According to a report released by the National Association of Insurance Commissioners this past month, Florida tops the charts for the nation's highest homeowners insurance premiums. Upon review of the report, Florida's average premium almost doubles the national average. The Insurance Journal made note of this astounding fact:
A national report shows the average premium for most Florida homeowners is $1,933 a year, or nearly twice the national average of $978. (Gary Fineout, Insurance Journal)
The report shows that Florida's insurance rates have been steadily increasing over the past several years, even though the hurricane activity for the state has been decreasing since 2005.
So, why does the average insurance premium continually increase if the hurricane activity is in decline?
The reinsurance for the insurance companies has been increasing over the last several years, which causes insurance companies to increase premiums to compensate for the expense.
Simply put, insurance companies also need to buy insurance to financially protect the company in the event of a total state disaster. The companies that offer insurance to insurance companies are called reinsurance companies, and are largely located in the Cayman Islands. These reinsurance companies also insure insurance companies around the world. So, when the tsunamis hit Japan and Sandy hit the northeast, the reinsurance companies had to pay the insurance companies so that the insurance companies could pay the insureds' claims.
Do you see the cycle?
So, even though Florida has not had any hurricane activity in the past few years, the insurance companies are still increasing rates to compensate for the reinsurance rate increases. Reinsurance rates typically increase whenever there is an influx in natural disasters.
So, is there any light at the end of the tunnel?
Yes. Reinsurance rates are set to drop this year, and one of our homeowners companies has already approved a standard 5% rate DECREASE across the board. Hopefully, all other companies will follow suit and, over time, the Florida homeowners insurance average premium will decrease significantly.
Still have questions? Contact the agency and ask one of our agents. 813-689-8878 or firstname.lastname@example.org