As Florida recovers from Hurricane Idalia, Fitch Ratings this week warned about the long-term effects of property insurance problems in Florida and California.
“Rising premiums and reduced availability of homeowners’ property insurance could drag on housing markets, development activity, overall economic growth and ultimately tax bases for certain California and Florida local governments over time,” the ratings agency said in a post Tuesday on its website. “Insurers are re-evaluating their exposures to geographic areas with elevated catastrophe risk as they face greater losses and higher building and reinsurance costs. Insurance plays a key role in securing mortgages and enabling rebuilding following natural disasters.”
Fitch said Florida has the highest homeowners’ insurance premiums in the country and pointed to pullbacks of firms such as Farmers Insurance in Florida and California.
It also cited massive growth at Florida’s Citizens Property Insurance Corp. which was created as an insurer of last resort but now has nearly 1.4 million policies.
“Recovery following natural disasters may be delayed or incomplete if there are greater numbers of those who are under-insured or uninsured due to affordability or non-renewal issues,” Fitch said. “High-risk areas could be left with a smaller tax base if hurricane or wildfire damage leads to permanent relocations, or if these areas find it difficult to attract new residents. Fitch has not observed these effects playing out to date, as insurance is one of many factors in home purchase decisions. However, pressures on housing demand could be amplified with increasing natural disasters and insurance markets in which the insurers of last resort are costly or impose higher assessments to cover increased claims.”
Florida lawmakers in December passed a series of changes to try to shore up the insurance market, including taking steps to limit lawsuits against property insurers.
©2023 The News Service of Florida
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