With the rising risk of extreme weather events in Florida, home insurance rates have gone through the roof. Meanwhile, the insurance market is suffering a meltdown and claiming huge losses of profit.
However, a 2022 report shared by the Tampa Bay Times and Miami Herald showed that while Florida insurance companies were complaining about profit losses, in reality, their parent companies and affiliates were making billions.
What happened?
The report found that at the beginning of the homeowner's insurance crisis in Florida, between 2017 and 2019, insurance companies said they lost $432 million in profits. The companies used this profit loss to justify raising their rates astronomically.
While Florida insurance companies claimed considerable losses in profit, they were moving money from their coffers to their affiliate companies and shareholders, who were making bank.
Affiliate companies reported a total of $1.8 billion in net income, while insurers paid their shareholders around $680 million in dividends.
The author of the report concluded some insurers in Florida took so much money from their own companies that they defied state regulations.
The result was insurers who were financially weak and sometimes unable to pay out on homeowner claims.
Tampa Bay Times shared comments from Doug Quinn, the executive director of the American Policyholder Association, who said, "These companies are crying poverty in order to raise premiums or justify insolvency: 'It's litigation, it's fraud.' This is money shifting from their left pocket to the right, and crying poverty while their right pocket bulges."
Why is this concerning?
Human activity, such as the burning of dirty energy, makes global temperatures rise. Oceans take in approximately 93% of the extra energy caused by this overheating of the planet, according to a Climate Science Special Report.
The warming of oceans has not only been linked to more intense hurricanes but has resulted in sea levels rising. Rising sea levels create storm surges, leading to increased flooding further inland in coastal areas.
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Definitely 🙁 Add to that the growing population living in coastal areas in the United States, and you have a recipe for disaster. Hurricanes and flooding can wreck homes, vehicles, and more, which makes homeowners insurance all the more vital.
However, with insurance companies unable to pay claims or outright dropping coverage in high-risk coastal areas (all while they claim profit loss while making billions), coastal communities are more at risk than ever.
What's being done about Florida insurers?
According to the Tampa Bay Times, Democratic lawmakers in Florida are calling for Governor Ron DeSantis to gather a statewide grand jury to investigate this matter.
They are also asking House Speaker Daniel Perez to put together a committee to determine why lawmakers never received this report and look further into the issue.
As House Minority Leader Fentrice Driskell said in a statement shared by the Times, "This is outrageous, and the people of Florida need answers."
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