Could Home Insurance Changes Create Problems for Florida Residents?

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  • For the past several years or more, the state of Florida has run its own type of hurricane insurance program for residents as a means of keeping costs artificially low in comparison with what their actual risk for damage is. However, some experts now say that these companies may present homeowners with significant problems, especially if a particularly powerful storm makes landfall in the Sunshine State. Because of this potential issue, it might be wise for insurance agents whose companies may soon start to operate in Florida once again to figure out the best ways of letting residents know about the potential risks and rewards associated with all of their options.

    A number of major hurricanes that rocked Floridians in 2004 and 2005 prompted many national home insurance companies to pull out of the state’s market altogether, and led to many smaller companies moving in or cropping up to take their place, according to a report from Reuters. However, experts have also expressed some concern about how these smaller insurers might be able to handle the demand; while they’ve been successful enough to some extent – six such companies have already folded in the past eight years – the fact is that they haven’t been hit with a major hurricane during that time either.

    What’s the issue?
    Currently, some 80 percent of all residential and commercial properties in Florida are in areas for which hurricanes would present significant wind and flooding damage risks, and those properties are valued at a combined $3 trillion, the report said. Currently, residents pay some $6 billion in annual premiums, which, given the size of the insurers involved, could mean significant shortfalls if a particularly crushing storm hits in the coming years. Most of the 48 private insurers recently reviewed by Weiss Ratings do not score very highly in terms of quality, with a median grade of C-minus.

    Insurance agents who can help consumers to better understand the ins and outs of their coverage, and the potential risks they face if they go without it, may help to increase clients’ positive feelings about paying for coverage, even if it’s somewhat expensive. Providing high-quality customer service in addition to the standard occasional hunt for applicable discounts may serve to significantly improve retention rates, and perhaps even attract more clients down the road as a result of positive word of mouth.