An academic study of Florida’s insurance market paints a grim picture of new companies and how they’re rated.
The study, done by a trio of researchers from Harvard, Columbia University and the Federal Reserve has not been peer-reviewed or published, but it was posted online.
The study states that traditional insurers have left high-risk areas and are being replaced by “low-quality” insurers with “riskier liabilities” and are “less diversified.”
The report also cited a “lax regulatory environment” and questioned the ratings they receive from the firm Demotech.
“This report has said the vast majority of small insurance companies operating in Florida are really financially weak and so much so they wouldn’t normally meet the federal guidelines saying you guys can back homes,” Michael DeLong of the Consumer Federation of America said.
Demotech’s president Joseph Petrelli responded to the report.
“The report is a continuation of a hit job that began in July 2022,” Petrelli said.
In 2022, Demotech had warned several insurers in Florida of downgrades.
Recently more new companies have entered the Florida market after reforms, and many insurers posted profits for the first time in seven years.
Projections for this year from Insurify have premiums going up 7% in 2024.
One bright spot came from Boca Raton-based Peninsula Insurance, which announced this month a 2% rollback in premiums.