Addressing Spiraling Premiums

• THE PROBLEM:

Whether for home or auto, insurance is costly and getting costlier. Floridians pay triple the national average for home coverage. Renters also suffer through insurance costs passed on by landlords in the rent: Some 91% of monthly rent is a pass-through of maintenance, taxes and insurance, according to the Florida Apartment Association. Meanwhile, insurance companies failed or cut back on writing policies, leading the number of customers at state-backed Citizens Property to soar. The money-losing insurance industry attributes the trouble to the weather, litigation and fraud. Bankrate reported last year that full coverage auto insurance — averaging $265 a month — costs 37% more in Florida than the national average while minimum coverage, at $94 per month, costs 45% more.

• 2023 LEGISLATIVE ACTION:

House Bill 837, the Legislature’s overhaul of the state’s tort law, was a big win for insurers, business groups and state-subsidized Citizens Insurance, but consumer relief has been slow to materialize. “Our current challenges in the insurance market have been years in the making. We realize it’s going to take some time for the market to adjust,” says Amanda White, who works for the Florida Apartment Association’s government affairs team.

State Insurance Commissioner Michael Yaworsky says the changes are bearing fruit in the form of lower reinsurance cost increases for insurers — the insurance that carriers buy to supplement their own capital — and more capital coming into the market to offer insurance and take customers off Citizens’ hands. The number of policies at Citizens isn’t rising as fast as feared. Projections were for upwards of 1.5 million policies at year-end 2023, but instead the count came in around 1.32 million.

• THIS LEGISLATIVE SESSION:

Republican legislative leaders this year seem inclined to pause on further insurance law changes given the scope of what was done in 2023. “We swung for the fences, and we got a lot done,” Senate Banking and Insurance Chairman Jim Boyd (R-Bradenton) told media after a committee hearing last year.

“Our No. 1 priority is keeping House Bill 837 intact and giving the reforms the chance and time to play out,” says Logan McFaddin, lobbyist for the American Property Casualty Insurance Association in Tallahassee.

Senate banking and insurance committee member Victor Torres Jr. (D-Kissimmee) favors requiring companies that sell auto insurance in Florida to also sell homeowners, supports a moratorium on companies dropping policies and has questioned why the state doesn’t cap rate increases.

ALICE in Florida

Part II: Coming in February

FLORIDA’S CHILDCARE CRISIS

Florida is facing a childcare cliff in 2024 when $3 billion in federal emergency relief that has stabilized the industry since the pandemic ends. For working families — particularly those whose incomes put them above the poverty line but too low to manage skyrocketing housing, insurance and inflation — the rising daycare costs are consuming even larger parts of their monthly budgets. The average working family spends $730 a month on childcare, the Florida Chamber of Commerce reports.

Florida’s businesses are losing almost $2.6 billion each year in reduced revenue and extra recruitment costs as a result of employees’ childcare challenges, Florida TaxWatch calculated in a study released in late 2023. Meanwhile, Florida families endure an aggregate income loss of $8.2 billion annually due to childcare-related turnover, lost work due to absences and having to drop out of the labor market because they cannot find affordable, quality childcare, according to the TaxWatch report. The Florida Chamber pegs the direct financial impact of insufficient childcare coverage on Florida’s economy at $5.38 billion each year.

The Florida Legislature set aside $1.6 billion in the state’s 2023-24 budget for early learning services, which includes the state’s universal VPK program for 4-year-olds. But subsidized care is difficult for families to access; advocates for lower-wage working families say the income limits are so low that two parents working minimum wage jobs make too much money to qualify for state help. Meanwhile, childcare workers find affording the state’s rising cost of living challenging too, and staffing and turnover at childcare centers is high.

In February’s issue of Florida Trend, the second part of a series examining the lives of the state’s struggling working families will focus on the ongoing childcare crisis, the looming financial cliff and what business and political leaders can do to address it. To learn more about Florida’s ALICE (Asset Limited, Income Constrained, Employed) families, visit floridatrend.com/ALICEinFlorida

Tags: ALICE in Florida