Insolvency, High Prices, and Unhappy Customers

Welcome to the Florida property insurance market. Plus, increased police presence in Ybor, a big week on Wall Street, and the week's weather.

Nov 06, 2023

*Storm damage and flooding from Hurricane Ian. Photo courtesy of Florida Fish and Wildlife.*

It has been called “the Florida Ponzi scheme.” It is property insurance in Florida, a market characterized by scarcity, high prices, carrier insolvency, and unhappy customers. How did things get this bad? Read all about it in today’s column. But first, let’s catch up on the news.

CURRENTS

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TOP NEWS

Controversial Florida judicial circuit merger faces committee resistance. WMNF

DeSantis outflanked by Trump on his home turf. Politico

Marlins finalizing deal with Rays GM Peter Bendix to lead front office, AP source says. 10 Tampa Bay

Jesuit dismisses assistant football coach who struck player on helmet. Tampa Bay Times $

Wesley Chapel’s fourth hospital may be All Children’s. Tampa Beacon

The future of 'Students for Justice in Palestine' at USF is still uncertain. WUSF

Panic in the plaza: New videos show chaos of stampede at UF peace vigil, reveal police secretly investigating suicide-bomb threat. Florida Politics

Tampa Bay among the top destinations for people looking to relocate. Tampa Bay Business Journal $

USF Women's Basketball expecting another big season. Spectrum Bay News 9

Stroud's late TD leads Texans past Bucs 39-37. Spectrum Bay News 9

WEATHER

Temperatures Still Warm With Partly Cloudy Skies

Warmer temperatures this week with some showers possibly on Thursday and Saturday, according to this week’s forecast from The Weather Channel:

MONDAY ⛅️ A mix of clouds and sun.
🌡️84° / 58° 💦 36% / 70% 🌅 6:44 a.m. / 5:41 p.m.

TUESDAY ⛅️ Partly cloudy skies.
🌡️85° / 61° 💦 55% / 70% 🌅 6:45 a.m. / 5:41 p.m.

WEDNESDAY 🌤️ Mostly sunny skies.
🌡️86° / 62° 💦 59% / 80% 🌅 6:46 a.m. / 5:40 p.m.

THURSDAY 🌤️ Generally sunny with afternoon clouds.
🌡️86° / 64° 💦 58% / 76% 🌅 6:46 a.m. / 5:40 p.m.

FRIDAY 🌤️Sunshine and some clouds.
🌡️87° / 66° 💦 60% / 84% 🌅 6:47 a.m. / 5:39 p.m.

SATURDAY ⛅️ Partly cloudy skies.
🌡️88° / 68° 💦 61% / 82% 🌅 6:48 a.m. / 5:39 p.m.

SUNDAY 🌥️ Partly cloudy skies with cloudy afternoon skies.
🌡️86° / 67° 💦 67% / 87% 🌅 6:49 a.m. / 5:38 p.m.

BRIEFS

Ybor Patrol Stats: The Tampa Police Department’s increased patrol and arrest presence in Historic Ybor City District over the weekend. Approximately 100 officers patrolled in vehicles and on foot, bike, and horseback with assistance from neighboring law enforcement agencies. Their efforts led to several arrests, including the felony arrest of two 16-year-old males, police said. Other stats reported from the stepped-up presence included 210 traffic stops, 1 recovered gun, 11 felony arrests, and 17 misdemeanor arrests.

Lowry Park North Shooting: Tampa police are investigating the Nov. 4 shooting of a male victim in his late 20s in the 8400 block of North Dexter Avenue. When police arrived at 1:47 a.m., they found the victim unresponsive. Based on a preliminary investigation, three male suspects entered the residence without permission and demanded money from the victim. After firing several rounds, the suspects fled. Detectives are working to identify the suspects and what led to the incident. Anyone with information that could assist in the investigation can call Tampa Police at 813-231-6130 or submit an anonymous tip by contacting Crime Stoppers at 800-873-TIPS (8477) or via TIP411.

Tax Rolls Open: Hillsborough County has mailed 575,000 tax notices to property owners in Hillsborough County for their 2023 property taxes, totaling an estimated $3.3 billion in property taxes. (Tax notices and payment information are available online at HillsTax.org.) The money collected pays for Hillsborough County services, including fire rescue, law enforcement, and infrastructure needs such as schools, roads, parks, and utilities. Pay early and get a discount: 4 percent discount if you pay by Nov. 30; 3 percent by Dec. 31; 2 percent by Jan. 31; and 1 percent discount by February 29. Taxpayers also have the option to plan ahead and apply for the installment plan for the 2024 tax season, which allows taxes to be paid in quarterly increments throughout the year and still take advantage of discounts.

Know Your Watering Days: Hillsborough County Water Resources wants residents and property owners to know their lawn watering days and hours and be mindful of water usage, especially outdoors, because there is a county rainfall deficit of more than 8.3 inches. Properties in the unincorporated county follow year-round watering days and hours, and it’s important to know lawn watering days and hours to avoid fines from $100 and up to $500 for repeated violations. Restrictions apply to most water sources, including private wells, ponds, or lakes used as alternate irrigation supplies. Street addresses ending in 0, 1, 2, or 3 can water Mondays and/or Thursdays. Street addresses ending in 4, 5, or 6 can water Tuesdays and/or Fridays. Street addresses ending in 7, 8, or 9 can water Wednesdays and/or Saturdays. Common areas with or without street addresses, locations with no address, and locations with mixed addresses (such as office complexes and shopping centers) can water Wednesdays and/or Saturdays. All watering must be done between midnight and 8 a.m. or between 6 p.m. and midnight, and only once on the designated days. Go to HCFLGov.net/WaterRestrictions for additional information. Suspected violations can be reported online or by calling Hillsborough County's water violations reporting hotline at (813) 224-8993. If you live in Tampa, Plant City, or Temple Terrace, it's important to research your municipality's watering restrictions.

Migratory Bird Baiting: Captive Wildlife Investigator Fernandez investigated illegal migratory bird trapping in a rural area of Miami-Dade County, according to the FWC Division of Law Enforcement’s Weekly Report for Oct. 20-26. The investigator observed a small bird trap with a bait bird hanging in the trees. Upon closer inspection, he noticed more traps and set up surveillance. After a few hours, a subject appeared collecting the traps. The investigator contacted the subject to address the violations. The subject admitted to having more birds at the residence. The subject allowed the investigator to inspect the property and more birds and traps were located. A total of 20 birds and five traps were seized. The subject was issued a notice to appear.

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CONNECTING THE DOTS

*Flooding from Hurricane Ian. Photo courtesy Florida Fish and Wildlife.*

Can You Really Trust Your Florida-Based Property Insurance Company?

By Stephen Buel

As word spread last year that a rogue financial analysis firm was about to downgrade the ratings of 17 Florida property insurance companies, state officials went berserk. It was as if the company was about to take away one of the Free State of Florida’s most-cherished freedoms — the right to pay lots of money to a financially risky property insurance company.

Gov. Ron DeSantis swiftly denounced the agency. Top insurance regulator David Altmaier called its actions an example of coercive “monopolistic power.” Chief Financial Officer Jimmy Patronis urged federal officials to stop relying on the firm’s ratings — essentially an effort to destroy the company’s business.

Had that rating agency, Demotech, gone ahead with its threatened downgrades, thousands if not millions of Floridians’ home insurance policies would no longer have been accepted by the lenders that held their mortgages. Citizens Property Insurance, Florida’s state-owned, nonprofit insurer of last resort, would then have had to extend coverage to all those policy holders suddenly at risk of defaulting on their mortgage.

But hear me out, my fellow freedom-loving Floridians, because something like that should happen — albeit in a calmer, more-deliberate fashion.

Only three carriers were ultimately downgraded. Two immediately pulled out of Florida, and the third one declared itself insolvent. If I’d insured my home with one of those companies, I’d have sent Demotech a handwritten thank-you note.

The CEO of Demotech later told the Florida Sun-Sentinel that there actually were 27 insurance carriers on its infamous list. But thanks to our state’s efforts to kill the messenger, the other 24 firms were never named. So in a state with an alarming history of insurance company failures, you may now be mailing premiums to an undercapitalized carrier.

Sure, they’ll stick around to cash your checks until the next major hurricane. But once you need them, more than a few are certain to raise the white flag and leave you and other policyholders in the lurch.

When an insurance carrier fails, policyholders must recover their losses directly from the state. That restarts the claims process, which automatically doubles the time it can take to get your claim resolved. It also sticks the rest of us with the cost of those claims.

If all this sounds like hyperbole, consider how distressingly common it is for Florida insurance companies to fail. As of today, the website of the same Florida CFO who berated Demotech for its list features a list of its own — naming the 14 Florida insurance carriers currently in liquidation.

After 1992’s Hurricane Andrew destroyed or damaged more than 125,000 homes in Southeast Florida, major national insurance firms began their slow, steady flight from the Florida market. That left the state reliant upon a raft of smaller, Florida-based carriers. Several times since then — including the last 12 months — Florida has endured a wave of insurance company failures, often in the immediate aftermath of a significant hurricane.

State inquiries into why these companies fail typically implicate Florida’s uniquely toothless oversight. Florida’s Office of Insurance Regulation is supposed to ensure that insurance rates are “not inadequate, excessive, or unfairly discriminatory.” But unlike most other states, Florida law makes a mockery of this mission by allowing carriers to set up unregulated sister companies that can charge the parent company any amount for basic operational functions.

This exemption not only lets carriers sidestep rate regulation and charge whatever they want, but it also encourages them to divert your premiums away from the financial reserves they’ll need whenever they are called upon to pay off your next claim.

As I set out to write a column based on my belief that Florida’s proliferation of small insurance companies is not a strength but a weakness, I discovered that another reporter had already connected all these dots. In 2010, Paige St. John of the Sarasota Herald-Tribune won a Pulitzer Prize for a landmark series of articles about Florida’s insurance industry. Thirteen years later, it remains a gripping and alarming read. It will make you angry.

Her series showed that overhead costs in Florida were 50 percent higher than the national average because companies pocket obscene profits for basic administrative tasks when they should be setting money aside for rainy or windy days.

An official with the Independent Insurance Agents of South Florida described this system to St. John as “the Florida Ponzi scheme.” Read her stories and you’ll learn how apt that description was.

Today in Tallahassee, state legislators will join the governor for the beginning of a four-day legislative session expected to sanction Iran, increase access to private school vouchers, and set aside additional aid to people stricken by Hurricane Idalia. But despite self-serving chatter to the contrary, I think it’s unlikely they will attempt to reform the state’s insurance market.

After all, they set it up that way on purpose.

Next column: What was the legislature thinking? And what should it do to clean up the dumpster fire that is the Florida insurance marketplace?

State representative says Florida needs to create regulatory environment to attract more property insurance companies. WUSF

Heritage Insurance exec says commercial rates to climb even higher in Florida. Tampa Bay Business Journal $

TODAY’S SPONSOR

The Navigator is sponsored by Mary’s Little Lamb Preschool at 7311 N. Armenia Ave. in Tampa. We are a nationally accredited preschool established in 1959.

Free Childcare and a paycheck. We are currently seeking a qualified toddler teacher or teaching assistant. The ideal candidate must be creative, energetic, dependable, nurturing, patient, have a passion about the growth and development of the children, and be a team player. Requirements: pass a level 2 background screening, high school diploma or higher, completed or willing to start and complete the DCF 45 training hours, get CPR/First aid certified.

Interested in sponsoring the Navigator? We should talk.

TAKING STOCK

A weekly look at the performance of 25 locally important stocks

GET INVOLVED

Civic meetings of note during the coming week.

Wednesday: The Hillsborough Transportation Planning Organization board will discuss its 2050 Long Range Transportation Plan and and look at the transportation equity needs in its plan. Hillsborough County Center, 601 E. Kennedy Blvd., 26th Floor, Conference Room A&B, Tampa, 10 a.m.

OTHER NEWS