More than two-thirds of people in Sarasota live in a place they own. Insurance is a big chunk of the cost for homeowners, but they’re now facing the perfect financial storm.
By Nef Price
Original Air Date: July 12, 2023
Official Transcript
Johannes Werner: More than two-thirds of people in Sarasota live in a place they own. Insurance is a big chunk of the cost for homeowners, but they’re now facing the perfect financial storm. In the latest hit for the Florida market, Farmers Insurance announced on Friday that it will pull out of the state. Meanwhile, the state-owned insurer of last resort, Citizens Property Insurance, added 5,500 new clients just last week, and Citizens has asked state regulators to be allowed to raise rates by more than 27% over the next two years.
WSLR Reporter Nef Price talked to local homeowners and realtors, how that would affect them and how they feel about it.
Host: On June 8, the Florida Office of Insurance Regulation conducted a hearing to receive public comment for proposed rate hikes from policyholders of Citizens Property Insurance. At the meeting, the state-owned insurer of last resort asked to be allowed to raise rates by 13.1% this year, and 14% in 2024 for all personal lines.
These personal homeowners insurance lines protect people and their families from losses they may not have been able to afford on their own. Also, lenders require mortgage holders to have insurance. Citizens Property Insurance is the state-owned insurer of last resort, but is now taking on the new role of monopolizing the market. The list of private insurance companies in Florida is shrinking fast. As a result, Citizens Property customers soared to 1.3 million at the end of May, more than double what it was two years earlier.
Timothy Cerio—President, CEO and Executive Director of Citizens Property Insurance—said it could reach 1.7 million policyholders by the end of the year. Now, betting on a recovery of the private insurance market, Florida policymakers are set to allow citizens to raise rates by combined 27.1% by the end of next year. This premium increase will directly impact homeowners and indirectly impact renters, as landlords will pass the burden on to them.
Evelyn Almodovar owns a home in Manatee County that is not located in a flood zone. She is privileged in that she fully owns her home without a lender forcing her to take insurance. As her rate has already more than tripled, she is considering going without.
Evelyn Almodovar: At this moment, we are weighing our options. Right now, we are not looking for any other policy. We started looking and it seems like that is the price all the way around. Besides it being an option, it’s like you just can’t afford that increase. So right now we are still looking at options, but have not decided on whether we are going to continue to insure the house or not.
The impact of the increase has really been exponential. We went from having a policy that cost us $2,100 a year to now policy this almost $7,300. So we went from paying a month in insurance about 170, and now the increase is almost at $700. It’s really just left us to do hard choices on what are the things that we actually can afford and what we can’t, and homeowners insurance is just something we can’t now.
On top of paying to have a policy, there’s also an increase in the hurricane deductibles, which is the biggest liability that we have in Florida. So let’s say a tree fall into my house, my deductible is now $10,000, so I would have to spend $10,000 before I could even touch my insurance. So yeah, it’s been a significant change for us and it’s been very difficult to deal with.
I am definitely not buying the story that this increase is as a result of fraudulent claims. There’s so many processes in place just to be able to file and get money from a real claim, especially during hurricane season. That’s just not credible to me. What is credible to me though, is that the insurance companies have been donating to Ron DeSantis’ campaign to push, to allow these increases. These investments that we see in his campaign do not help us believe that the insurance companies are actually struggling. What helps us believe is that the insurance company is funding a lot of his campaign stuff.
Host: Edwin Jacob owns a home in East Manatee County near the Manatee River, but far from the coast and not in flood zone. He has been buying private insurance, even though he suffered rate shock this year. He tried to shop for alternatives but quickly found there is no market.
Edwin Jacob: I was paying like $1,300 I think initially when I first moved here in 2014, and then it probably went up to about, maybe it was 1,200 and then it went up maybe a couple hundred dollars since then. And then this year, I got a letter and it looks like he’s gonna jump up about another $1,000 or more, I can’t remember the exact quote.
How it affects me is that, I try to put a few $100 extra a month away for my mortgage to pay it off a little bit sooner. And so now, with the insurance going up, well, I guess like only $100 extra of that is going to property insurance, you know. Extra, on top of what was already being taken out. So, how that affect me is, it effects my wallet a lot.
What I was going to do about it, first I said, I’m gonna get me another insurance company. And so I called around and asked a couple of friends, “Hey, did you know this thing just went up? Yeah, yeah, yeah.” People have stated that it doesn’t matter where you go now, they’ve all raised their rates so high, that you might as well stay with the insurance company that you have since you can’t really find another one cheaper. I’m sure could probably find one $10 cheaper somewhere if I wanted to put the effort into it, but I’m not going to.
Right now, it seems like I’m stuck with it, and I’ve talked to other people whose situation is a lot worse, and don’t even have as much income as maybe I have.
Host: He also spoke about how the state legislature does not seem to be concerned with people getting priced out of their homes, because new home-buyers keep moving to the state.
EJ: They take an opportunity, I think they could do it a lot cheaper and help people out, but if they can make money off of you and they’ve got you between a rock and a hard place, where you really don’t have any options, that’s what they’re gonna do. They’re not worried about it because they got other people who can take their place. You know, this is Florida, people are moving down here because of the weather, and, you know, the homeowners can’t rent nothing down here. They’re just making money, they’re not going to take a whooping.
Host: Sarasota realtors are also feeling the pressure as buyers are struggling to find insurance, let alone affordable insurance. Fran Polar, a realtor who joined RE/MAX Alliance group on Siesta Key a year ago to sell luxury properties said she felt lucky because she didn’t expect her clientele to be impacted by insurance troubles.
But even the most successful luxury realtors have seen things slow down tremendously, she says. Closing deals used to take three weeks, now they can take up to months. And she increasingly has to send out-of-town buyers inland and north where insurance is affordable, Polar says.
Here’s how she deals with it: “I’ve had to develop a lot of patience and understanding in that it’s out of my control and all I can do is put my clients in the right direction to look for appreciation and equity when it comes to the homes they want. And then we can think about insurance, because at the end of the day, they still need the home.”
This was Nef Price reporting for WSLR News.
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