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Florida Insurance? Ouch!

David R. Kotok
Sun Dec 10, 2023

The excerpt below is from a letter from the chairman of the US Senate Committee on the Budget to Gov. Ron DeSantis and Insurance Commissioner Michael Yaworsky of the State of Florida, and to Tim Cerio, president, CEO, and executive director, Citizens Property Insurance Corporation, based in Jacksonville. Here’s a link to the entire letter:

Florida Insurance? Ouch!



The situation in Florida appears to have grown particularly dire. To wit:

• The insurance industry exodus from Florida has accelerated;
• Premiums in Florida are projected to increase by 40 percent or more this year;
• Millions of policies across the country, including at least 75 percent of policies in every Florida county, are at risk of non-renewal or a rate increase this year;
• Increased premiums and decreased availability are beginning to disrupt the Florida real estate market;
• The National Oceanic and Atmospheric Administration (NOAA) announced that, as of the end of mid-September, there had already been 23 extreme weather disasters in the United States with costs of $1 billion or more, the most in recorded history. This list includes Hurricane Idalia, which struck Florida in August.

We urge readers to take 4 minutes and read the entire letter. Those inclined to dig deeper are invited to look at the footnotes and links to the backup information that triggered this letter. I especially suggest that anyone with property in Florida, or who is contemplating a purchase in Florida, read this letter. Readers are invited to forward this missive to anyone they think is interested in this subject. Full permission to share or quote is hereby extended.

Please note that the comprehensive estimated cost of a hurricane (climate) disaster in Florida is a number now estimated in the trillion-plus range and would be 10 times the total budget of the State of Florida. This estimate is for a direct hit on a major city like Miami, Tampa, or Jacksonville.  Gov. DeSantis himself has admitted that citizens would not be “solvent” under such circumstances. He is quoted in the letter.

I live in Florida. Most of Cumberland’s staff does, too. Many of our clients throughout the state and on both coasts face this insurance cost/coverage issue.

We need only to look at the results of Hurricane Idalia or Hurricane Ian for warnings of more to come.

There are solutions, but the Florida legislature fails to address them, and the Governor is busy with his aspirations to a different office than chief executive of the State of Florida. So, nothing happens. Tallahassee is living with the hope that the next disaster will be on the next politicians’ watch and not on theirs.

Warnings about tragic large-scale events often go unheeded. This is a current example. The motivation for the Senate not to sit on its hands is that a huge loss in Florida would trigger a call for billions and billions of federal money for a Florida bailout.

The implications for the trillions of dollars in Florida real estate and the related risk for the institutions that have extended loans for Florida real estate and businesses are substantial. The details are referenced in the letter.

As we are wrapping up this commentary, Gov. DeSantis has unveiled his 2024 Florida budget proposal, which includes $431 million in property insurance relief for citizens. See “Ron DeSantis budget includes relief for people with homeowners insurance policies,” Also in the news, “Surcharge risks drop sharply for Citizens Insurance customers next year,”

$430 million for a trillion-dollar risk?  Readers: you decide.  Florida homeowners and businesses: you decide, too.

At Cumberland, we continuously monitor credit standards, debt structures, and climate risks. That is part of our job as a boutique bond management firm. We ignore the political culture war being waged on the term ESG. We want our clients to be paid for the risks they take.

Reader’s responses to this commentary are invited, and we can assemble those replies so all readers may get to appreciate your anecdotal experiences of the Florida insurance crisis.


David R. Kotok
Co-Founder & Chief Investment Officer
Email | Bio



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