses with metal roofs, hurricane brackets and a lot more concrete first floors near the coast. I mean you go to NC/SC and coastal homes are on pilings whereas in FL you see 1 story ranch houses from the 70s right on the water with asphalt shingles. Any sort of surge or wind and they’re a total loss.

Every company buys reinsurance on their risks. To say SF isn’t an insurance company is the silliest shite I’ve heard in a long time. We just reported a 13.4 Billion dollar underwriting loss for 2023. After Hurricane Andrew, State Farm started a separate entity in Florida called State Farm Florida for all fire policies. We 100% underwrite all of our risks.

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The out of control litigious situation has to be addressed to make the market more appealing, then the claims process needs to be fixed so owners don’t get screwed when claims are filed and all of that will require the legislature to get involved asap before the bottom drops out.

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This is the biggest issue facing Florida.

The problem is claims against insurance companies for frivolous reasons in Florida is like the auto insurance industry in Louisiana.

Stucco is cracked? They will sue everyone from the yard man to the guy who painted the inside. It's out of control. They also have a 10 year SOL (recently reduced to 7). So up to three to four carriers being placed on notice is not uncommon.

Source: Handle claims in Florida.

You’re spot on.

Source: I’m a SF agent in Florida on the coast

Between my yearly increase for Insurance and Property taxes could not imagine living in Fl. if my Mortgage rate was 6% or higher. This is getting ridiculous.

The very old surviving houses in Daytona on the peninsula were all classic Spanish style made of stucco with smallish windows and recessed roofs. Very resistant to wind damage.