As cost of condo insurance skyrockets, Florida lawmakers remain silent

TALLAHASSEE — As Florida lawmakers gather next week for a special session aimed at tackling Florida’s growing property insurance crisis, one area that’s getting little attention is the dwindling availability of insurance. condominium insurance.

Commercial residential insurance rates on condominiums have seen rate hikes of 30% to 100%, exacerbated in part by the collapse of the Champlain Towers South condo in Surfside that killed 98 people and an industry in turmoil.

As many as nine companies that offer condo insurance have exited the market, and the four esteemed companies still writing policies have raised their premiums by an average of 50%, and up to 100% in some markets, Mike Clarkson said, president of All Lines Insurance Group, a Clearwater-based company that represents 750 condominium associations statewide.

However, condominium unit sales are still active as the booming real estate market has “condos still flying,” he said. But while many buyers offer cash payments for their purchases, new owners too often face a stark reality, he said. “There is no capacity in the market – which dried up on March 1.”

The result is that condominium owners are forced to turn to the more expensive and less regulated excess line market or purchase insurance from Citizens Property Insurance, the common carrier. Citizens, however, are barred to the wealthiest homeowners, as they cap coverage at $700,000 statewide and $1 million in Monroe and Miami-Dade counties.

The condominium insurance market reflects the same issues as the larger homeowner’s property insurance market. In the past 90 days, three Florida home insurance companies have been declared insolvent and a fourth insurer has announced it is canceling more than 68,000 policies.

Related: When Florida Property Insurers Fail, Few Wonder Why

Late Friday, the House released a bullet list outlining some proposals that will be considered. None of the items mentions co-ownership coverage. Earlier in the week, Governor Ron DeSantis was making promises.

“It will be a significant package,” the governor said Monday. “And we won’t accept anything less than a very important package for the people of Florida.”

Citizens see a spike in condominium policies

Over the past year, Citizens has seen the number of individual condominium insurance policies for buildings over 40 years old decline across the state. Then, in March, the company saw a 27% increase in new policies for older buildings in Florida, with a 37% increase in Miami-Dade and Broward counties alone.

In condominiums built before 1982, unit owners increasingly had to look to citizens for home insurance, Citizens told the Schedules / Announcement. In March, citizens saw a 35% increase in new business statewide for condos under 40 years old, an increase of just 12% in policies for these buildings in Miami-Dade and Broward.

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“I haven’t seen it this bad in 30 years,” Clarkson said.

Condo associations are required by law to have master policies for building coverage, to cover structural damage caused by things like storms, wind, and fire. Most condominium corporations also have bylaws stipulating other insurance requirements, such as flood insurance, general liability, directors and officers insurance (which protects people who take decisions for the board).

But for several years, there hasn’t been much competition among insurance companies to write master policies for the condo market, as banks “made it harder and harder to get a loan for a mortgage on a condominium unit, Clarkson said.

Before Champlain Towers South collapsed on June 24, 2021 and raised doubts about the structural integrity of thousands of aging condominium buildings in Florida, the condominium prime policy insurance market was already in decline, Clarkson said. Since the Surfside tragedy, things have only gotten worse.

Some companies have stopped writing master policies for condominiums, others simply choose not to renew, and the few that remain to be written have imposed new underwriting policies. Condominium corporations must now provide proof that the condominium has passed all inspections, completed a detailed on-site inspection of all buildings, and that all members of the board of directors have signed affidavits confirming that it does not there are no outstanding maintenance issues.

Lawmakers failed to reach an agreement

During the regular legislative session that ended in March, lawmakers considered legislation that would impose statewide re-inspection requirements for aging buildings and meet the financial reserve requirements needed to pay for them. .

But the bills died when the Senate and House reached an impasse. The Senate refused to require condo associations to hold reserves to pay for structural repairs, allowing a two-thirds vote of owners to waive reserves, while the House refused to back down from its requirement that it not there is no waiver of reservations.

Related: Florida legislature fails to agree on bill to increase inspections of aging condos

“Florida’s property insurance crisis is a man-made disaster, not a natural disaster,” said Mark Friedlander, director of communications for the Insurance Information Institute. Like many in his industry, he notes that underwriting losses peaked in 2020, even in the absence of active hurricanes, and the data shows that losses are tracking the increase in water damage litigation and property claims. roof and costs accelerated by attorney fee multipliers.

Between 2020 and 2021, 2,267 commercial residential condo policies were dropped by admitted carriers in Florida and nine fewer companies purchased coverage, according to the Office of Insurance Regulation, which is responsible for regulating the industry.

For owners seeking information on excess liner carriers, which are not regulated, the OIR directs consumers to www.fslso.com/Florida/MarketData/home.

At a Florida insurance market briefing sponsored by AM Best, the credit rating agency, insurers warned that Florida’s property insurance climate will get worse before it gets worse. improve.

Kyle Ulrich, president and CEO of the Florida Association of Insurance Agents, said Thursday that speaking to more than 2,000 members of his association, “this is the toughest market in which anyone I spoke had to operate, even after (Hurricane) Andrew in 1992 and 1993.”

DeSantis does not offer specifics

Meanwhile, DeSantis has remained silent on which direction he would prefer lawmakers to go. He said this week he was ready to address other issues “if the legislature comes to me and says it’s okay to do some of the other key things that people have been talking about on a wide range of issues. “. Efforts to get his communications staff to clarify whether he took a position on the House or Senate’s approach to condo inspection reform went unanswered.

Sen. Jason Pizzo, a Miami Beach Democrat, is less optimistic than the governor about the outcome.

He said he was one of the only lawmakers to live in a condominium and have gone through the pain of finding affordable insurance. He said he bought his apartment a few months ago and the price of his home insurance was “awful”.

“I’m disappointed that whatever we do next week will result in immediate premium reductions,” he said.

He also said he fears lawmakers are doing too little, too late.

“My biggest concern is that real estate valuations have followed the appreciation of the real estate market, and they’re going to catch up and you’re going to have a perfect storm,” he said. “Higher property taxes, higher insurance, mortgage insurance and all of that is going to pop the balloon and cause recessionary pressures.”

About Teresa G. Wilson

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