Florida Insurance Companies Propose Over 50 Percent Rate Rises

Two private home insurance companies operating in Florida are proposing to raise their rates by over 50 percent, a move that could bring even higher premiums for homeowners in the state, who are already paying for the most expensive coverage in the entire country.

The two insurers are Castle Key—a subsidiary of Allstate—and Amica Mutual Insurance, which are trying to increase their rates by 53 percent or 54 percent, as reported by local broadcaster Bay News 9.

In a statement to Newsweek, Allstate said: "The cost of providing reliable protection for Florida homeowners has risen dramatically, and we're taking actions to ensure we can protect customers over the long haul. We're committed to the state of Florida and confident recent insurance reforms will address longstanding challenges in the state."

Allstate added that the rate increase was filed with the Florida Office of Insurance Regulation nearly a year ago and began rolling out to customers in May 2023, with a majority of customers having already experienced this increase.

Amica told Newsweek in a written statement that the company "is requesting this rate increase on our dwelling policy line of business, which are policies that often cover secondary residences or rental properties. This rate change specifically does not apply to standard home policies.

"The rate increase is necessary to restore pricing adequacy for this product. Amica remains committed to providing excellent products and services to our customers at competitive rates." Amica's rate hike request is yet to be implemented, the company said.

Floridians are currently paying $4,218 a year on average in home insurance costs, according to Insurance.com. The national average is $2,777. Others, including CNN and Fox 13, have reported Florida's home premiums to be even higher, for an average of $6,000 a year.

According to the Insurance Information Institute, or Triple I, premiums have risen by a staggering 102 percent in the past three years. These hikes can be traced to a combination of factors, including inflation, excess litigation in Florida, fraud and the increased risk of more frequent and more severe extreme weather events due to climate change.

This, in turn, has led to dozens of private insurers in recent years leaving Florida or cutting some policies in the state, including major companies like AAA and Farmers Insurance. Many fear they will have to pay more in damage claims in the future than they're able to take in in new policies.

The exodus of private insurers has forced many Floridians to seek coverage with the state's insurer of last resort, Citizens Property Insurance, which saw its number of policies ballooning in the past three years. This sudden growth of Citizens has raised concerns among lawmakers over the state-backed insurer's ability to pay claims.

Citizens has recently announced that it plans to offload hundreds of thousands of policies to private insurers through 2024, as Florida approved six new private insurers to enter the state's market.

In a previous interview with Newsweek, David T. Russell, professor of insurance and finance at California State University, Northridge (CSUN), said that homeowners in states like Florida and California—which is also experiencing its own insurance crisis—are stuck in a lose-lose situation.

"A lot of people are very frustrated because either their premiums are going up or they're unable to get insurance at all or they have to seek it through, let's call it, a side market that is much more expensive," he said.

Reforms to stabilize these state's insurance markets, according to Russell, "will cost more for consumers or change the way certain claims are handled."

Update 2/13/24, 11:15 a.m. ET: This article was updated to include a comment from Allstate.

Update, 2/14/24 11 a.m. ET: This article was updated to include further background information from Allstate.

Update, 2/19/24 7:09 a.m. ET: This article was updated to include comment from Amica.