Inside Florida’s property insurance crisis

The Florida property insurance market is in trouble.

“For the last two years, the private companies operating in Florida have had a combined negative net income of $1 billion. So, the market is fundamentally shutting down.”

It’s bad for homeowners too.

“Consumers are on life support right now. They are … paying more money for less coverage.”

When a market craters like that, something fundamental has gone wrong. In Florida, it comes down to one thing: litigation.

“Florida has 8% of the claims and 79% of the litigation, so there’s something very, very wrong with that.

“And I don’t think anyone logically could explain that kind of differential other than the statutes in Florida being abused.”

Today, On Point: Florida’s property insurance meltdown. Can it be fixed?


Mark Friedlander, director of corporate communications at the Insurance Information Institute, a non-partisan nonprofit. (@markfri09)

Jeff Brandes, Republican Florida state senator since 2012. Author of Senator Jeff Brandes Calls for Special Session on Insurance.  (@JeffreyBrandes)

Also Featured

Mandy Wells, a homeowner in Cape Coral, FL

Joe Carlucci, co-owner of Brightway Insurance, an insurance agency in Jacksonville, Florida.

Transcript: One Florida Homeowner On Florida’s Property Insurance Meltdown

MANDY WELLS: Cape Coral’s like copy-paste. It’s like the builders just went and built the same house over and over again.

MEGHNA CHAKRABARTI: Mandy Wells, her husband and her son, moved to Cape Coral, Florida in 2017, and they live in one of those copy-paste homes. The three bedroom, two bath, 1,600 square foot house was modern and in great condition until October 2019, when Mandy noticed that the roof was leaking. Not good.

Mandy had remembered, though, seeing a roofing ad on Facebook. It was from Fort Myers based Marlin Construction Group, and their website says they’re licensed and insured and a red banner across the top of the home, page says at Marlin Construction Group, your satisfaction is our No. 1 priority. So Mandy called them up.

WELLS: He comes over. He has me sign a document called a proposal contract. And then he also writes on the back of my direct to pay authorization that I have a leak in the front. He tells me a storm date, which is different than the date that we’re meeting on and even different than the date that I had seen the water.

And he tells me, Oh, this is from high winds. Everything is like high winds down here. So and then he sits down next to me at the computer and assists me in filing an insurance claim.

CHAKRABARTI: By the way, the contractor hadn’t even been up on the roof to inspect it, but he puts down December 20th, 2018, on the paperwork, the very same day that severe weather and wind did hit Florida. But that happened to be more than a year before Mandy had any roof issues.

And by the way, the proposal contract, which Mandy provided to us, has both an Angie’s List logo and a Better Business Bureau A-plus rating logo in the upper right hand corner. But Mandy, of course, wasn’t feeling like she was getting that A-plus service. So she spends the next several weeks going back and forth with this company, trying to sort it all out.

WELLS: And this company never came back to do the work. They tried to leverage this document into getting me to sign a power of attorney, and assignment of benefits. This one not until February of 2020, when I asked them just to cancel my file. No work had been done on my home. The company’s never even been on my roof. My home had been taking on water that entire time.

CHAKRABARTI: Assignment of benefits, also known as AOB. It’s very common in property insurance lawsuits in Florida. And here’s how it works. A contractor or attorney has the homeowner sign over their property insurance policy to them. So that any money collected in an insurance claim goes directly to the attorney or contractor, not the policyholder. It’s common and it’s legal. But here comes your plot twist.

In Florida, lawyers often sue insurance companies for much more than the actual repair costs. And because of that AOB, they get to collect the extra cash. In fact, since 2013, insurance companies made $15 billion in payouts in Florida, but less than 10% of that went to policyholders. More than 70% of it went to attorneys. What’s more, the Sunshine State is a standout nationwide. More than 75%, three quarters of all property insurance litigation in the entire country originates in Florida.

WELLS: The construction firms are being aided by attorneys and they’re tying everybody up in litigation. I can promise you that the homeowner has no idea what they’re getting into. They think, you know, this is the path to, you know, I’m going to save my home. I’m going to have a healthy place to live. You know, I have mold in my house now. I have water stains on my ceilings.

CHAKRABARTI: That’s Mandy Wells in Cape Coral again. It’s taken more than two years of legal battles with Marlin Construction Group and her insurance company. But Mandy will finally get her roof fixed in a few weeks. Meanwhile, her insurance premium has gone up. A lot.

WELLS: It went up from $800 a year to $2,700 a year.

CHAKRABARTI: More than tripled since 2017. All the while, Mandy’s coverage has gone down. And on top of that, her current insurance sent her a non-renewal letter for this coming year, meaning she’s got to find a new policy by next month.

WELLS: Before, I maybe had, like three or four companies to choose from. There was one company to choose from. That was it. But, you know, it’s just like paying for gas. You just put your card in the machine and you just look away and you just do it, you know? So … the sting is over.

CHAKRABARTI: But if insurance premiums keep rising the way they are, Mandy doesn’t know how much longer she can withstand that sting.

WELLS: If it’s going to triple for every couple of years, I mean, we’re basically almost single income household. Because I am a stay at home mom with my special needs son that I do homeschool. We would have to consider making some kind of change.

I don’t know how much longer we could even afford to stay in the house. I guess maybe I’m just fixing up the house for someone else to move into. It’s just incredible. It’s incredible what’s happening. It’s incredible that Tallahassee can’t do more for homeowners because we’re the ones that are. … We’re losing. We’re losing.

Transcript: How Insurance Brokers Are Impacted By Florida’s Property Insurance Crisis

MEGHNA CHAKRABARTI: Joe Carlucci and his brother Matt own Brightway Insurance, a brokerage in Jacksonville. And they opened in 2013 and have weathered some ups and downs in the market. But they’ve never seen anything like this.

JOE CARLUCCI: We’ve never seen just the catastrophic event like it is right now. I mean, we’re getting hundreds of phone calls and emails about rate increases, non-renewals, companies going out of business. So it’s really just kind of a scramble to try to keep people covered.

CHAKRABARTI: I talked about those doubling and tripling premiums, but the biggest issue, Joe says, is finding insurers who are even willing now to take on new customers.

CARLUCCI: We’re seeing a lot of strict guidelines like we won’t take a roof that’s over ten years old. That’s almost becoming the norm. And it used to be 20. So that’s crazy. That’s really hard for people to replace a roof that’s ten years old and it’s perfectly fine.

CHAKRABARTI: And Joe told us that some companies won’t insure customers whose homes were built before 2010, which, as you can imagine, eliminates many homeowners. And as a result, Joe has few options for people, making his job very hard.

CARLUCCI: Whereas three years ago we were giving people like three or four options. We’re like, Hey, Company A is $1,000 bucks a year, company B is $1,500, but there are a little bit of a better company. You know, people want to see kind of what the options are. And right now there’s just like no options. It’s like, hey, here’s your policy, here’s your quote that you have to have ultimately.

CHAKRABARTI: So what this means is that many people end up going to one other place. Because brokers like Joe Carlucci can’t find them an affordable policy. And that place is Florida’s state run insurance company. So here’s Barry Gilway, the CEO and president of Citizens Property Insurance Corporation, the state run insurance option.

BARRY GILWAY: I would say very, very few additional companies are writing business. And, you know, we’re the only place for those insurers to go. We are, frankly, for those insurers, we are really the last resort, but we are becoming the only resort.

CHAKRABARTI: Well, for Joe Carlucci and other insurance brokers like him, though, for everyone that goes to Citizens Property Insurance, that means he loses out on commission.

CARLUCCI: It’s not really benefiting the agents. It’s not really benefiting customers. It’s not really benefiting insurance companies. So, you know, I mean, I guess the people that are getting paid on the claims. So I think, you know, roofers are definitely making a solid living right now.