Are lower home insurance rates leading to cost reductions for Florida homeowners?

After insurance leaders in Florida spent the last year touting the revival of a healthy insurance market, the South Florida Sun Sentinel decided to find out whether policyholders have been affected in the only way most of us care about: Can we insure our homes for a lower price?

Insurers say the only way to find out is to shop your policy out on the open market.

So for this test, the Sun Sentinel recruited four homeowners — two each in south and central Florida — and four agents.

Each agent obtained quotes for two homeowners from insurance companies they are contracted to represent.

The results:

— Among 13 private-market insurers that provided quotes, only two — Edison and newcomer Ovation — offered to reduce premiums. Edison and Ovation both offered lower premiums to one of four participating homeowners while Ovation also offered a lower cost to another homeowner.

— Many of the quotes included $10,000 caps on water damage coverage and several capped roof coverage at the actual cash value, rather than replacement cost. These caps stem from insurers’ experience with high volumes of roof and water claims and heavy litigation connected to them.

— Some quotes ranged widely. A Cocoa Beach homeowner living blocks from the ocean, currently paying $5,451, drew five quotes ranging from $5,793 by Orion 180 to $19,921 from Edison.

Insurance experts interviewed for this report, however, said they expect insurers to begin cutting premiums soon in South Florida, even as continued high inflation eats away savings that reduced rates would otherwise make possible.

While several experts said they weren’t surprised by the wide range separating the lowest from the highest quotes obtained by the homeowners, they were nonetheless impressed that nine private market companies were willing to cover one of the two South Florida homes.

“I’m extremely encouraged to see that there were so many private market options available,” said Paul Handerhan, president of the consumer-focused nonprofit watchdog group Federal Association for Insurance Reform. “Prior to the legislative reforms (enacted in 2022 and 2023), we didn’t see that. Everything was going to Citizens,” the state-owned insurer of last resort.

Ten companies, including Citizens, submitted quotes to cover a 2,332-square-foot Pembroke Pines home built in 1996 built with concrete and a clay tile roof and a $547,674 rebuild value. Homeowner Wayne Zimmerman is paying Tower Hill Insurance Exchange $7,137 for his current policy.

Two quotes were lower: Edison ($4,517) and Ovation ($5,110).

Eight were higher: Citizens ($7,595), Florida Peninsula ($7,825), Olympus ($7,969), Slide ($8,356), Florida Family ($8,594), Universal Property & Casualty ($10,185), Monarch ($14,577), and American Integrity ($19,448).

Insurers: Accurate quotes require more information

For the test, homeowners were asked to provide a copy of their policy declaration — the two- to four-page summary of coverage that all insurance customers receive each year with their policy renewals — and their most recent windstorm mitigation inspection report, if they had one.

Declarations contain relevant information including the replacement value of their dwelling and limits of coverage for other structures, personal property, loss of use, personal liability, and medical payments.

They also include the age of the home, construction type, whether the policy covers the cost of rebuilding to current building codes, and a long list of charges and discounts that are applied to the final premium.

The Sun Sentinel did not ask homeowners to provide other information that most insurance companies require to determine actual coverage costs.

Homeowners were not asked to allow insurers to check their insurance scores, which combines claims-filing and personal-credit histories. Nor were they asked to pay for a four-point inspection, increasingly required by insurers who want to verify the condition of a home’s roof, electrical system, plumbing and HVAC gear.

Shiloh Elliott, spokeswoman for the Florida Office of Insurance Regulation, said the absence of “pertinent information,” such as the credit scores and four-point inspection results, generated quotes that are “likely inaccurate” and “should not be used for direct, definitive comparison.”

She also criticized the sample size of just four homeowners, saying that using it to draw “broad conclusions about the entire private marketplace” would be “misleading.”

Spokespersons for several insurers, contacted for their thoughts about the test, made similar points.

But the exercise was only meant to capture what a handful of homeowners in late September could expect to find if they shopped their policies after hearing a year’s worth of rhetoric about rates that are falling or unchanged, and how reforms enacted in 2022 and 2023 spurred the creation of 17 new private market companies that are now competing for business.

Discounts and coverage reductions fail to sway

It turned out that neither homeowner who obtained quotes below their current policy costs were interested in pursuing the potentially lowered premiums by paying for a four-point inspection and providing access to their credit scores.

Two agents each found a company that provided lower quotes to Jeff Torrey, who’s paying Slide Insurance $7,029 to insure his 1,224-square-foot concrete Deerfield Beach home. One of the agents provided Torrey a $5,333 quote from Ovation while another said that Citizens would cover him for $5,866.

Torrey was previously insured by Citizens until Slide acquired his policy as part of Citizens’ depopulation program that renders as ineligible any homeowner that can obtain comparable private-market coverage that costs under 20% more than Citizens.

The premium Torrey is paying Slide is 19.8% more than the Citizens’ quote, making him ineligible to return to Citizens.

Rather than pay for a four-point inspection, Torrey said he decided to wait and see what the Slide policy renews at next July.

Wayne Zimmerman, who obtained lower quotes from Ovation and Edison, said he suspected they fell below his Tower Hill premium because they included $10,000 caps on water damage and actual cash value coverage of his roof — and he was correct. His Tower Hill policy includes neither restriction.

Those two restrictions caused him to forego pursuing the companies with the lower quotes, he said.

“After I looked at all of them, I decided, you know, I already paid my money for Tower Hill and I’m just gonna stick with them at this point, and then reevaluate again next year with my broker,” he said.

Terry Heagy, the Cocoa Beach homeowner, is paying Universal Property and Casualty $5,451 to insure his 1,978-square-foot masonry home built four blocks from the beach in 1965. The policy covers his dwelling for $454,405.

None of the quotes provided by the agents suggested he could get a lower premium, including Orion180 ($5,793), Frontline ($7,308), Ovation ($7,558), Florida Peninsula ($11,902) and Edison ($19,921).

“Based on this, I guess I can’t complain too much about my current provider,” he said.

And Richard Crabtree, an Orlando homeowner, is paying Travelers just $2,748 to insure his 1,460-square-foot masonry home built in 1955. His policy includes $400,000 in dwelling coverage.

That includes a savings of $906 that Crabtree realized by eliminating the optional “law and ordinance” coverage that would have paid up to $100,000 over the limit of his policy to cover additional costs required to rebuild his home to the current building code.

His home drew quotes ranging from $3,192 from Security First with no water damage coverage and included Tower Hill ($3,515), Florida Peninsula ($3,807), Frontline ($4,032), another Security First quote with limited water damage coverage ($4,168), and Ovation ($4,445).

Crabtree said he’s sticking with Travelers, which hasn’t sold new policies in Florida since 2007.

“I’ve been told by a local insurance rep, someone I trust, that she could not replace the Travelers insurance coverage and that no one else would cover what Travelers covers even with the restrictions that seem to grow each year,” he said.

Many factors drive wide range of quotes

Large differences between costs proposed by some of the companies to cover the same houses are not a sign of “dysfunction” in the market, said Lisa Miller, a former deputy commissioner at the Office of Insurance Regulation who now runs a private consulting business.

“Rather, it’s an indicator of competition and recalibration among insurers that have recently opened up market segments or expanded in Florida,” she said.

And while numerous companies have resumed selling policies in South Florida after the 2022-2023 reforms reduced litigation costs, higher quotes can reflect histories of high losses endured in the region by older, more established companies, says Dulce Suarez-Resnick, vice president of underwriting at the Miami-based Acentria Insurance agency.

High prices also can be an indication that while a company might be willing to write policies in certain areas, it really doesn’t want to, she says.

Kerrie Ruland, senior vice president at Monarch Insurance Co., says she’s confident that the $14,577 quote her company submitted to insure Zimmerman’s Pembroke Pines home was accurate, even though it was among the highest of those offered by 10 companies.

Rates for different companies “are built around the carrier’s overall appetite for risk,” Ruland says. “Most will have highly competitive pricing in areas where they are comfortable growing and higher (or no) pricing in areas where they may not look to grow.”

Elliott says that differences in premiums quoted by companies over the same properties “are generally expected due to different carriers’ financial and strategic models.”

Different quotes, she says, can be driven by differences in expected loss costs and in operational costs, including costs of reinsurance — insurance that insurers must buy.

Also, differences in companies’ business strategies play a role in premiums they charge. They could be “differences in underwriting appetites, target market segments, geography, policy features, and claims history.”

Suarez-Resnick says newer companies, such as Ovation, can provide lower quotes “because they don’t have any baggage.”

“They’re brand new. It’s not like they have old water damage claims or old hurricane claims sitting on their books,” she added. “They have a clean slate.”

While participating homeowners in south and central Florida might have seen limited opportunities for saving money in the premium quotes sought by the Sun Sentinel, better luck awaits consumers in other parts of the state, one expert said.

Kyle Ulrich, president and CEO of the Florida Association of Insurance Agents, says he’s hearing from his members that homeowners in northern Florida and in the Tampa area are beginning to see discounts.

Ulrich, who lives in Tallahassee, was removed from Citizens by a company that provided a 20% discount, he says. And an agent in the Tampa Bay area told him “at least seven out of 10 homeowners that he’s renewing are all receiving premium reductions” — the largest for 30% — “and getting multiple offers from carriers that were not willing to write coverage two years ago.”

Suarez-Resnick predicted that South Florida homeowners will see lower premiums as early as next year if “Mother Nature continues to be kind to us” and lawmakers resist the urge to tweak the legislative reforms.

If no hurricane hits, she expects reinsurance costs to drop and homeowners should start to see savings by the beginning of summer, when insurers sign their reinsurance contracts.

“My goal is by June 1, we’ll see double-digit reductions,” she says.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at [email protected].

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