As Florida still reels from the impacts of hurricanes Helene and Milton, residents statewide may end up footing the bill for property damages via their insurance policies.
What's happening?
As E&E News by Politico detailed, the aftermath of Hurricane Andrew, a Category 5 storm that pummeled Florida in 1992, led to the creation of a catastrophe fund the following year as private insurers began to stop offering policies in the Sunshine State — a practice still common today in areas deemed especially vulnerable to natural disasters like hurricanes and wildfires.
In May, prior to Helene and Milton, a state report estimated that the fund had around $7 billion in reserves. Meanwhile, Citizens Property Insurance Corporation, which facilitates the state insurance program, projected that it could cover around $14 billion in claims before imposing additional surcharges and assessments.
However, the corporation insures around $533 billion worth of property in the Sunshine State, and it relies on about $4.6 billion from the catastrophe fund. Ultimately, the need to pay out more than the system has available would result in higher insurance rates.
"Citizens is sitting on some of the riskiest policies in Florida," Harvard University assistant professor and insurance market researcher Ishita Sen told E&E News. "There is definitely a worry of whether or not they are going to be able to withstand the number of claims."
"The way the state has set it up [is] a necessary part of the system," added Appalachian State University professor and Florida insurance expert Lori Medders.
Why is this concerning?
The Sunshine State has the highest insurance rates in the United States, as E&E News noted, with skyrocketing costs leading to a potential housing crisis. Further pressure on homeowners' wallets could exacerbate or accelerate the issue — even as many are still in upheaval as a result of the latest storms.
Moreover, those with the desire or ability to move will likely not escape rising insurance rates. According to S&P Global data cited by The Conversation, premiums increased by 34% on average between 2017 and 2023, and the rise was apparent even in Midwestern states far from coastlines and the frequent wildfires in the West.
In part, insurers are raising premiums as they are increasingly wary of the costs associated with extreme weather events, which warmer global temperatures have supercharged.
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What can be done about rising insurance rates?
Building more climate-resilient structures could help reduce property damages — and thus the number of claims that insurance companies need to pay out. This year, the Federal Emergency Management Agency even went as far as to announce that anything built with its funds needed to be constructed to withstand flooding.
In order to bring the Earth back into balance, though, transitioning to less polluting fuels is critical, with more than 75% of planet-warming pollution coming from gas, oil, and coal.
Installing home solar systems or signing up for community solar can put your household on a cleaner path while also reducing utility bills, while using your purchasing power to support brands working toward more sustainable practices is one way to hold corporations accountable.
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