Florida Today is reporting Potential loss drives rate hike
Meteorology, computer models and targeted policy cancellations don’t offer enough financial comfort for State Farm Florida.
State Farm seeks a record 78 percent average rate hike — more than doubling what it charges policyholders in Brevard — to cover a guess as to the worst potential luck it might suffer in a hurricane season many times worse than any the Southeast has seen.
- In two years, rates for much of coastal Florida will have more than doubled, including almost 20,000 State Farm customers who face 125 percent increases in this filing.
- It will force similar hikes for the nearly 1 million Floridians covered by Citizens Property Insurance, the state-run insurer of last resort, because Citizens is required by law to charge more than the private market. Together, State Farm and Citizens insure about 30 percent of Florida homes.
- And it sets a precedent for nearly 200 other property insurers doing business in the storm-struck state, allowing them to look beyond predicted losses and bolster rates to soothe investors.
State Farm’s math confounds consumers like Eddie Moran, who moved his family here from California five years ago. Now the commercial airline pilot is ready to bail from Florida.
“If I move out, which I’m seriously considering, who’s going to move into my house?” he asked. “Can they afford the property taxes, have kids who go to public schools, be two people who work? Or is it going to be New Jersey or New York retirees who spend six months a year living elsewhere?”
In 2001, State Farm charged $1,800 to insure Moran’s dockside home on Merritt Island. The premium now is $5,361 and, if the state approves the company’s rate hike, Moran’s bill will top $12,000. Even his agent finds the premium hard to digest, Moran said.
Let’s see…… $1,800 in insurance cost soars to a proposed $12,000 annual insurance cost.
What about property taxes? What did those do? Hmmm. In Florida the bulk of those do not kick in until he sells and the new buyer has to pay those property tax increases.
Moran made a serious mistake.
He should have “Gottin while the gettin was good”.
I fully expect people to be harping at me about how “inflationary this is”. It is nothing of the kind. It will drive down asset prices in Florida while putting speculators further behind. The process is just starting. “Get before the gettin gets worse” applies to Florida perhaps more than anywhere else.
Mike Shedlock / Mish/