Hurricane Debby fades, but Florida’s hellish insurance crisis doesn’t

As working- and middle-class Floridians struggle to afford housing and insurance and rebuild after disaster, the DeSantis administration has further showered the insurance industry with gifts and appointments while shifting much of the blame for the state’s growing crisis onto its customers. A report last year by the American Federation of Teachers, Hedge Clippers, Florida Rising and the Center for Popular Democracy found that insurance industry donors gave DeSantis and his political action committee, Friend of Ron DeSantis, $3.9 million between 2018 and 2022. Those contributions included “more than $150,000 in one day from dozens of State Farm agents,” the report noted. “Including their donations to the Florida Republican Party since January 1, 2019 (days before DeSantis was sworn in), the insurance industry’s campaign money swells to more than $9.9 million,” the report adds.

Florida’s insurance market problems have reached new heights during DeSantis’ tenure, but they are not entirely new. Major insurers began fleeing the state after Hurricane Andrew in 1992, when many of their competitors went bankrupt due to historic losses. The costly storm seasons of 2017 and 2022 also saw more than a dozen other companies, like Farmers Insurance, pull out of the state. In their place, encouraged by generous state incentives, smaller and sometimes shadier insurers have emerged, often concentrated in Florida and heavily reliant on reinsurance, which itself is becoming much more expensive, complex and speculative. The state’s population has also continued to grow, including in the risky and affluent areas of Florida’s South Coast. This means there are more properties exposed to worsening damage and greater concentrations of risk for insurers who may be less equipped to deal with it.

Between 2021 and 2022, seven Florida property insurers filed for bankruptcy, leaving their policyholders with unpaid claims, little recourse and huge bills. The bankruptcies may be somewhat surprising given that all of the companies had received “A” ratings from an Ohio-based company called Demotech Inc., a rating agency that is supposed to serve as an alternative to Standard & Poor’s and AM Best, which often refuse to rate new Florida insurers.