Home insurance costs in Florida spiked in third quarter. Are more increases on the way?

Those stabilized home insurance costs that industry leaders and state insurance regulators touted over most of 2024?

It looks like premiums might be heading up again.

That’s what a South Florida Sun Sentinel analysis of insurance market share data from the third quarter of 2024 shows.

The statewide average premium paid for an all-perils single-family home policy in Florida increased by 3.1% between the second and third quarters, the data shows. That follows two straight quarters that saw increases of 1.3%, a reduced rate that experts attributed to a decrease in lawsuits, a mild 2023 hurricane season and lower hikes in the cost of reinsurance.

In 2022, Florida’s Legislature required that insurers release the statewide data to the public as part of a series of insurance reforms that imposed restrictions on what insurers described as runaway litigation. Prior to the mid-2010s, county-level data was publicly available through the Office of Insurance Regulation until State Farm Florida won a lawsuit that sought to shield it as a “trade secret.”

Most other insurers followed suit and blocked their data as well. The newly required data, also released by the Office of Insurance Regulation, provides the ability to calculate statewide average premiums that don’t reflect the higher costs of covering homes in South Florida, or the lower costs of covering homes in the Panhandle and rural parts of the state.

The average premium to cover a single-family house in Florida was $3,668 in the third quarter, up from $3,558 in the second quarter and $2,798 in the second quarter of 2022, when the first statewide report was released. The average premium has increased by 31% since that first report.

The two quarters with premium increases of just 1.3% could mark a bottoming of rate hikes following increases ranging from 2.6% to 4.8% over the previous six quarters.

Inflation, reinsurance prices are key to coming year

It's uncertain whether the 3.1% spike noted in the third-quarter data released in December foretells a new upward trend that homeowners will face in 2025, says Paul Handerhan, president of the consumer-focused Federal Association for Insurance Reform.

"Looking at changes from quarter to quarter isn't really a long enough time horizon to pinpoint a long-term trend," Handerhan said in a recent interview.

He suggested looking at another factor revealed in the data — the cost to insure each $1,000 of value. That figure rose from $5.10 to $5.15 — or less than 1% — between the first and second quarters. "If you track that, it's really not going up very much," he said.

The lower cost-per-thousand increase likely means that the higher premium hike was driven by rising home prices, and continued increases in costs of building materials and labor, he said. "Probably two-thirds of (the 3.1%) increase is due to inflation," he said.

Home prices aren't the only factor that affects the total insured value. All-perils policies also factor in coverage of the home's contents and the potential of a visitor to a covered property filing a claim to cover an injury from a incident such as a falling tree branch, a slip on the patio or an animal mishap.

The cost of potential claims from such incidents are factored into the insured value that carriers report to the state. And the average insured value can be learned by dividing the total insured value by the number of policies reported. During the third quarter, the average insured value covered by all-perils homeowner policies rose by 2.3%, from $697,034 to $712,757.

Stacey Giulianti, chief legal officer at Boca Raton-based Florida Peninsula, took issue with calling a 3.1% increase a "spike."

"That seems a little exaggerated, no?" he asked. He concurred with Handerhan that "inflation is still an issue, and post-storms you have demand surge, and prices increase." In addition, policies have an inflation-guard mechanism that increases building coverage to account for rising costs to rebuild, he said.

Whether premiums are on a new upward swing will depend on several factors, Handerhan said, including what happens to the costs of building materials and labor over the coming year. Demand in regions of the Gulf Coast rebuilding from damage by hurricanes Milton and Helene last year are keeping those costs high, he said.

Other potential price drivers include the amount of reinsurance that insurance companies must buy to cover all claims after disasters. Officials in charge of Florida's Hurricane Catastrophe Fund, created to provide an extra layer of reinsurance, continue to annually raise the deductible that insurers must meet before they can tap the fund. That increases the amount of private reinsurance they must buy, directly impacting premiums, says Handerhan, who has for several years unsuccessfully tried to convince the Legislature that reducing the deductible would save money for insurance customers.

Good news for condo owners

The third-quarter report contains some good news for condominium owners. The average cost to cover a condo unit in Florida increased by just 1.3% for the second straight quarter — to $1,737 — after rising as high as 5.9% between the first and second quarters of 2023.

The average cost of commercial coverage for condo associations, after doubling between the second quarters of 2022 and 2024, declined by 3% to $142,909 between the second and third quarters of 2024.

Changes in average premiums for all-perils coverage of single-family homes by insurers with at least 1,000 policies in the year ending on Sept. 30 ranged from an average 37.8% increase for Centauri Specialty policies to an average 6.6% decrease for customers of Nationwide Mutual.

Jacksonville-based Olympus Insurance saw its average premium swell by 23.2%, the second-largest increase for single-family home coverage among companies with at least 1,000 policies.

Olympus CEO Tim Stroble pointed out that the average insured value of his company's policies increased by 14.8% to $1.1 million over the same period. Taking that increase into account, the cost Olympus policyholders paid to cover $1,000 of insured value increased by just 7.3%, Stroble said.

The company also covers homes with values of up to $15 million, Stroble said, provides "white glove claim handling" and offers coverage items that some other companies restrict, including solar panels, wind-driven rain, wind coverage for screen enclosures and availability of coverage for homes up to 60 years old.

"Our policyholders recognize the Olympus value, gaining 21,000 new customers to serve in 2024," Stroble said.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at [email protected].

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