Floridians Want Answers: Why are Insurance Rates Not Going Down? By Tod Aronovitz | 08/28/13 | 0 Comment

Florida Chief Financial Officer Jeff Atwater isn’t the only person who wants to know why homeowner insurance rates aren’t dropping. Consumers are wondering the same thing, especially when one of the main costs for insurers has been decreasing this past year.

After CFO Atwater read in trade journal reports that the cost of reinsurance has come down an average of 15 to 20 percent, he sent a letter to Florida’s insurance commissioner, Kevin McCarty, asking why insurance cost savings aren’t being passed along to consumers. Insurers purchase reinsurance from an out-of-state or foreign company to provide the insurer financial backing in case of major claims.

Atwater believes Floridians need answers, and they need to see their insurance bills coming down. “If insurance companies can justifiably raise rates on Florida families because the reinsurance market drives their costs up, they can certainly lower the costs for Florida families when reinsurance prices fall,” he wrote in his letter.

McCarty said in late May that he expected insurance rates to stabilize in the coming year.

But according to annual reports prepared by Florida’s Office of Insurance Regulation, the department has been approving more than 100 rate hike requests a year since 2009, including requests to raise rates by double-digits.

Myriad reasons—some of which have generated arguments among state legislators for the past two decades—have been offered as to why Florida’s insurance rates have steadily increased. Industry experts argue that insurers did not charge enough in past years to cover homes in hurricane-prone Florida. They also say the market is fragile because it has been faced with heavy claims from storms including Category 5 Hurricane Andrew that destroyed much of the South Florida city of Homestead in 1992, as well as a series of storms that pummeled the state in 2004 and 2005.

A spokesperson said McCarty is working on a response to Atwater’s August 7th letter. Atwater is one of the state officials with the power to hire and fire the insurance commissioner.

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