Florida Market Update

Citizens Insurance company is commonly positioned as offering the “home insurance policy of last resort” in Florida.  Premiums can appear competitive; however, policy benefits are limited and limits are often inadequate in the event of a loss.  As an example, common losses such as water back-up claims are excluded and personal injury limits are capped at $100,000 – creating coverage gaps when combined with most personal liability umbrella policies.  

Also, Citizens has the right to assess their policyholders in the event of a catastrophe.  This assessment can be as much as 45% of the annual policy premium.  Finally, although backed by Florida taxpayers, Citizens financial stability is rated B++ by AM Best, noting that any insurance company with a rating of B or less is considered vulnerable.  

In spite of these unflattering attributes, Citizens Insurance is growing.  Here’s why…

As of March 30, 2022, there were at least nine Florida homeowner insurance companies declared insolvent since the beginning of the year – displacing over 500,000 Florida home insurance policy holders.   The cause of this crisis is not necessarily the weather.  Rather, it’s an indisputable man-made crisis…litigation.   

Over 75% of homeowner insurance claim lawsuits filed nationwide last year were filed in the state of Florida.  Many point to a Florida statute (SB 627.428), which requires insurance companies to pay plaintiff legal fees, as the primary driver of these lawsuits.  The Florida Legislature has planned a special session the week of May 23 to address this issue, but the problem is likely too complex to resolve in the near term.

Despite these difficult market conditions, appetite remains in the Florida homeowner insurance market amongst high-end, AM Best ‘A’ rated carriers, like Berkley One Chubb, Cincinnati Insurance, Nationwide Private Client, PURE and Vault Insurance.  These carriers offer “All Risk” homeowner policies which include:

  • Replacement cost on contents losses
  • No sub-limit for water back-up claims
  • High limits available for personal liability
  • “White-glove” claim service

This presents opportunity, specifically for owners of newly built, high-value homes, to perhaps upgrade their coverage.   

Headquartered in Chicago, BCU Risk Advisors is an independent insurance brokerage and consulting firm, serving ultra-high net worth families, Family Offices and Multi-Family Offices.  Founded in 2007, BCU is licensed in 50 U.S. States.