The Jacksonville newspaper, the Florida Times Union takes a complete look in an article at the crisis of property insurance in the state. All it could take is for one major hurricane to hit a large metropolitan area, such as Miami, for the state to boost taxes on insurance policies and take out billions in debt as our state-backed insurance plans fall short.
Funding that kind of debt would be difficult, causing an increase in taxes on almost everything and a debt that could take years to repay. Some even predict bankruptcy from a major hurricane.
A little background – The reinsurance market prices have skyrocketed by 75 percent in recent years following the more damaging storms of 2004 and 2005. When that happened in 2006, private companies passed that onto their customers.
State Farm Florida says it is leaving the state because the insurance commissioner says it can’t raise its rates 47 percent. Gov. Charlie Crist said ‘good riddance.’
If State Farm leaves, it would force nearly one million policy holders into new insurance carriers including Citizens, the state insurance plan that at the present time could be strapped if it had to pay out millions. Citizens is the largest insurer in the state with State Farm Florida being second. State Farm is trying to stay, and by eliminating discounts to some customers, it boosted rates an average of 28.4 percent.
As we all know, competition is good for consumers, giving them choice and lower prices. One of the best solutions proposed by Rep. Ron Klein may be a national Florida Hurricane Catastrophe Fund. Each state would buy coverage and agree to pay some in damages, spreading out the risk, which is how insurance works best.
Part of the problem is Floridians. The growth of valuable Florida coastal property is now estimated at $2 trillion, making Florida a high-risk area in a high-risk state. The hurricane season goes from June through October. Let’s keep our fingers crossed again this year.
If you believe that your insurance company is not fulfilling legal obligations under your policy, the skilled Florida hurricane insurance dispute attorneys at Farah and Farah can help you receive the compensation that you and your family deserve. Contact Farah and Farah today for a free consultation.