As a Financial Advisor residing in Florida, it is crucial for me to inform fellow residents about the current challenges we are facing in the Flood and Homeowner's insurance market. Rising insurance premiums and a significant increase in policy non-renewals have created a stormy situation for many individuals.

Even major insurance carriers like Chubb are now declining to renew auto and home policies based on zip code and proximity to water.

With deductibles skyrocketing and premium increases reaching alarming levels of up to 120%, it is essential to understand how we arrived at this predicament. In this article, I will delve into the aftermath of Hurricane Ian and explore the underlying issues of fraud that have shaped the insurance industry's response.

The Aftermath of Hurricane Irma

Hurricane Irma began her destructive journey through Florida on September 10, 2017, causing immense damage as it traversed the state. The forecast predicted catastrophic winds and over 10 feet of storm surge, creating a recipe for disaster. However, Irma unexpectedly shifted eastward, drawing water away from channels and bays and exposing the seabed in many areas. This led to sea walls failing and collapsing, leaving affected properties vulnerable once the water returned. In addition to flooding, significant wind damage occurred. In summary, Irma was a powerful Category 4 storm upon landfall, hitting SWFL (Southwest Florida) as a strong Category 3 storm.

Escalation of Insurance Claim Fraud

When there's blood in the water, the sharks will come. Following the passage of Hurricane Irma, immediate efforts were made to assess the damage and commence the cleanup process. Local communities joined forces to support one another, while municipal authorities efficiently allocated resources to clear the streets. Residents promptly contacted their insurance providers to evaluate the extent of the damage and initiate the reconstruction process. Additionally, out-of-state contractors arrived to address the overwhelming workload.

Unfortunately, during times of disaster, opportunistic individuals exploit the vulnerable.

Homeowners, emotionally affected by the destruction of their most valuable asset, often act impulsively rather than rationally. Eager to restore their homes, they often place their trust in contractors and other third parties, inadvertently surrendering control of insurance claim negotiations. This grants significant power to contractors, legal firms, and public adjusters, who collaborate to exaggerate damages and subsequent payouts from insurance companies. Shockingly, there have been instances where additional damage was intentionally cause dduring the cleanup process to inflate claims.

Recognizing this fraudulent behavior, insurance companies began resisting such claims, resulting in ongoing litigation that persists to this day as a consequence of Hurricane Irma.

The Impact of Subsequent Storms – Hurricane Ian

Oops, she did it again! Mother Nature decided SWFL (Southwest Florida) hadn't endured enough after Irma. On September 28, 2022, Hurricane Ian made a direct landfall near Ft. Myers beach as a powerful Category 4 storm, just a few miles per hour shy of a Category 5. The devastating storm surge, exceeding 12 feet, obliterated a significant portion of the coastline ,inundating homes along waterways. With fierce winds, roofs were torn off, lanais were destroyed, and vegetation was uprooted. The aftermath resembled a scene from an apocalyptic film, with no power, streetlights, and the constant roar of generators in the background. People were left residing in tents, and homes were washed off their foundations, illustrating the extent of the destruction.

Prospects and Resolution

There’s no disputing the last seven years have presented some major challenges for Florida when it comes to natural disasters. Insurance companies are facing the same difficulties, resulting in staggering premium increases for fortunate property owners whose policies are renewed. As of writing this article, Farmers Insurance has ceased writing policies in the state, adding to the complexity.

Unfortunately, there isn't an easy answer in the foreseeable future, as premiums will continue to rise while the number of carriers decreases.

Many homeowners are struggling to afford the significantly higher premiums, sometimes doubling or even tripling their previous amounts. In my own situation, I find myself conducting rigorous self-inspections as requested by my insurance company, which often leads to repairs deemed essential for preventative maintenance.

While there may not be a straightforward solution to this conundrum, options do exist. It's advisable to seek out a reputable insurance agent with established carrier relationships and to explore different policies. Additionally, assess your overall insurance needs, including auto coverage (which is also seeing a significant increase of 50% or more) and umbrella coverage.

Anticipating similar conditions in the coming years, industry professionals stress the importance of consulting with your advisor team and other experts to ensure sufficient coverage and secure the optimal insurance solutions for your assets.

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