Palm Beach Daily News – Opinion
Anti-woke distractions leave Florida property insurance crisis unrepaired | Opinion
Bruce Anderson – July 21, 2023
Farmers Insurance this month announced it would depart the Florida market with all its proprietary products – no new housing contracts, and no renewals for things like auto insurance. Pulling up stakes. Getting out.
While the Florida governing apparatus grappled with inapt hogwash, an actual crisis of critical impact was creeping from the shadows — despite the Legislature’s two-year policy of aggressively whistling past this particular graveyard.
The housing insurance rate in Florida is four times the national average, and the national average is higher than ever.
The problem has its roots in several ugly places – several likely out of the direct control of lawmakers. The reinsurance folks, who indemnify the insurers, have jacked up their rates in Florida by as much as 30%. They lost money here over the past 4-5 years and are looking to repair their profit margins. So, as costs to insurers rise, they are passed on to customers. Additionally, the hurricane seasons of the past few years have been brutal. The loss of life and property has risen and climate change, altered coastlines, beach erosion and failing breakwaters have contributed, as well.
More: Editorial: Badmouthing Farmers is not a fix for Florida’s property insurance crisis
All this damage comes with a gargantuan price tag. The cost of simply fixing things has risen – whether it be lines of roof tiles or an entire apartment block falling into the sea. That damage is covered by insurance – we hope – and the insurance folks pay out. And pay out. Squeezed between reinsurers and the insured, they raise premiums to preposterous levels until finally the roof caves in. They are, after all, in business and business demands a profit, and the profits the insurance folks are used to making are pretty astronomical.
There is an interconnectedness to all this, too. No housing insurance, no loans; no loans, no new moderate income or middle-class homeowners. No homeowners, no loans, and banking profits spin for the floor. It begins to look like a negative reversal of the housing “bubble” of 2007, which was driven by banks loaning too much on housing, whatever the risks.
Now, home loans are drying up because they cannot insure them. There’s a ripple effect spreading out into truly damaging areas. Middle management in businesses is often peopled by folks recruited out of college, and they have to have a place to live. When a potential employee is offered a job here, the appeal is high but unless the employer wants to take on the additional housing costs, the potential employee is likely to look elsewhere.
More: Does your Florida county rank in the most expensive home insurance premiums?
The cost of simply employing people in Florida could theoretically go through the uninsured roof. And the folks that are already here? Wages cannot keep pace with the rising costs. Moving from Florida is not popular, but it could become so, if the cost of living continues to soar.
Another oddity is the backwash from one thing the Legislature did do, although not with the intent of affecting the insurance world. The new immigration bill is causing what appears to be an ever-growing flood of immigrant workers out of the state or an increasing hesitancy to come at all. This has immediate implications on the construction labor market, much of which comes from immigrant labor. As it dries up, and as wages rise to attract scarce labor, the price of rebuilding goes higher each day.
I’d love to have a fistful of answers to this but I don’t. What we do know is, as long as the governing and policymaking end of government here in Florida is laser-focused on banning books and drag queens, we’re not going to find them.