The home insurance market is collapsing all across the country. Big, brand-name insurance companies are walking away from the riskiest states. And, the companies that are sticking around are often doubling and tripling rates over just a few years. Nothing like this has ever happened before. And nowhere is this crisis worse... than Florida. In fact, Florida is the origin story of this crisis: the home insurance market in every other state seems to be headed down the road that Florida has paved.
This episode was hosted by Jessica Meszaros and Carlyle Calhoun. This episode was written and reported by Jessica Meszaros and Jack Rodolico. Editing by Jack Rodolico, and Carlyle Calhoun with additional help from Halle Parker, Eva Tesfaye, Ryan Vasquez. This episode was fact-checked by Garret Hazelwood. Carlyle Calhoun is the managing producer. Our sound designer is Emily Jankowski and our theme music is by Jon Batiste.
Sea Change is a WWNO and WRKF production. We're a part of the NPR Podcast Network and distributed by PRX. SeaChange is made possible with major support from the Gulf Research Program of the National Academy of Sciences, Engineering, and Medicine. WWNO's Coastal Desk is supported by the Walton Family Foundation, the Meraux, and the Greater New Orleans Foundation.
You can reach the Sea Change team at seachange@wwno.org.
Carlyle: I ask a lot of climate experts a version of one particular question: What's the tipping point for the average American? What singular aspect of climate change is most likely to push a regular person to make some kind of big change in their personal lives?
The answer I hear most? Home insurance. Yep, boring old insurance is already reshaping where people live. Forcing some out of their homes, making the cost of a house out of reach for others, and for more and more people, changing their decision about where in the country they should live.
And, those experts say this is only the beginning.
So to kick this story off…we’re first going on a home tour.
Maria Lopez: \This house, it's so authentic, it has the actual, like, Fan of the house. ]
Jessica Meszaros: Oh, really?
Maria Lopez: When there was no air conditioning.
Jessica Meszaros: Whoa!
Maria Lopez: One day I said, What is this knob for? And I almost had a heart attack.
Jessica Meszaros: Because basically what you just did is you turned the knob and above our heads, um, some flaps opened up and a huge fan just started spinning. It's revealed.
Maria Lopez: In your house. You have a helicopter in your house, you know.
Carlyle: This gigantic fan is inside the home of Maria Lopez in Tampa, Florida. She's giving reporter Jessica Meszaros a tour.
Maria lives in a small, green, 2-bedroom bungalow with palm trees lining the yard. And Maria has art everywhere. She's a visual artist, and her husband wa s a painter.
Jessica Meszaros: I love these. These are very Florida. It's all water based and mangroves.
Maria Lopez: Oh, he loved the keys. Now that, that was his last painting, and you can see the darkness in the sky and all that, because he knew he was very sick.
Jessica Meszaros: And, and what year did he pass away from pancreatic cancer?
Maria Lopez: 1996.
Jessica Meszaros: 1996?
Carlyle: Maria is an experienced homeowner. She emigrated from Cuba in the 60s and she's basically owned a home in Florida for fifty-plus years. . She's had townhouses, apartments, condos, houses.
Maria Lopez: I've been through everything, through everything.
Jessica Meszaros: How would you describe the state of Florida's property insurance right now?
Maria Lopez: I think it's a mess.
(MUX IN)
Carlyle: I’m Carlyle Calhoun and you’re listening to Sea Change.
Home insurance is a front line of defense against climate change.
If your home is damaged by a flood or a fire, a good insurance policy is what allows you to rebuild, or at least get a payout...money to help you start over.
Insurance is so important that you can't get a mortgage without a policy.
But what's happening right now all across America is the home insurance market is collapsing. Big, brand-name insurance companies are straight up walking away from the riskiest states. The companies that are sticking around are often doubling and tripling rates, over a matter of just a few years. Nothing like this has ever happened before. And nowhere is this crisis worse... than Florida. In fact, Florida is the origin story of this crisis: the home insurance market in every other state seems to be headed down the road that Florida has paved.
After the break, Jessica Meszaros of WUSF takes us into the truly wild world of Florida homeowners insurance.
MID-ROLL 1
For this story, I wanted to interview people shouldering the burden of this crisis. So I put a callout to homeowners in the Tampa area, along the Gulf coast. I was inundated. People seemed desperate to talk to me about what they’d been going through.
And everyone I spoke to told me the same thing: until recently their home insurance was in the back of their minds. Now, it’s blowing up their lives.
(mux in/pause for a beat)
Sarah Haverstick: I'd grab the mail on my way in. And I opened a letter and a few expletives came out of my mouth, uh, and it was a notice from the insurance provider basically saying that you're no longer going to be covered.
Just like that... no warning. Sarah Haverstick's home insurance was canceled.
For Amy Beer... this crisis started with a stranger at her door.
Amy Beer: this guy knocked on the door and said, I am here to inspect the interior, exterior of your house. your insurance company, he said to me.
He wandered around, checked out the house. Weeks later, Amy got a threatening letter.
Amy Beer: If you don't replace your roof by January 8th, uh, your home insurance will be canceled.
A new roof is possibly one of the most expensive repairs a homeowner will ever undertake. Amy's insurer gave her just weeks to get it done.
Maria Lopez: this last year, um, I was shocked, uh, that, um, my insurance all of a sudden was canceled.
Maria Lopez says her insurer pulled out of Florida. Just refused to sell policies here anymore. She had no say in the matter. Maria was passed off to another insurance company.
Maria Lopez: They accepted my payment, they sent me a policy, and two months later they decided they didn't want me either. Why?
(mux/pause for a beat)
This stuff will stop your heart.
Everyone I spoke to was in fight or flight mode. But they didn’t have time to feel scared. They had to jump in… figure out how to insure their homes.
Some folks I spoke to haven’t been kicked off their insurance outright. But they are being priced out. That’s the case for Jeffrey Phillips.
Jeffrey Phillips: Just a few years ago, I was paying around 5,000 a year for my homeowner's insurance. It's now over 15,000 per year.
That is a three-fold rate increase. Who can budget for that?
Jeffrey Phillips: My insurance agents don't seem to be able to help. I've looked on the internet to see if there are other options to have, and I just have found I'm stuck.
Jeffrey’s an eye doctor. He says he’d like to fully retire, but can’t… because of his home insurance premiums.
Maria (by the way) is a graphic designer. Amy is a writer. And Sarah is a company manager.
Sarah is raising young kids. She — and Amy — were both in remission from cancer when that letter or knock at the door came.
Also.. none of the people you’re hearing from had any real damage done by storms. No one even filed a claim with their insurers. And still – kicked off or priced out.
Sarah Haverstick: It was such a sort of slap in the face and the idea that all of a sudden I can just get this notice of non renewal Now you're not holding up your end of this agreement.
MUX IN
I bought a house in Tampa a few years ago. And honestly... I’m worried too. If I lose my home insurance, I could lose my mortgage. It’s an overwhelming thought, so I tend to push it into the back of my mind.
Now… Florida isn’t the only state where it’s getting really expensive, or just impossible, to insure your home. This is a climate change problem: insurers are pulling out of states where they’re losing money. In Louisiana, they’re losing money because of hurricanes. In California, wildfires. In the Midwest, severe storms and tornadoes. Google it… wherever you live you’ll likely find stories in your neck of the woods about home insurance rates going up.
But in Florida home insurance is in a full blown crisis. It’s worse here than any other state, and it’s been brewing here longer. If Florida is where the rest of the country is headed, then we should all pay attention.
Lawrence Mower: this is this cycle we're in. We've seen it all happen before. Florida seems to be kind of stuck in this kind of terrible loop of insurance crises that has have never really resolved themselves. And frankly, I don't know if they ever will.
I don’t think I know as much about anything as Lawrence Mower knows about property insurance in Florida. He covers the statehouse for the Tampa Bay Times and the Miami Herald. I interviewed him three times for this story, and he was endlessly patient.
Lawrence says to understand Florida’s chronic cycle of home insurance crises, you have to go back to where it started. Hurricane Andrew in 1992.
Hurricane Andrew News Clip: This is incredible. It has just flattened this area. this can only be described as total devastation.
At the time Hurricane Andrew was the costliest natural disaster in U.S. history. It came ashore as a Category 5 and destroyed tens of thousands of homes in South Florida.
Residents filed about 650,000 insurance claims.
Insurance companies – big ones, –were not ready for this: State Farm, Allstate, Travelers and Prudential. Some dropped hundreds of thousands of policies. Others just abandoned the state.
Lawrence Mower: a lot of Floridians were left with this situation where they couldn't find insurance for their homes.
And housing fuels Florida’s economy. This was an existential threat. State lawmakers had to do something: so they came up with a couple big solutions… solutions that would ACTUALLY become even bigger problems.
Here’s the first solution we’ll talk about: Citizens… a brand new home insurance company created by lawmakers and run by the state. It’s basically socialized home insurance for people who can’t find coverage on the private market.
Lawrence Mower: Citizens was, is supposed to act like an accordion.
Lawmakers set up Citizens in the years following Hurricane Andrew. And because of high demand from people dumped by commercial insurers, Citizens expanded… it took on hundreds of thousands of homeowners. Lawmakers freaked out.
Lawrence Mower: It violates, you know, Republicans idea of the government and the free market, when it gets big, it becomes this panic among politicians to get rid of citizens policies, get rid of these policies, put them back on the private market.
Lawmakers squeezed the accordion. They kicked a bunch of homeowners off of Citizens.
(mux/pause for a beat)
So… where did all those people go? If the state wouldn’t cover them, and big insurers fled, how did they find home insurance?
Here’s another solution that became a problem. Florida lawmakers encouraged entrepreneurs — people with NO insurance experience — to open new, very small insurance companies. Citizens dumped tons of its policies directly into the hands of these small companies.
Jessica Meszaros: So let's talk about these small, sometimes sketchy insurers. There's probably a lot of ways to describe how bad they are. I'm just curious, like, how would you describe these insurers?
Lawrence Mower: Basically these companies are vehicles to do one thing, and that is to extract as much money out of the insurance market as possible for their investors.
Here's something that blew my mind. In the same market where big insurance companies had lost money… the CEOs of these tiny companies started making 20 plus million dollars a year.
Lawrence Mower: these guys are making more than the insurance, the CEOs of state farm nationally, all state progressive. These guys were getting filthy rich.
Here’s how that’s possible.
Let’s say I want to make a bunch of money in Florida’s insurance market. Insurance companies are highly regulated, states actually limit how much profit I can skim off all those monthly premiums that homeowners pay me.
But I’m greedy. So here’s what I do: I open an insurance company that’s only a shell. I don’t hire anyone to work there.
Lawrence Mower: You'll never deal with somebody literally from the insurance company because the insurance company often will employ no one.
At the same time, I open a string of sister companies.
Lawrence Mower: You'll deal with a sister company of the insurance company. One that charges the insurance company a ton of money for these services.
My sister companies do all the work for my shell insurance company. One of them handles claims. Another does my marketing. I use my sister companies to charge my shell company crazy, inflated prices for these basic services. And the financial regulations do not apply to my sister companies. So, my shell insurance company does ok. But my sister companies… they do GREAT.
Lawrence Mower: And what it's done to the insurance market is, you know, about a third of every premium dollar. Goes gets extracted out of the company and goes to profits.
PAUSE FOR A BEAT
While lawmakers scrambled to prop up Florida’s shaky home insurance market…you know what they didn’t plan for? Climate change.
In the years after Hurricane Andrew, the oceans warmed up. And then the Atlantic started pumping out hurricanes like never before.
HURRICANE NEWSREEL: Hurricane Charley brushed the Florida Keys and then plowed into the Gulf Coast near Fort Myers. Winds were clocked at 145 miles an hour, making it a Category 4 hurricane, and the strongest to hit the U. S. since Andrew in 1992.
In 2004 and 5, EIGHT hurricanes hit Florida. Eight hurricanes in two years.
Lawrence Mowerrre : And when Florida started getting hit by storms these little companies started going out of business. They couldn't handle it.
Small insurers went bankrupt left and right.
Although! The CEOs tend to do just fine as these small insurers go bankrupt.
Take former mayor of Tampa, Bill Poe, Sr. This powerful politician opened his own little insurance company. And in 2008, state regulators sued him, his wife and five of his children. The family and other executives were accused of pocketing $140 million dollars as their web of companies were going bankrupt.
Anyway… after all those hurricanes… more insurers pull out, or close shop. New ones replace them… and for a while, also pull in crazy profits. And then… it happens all over again…
Hurricane Irma is right over us right now. Fort Myers is getting absolutely ripped apart.
Newsreel: One of Hurricane Michael's survivors says his city looks like an atomic bomb hit it. Florida's panhandle is one huge disaster zone.
Newsreel:It's hell on earth as Hurricane Ian slams into Florida.
Newsreel: Hurricane Idalia making landfall just moments ago on Florida's Gulf Coast
Four massive hurricanes have hit Florida in recent years. The coastal water is now so warm that storms rapidly intensify just before they come ashore. There may never be a hurricane lull here again.
PAUSE FOR A BEAT
Here’s where things stand. Florida’s insurance market is in the worst shape it’s ever been.
Citizens is under investigation by the U.S. Senate… for allegedly: not having enough money to pay out if a big disaster hits. But at the same time, Citizens has been expanding like crazy. In just the last five years, it has more than tripled the number of homeowners it covers — from about 420 THOUSAND people up to 1.4 MILLION.
Meanwhile, private home insurance here is super-chaotic. Farmers pulled out of the state last year. And there’s this constant churn of small insurers going bankrupt and being replaced by others just like them.
Still… the sketchy guys control the market. A few dozen small companies hold 70 percent of home insurance policies in Florida.
Lawrence Mower: These companies will turn around and give millions of dollars to Florida politicians to finance their campaigns. And when there have been serious efforts to reform the market, these little companies have stood in the way.
Florida lawmakers recently made it harder for consumers to sue their insurance companies, and mandated roof inspections for homes over 15 years old. Every time they pass some kind of reform, it seems like their priority is protecting insurers, not homeowners.
Lawrence Mower: Florida is an example of what happened when that risk hit a tipping point . The way Florida dealt with that is basically a lesson for everyone else, because, you know, we're already starting to see insurance companies in other parts of the country pull out. Uh, we're already starting to see more natural disasters in places that did not see them before and insurance companies are Very good about shedding risk.
MUX UP AND DOWN
I asked all of the homeowners I interviewed: What are you going to do? None of them had a clear answer. Some might stay in Florida, some might leave.
Maria Lopez, the graphic designer, wants to stay right here in Tampa. Her daughter lives next door. She loves her little home. But…
Maria Lopez: I think it's a mess. I'm not like a government take all, you know, person. I have my own company. I, I, I'm, I'm all for independent people and having their own thing. But definitely, um, there's, um, there's an abuse. To the citizen. There's an abuse to people.
Maria got passed around from one insurer to another. Eventually she got covered… but for more than she was paying before. It has been so frustrating for her.
Maria Lopez: But what really got me through all this, you know, when I spoke to friends, is that I have many, many friends that don't have insurance anymore. And this is not like the very poor people, it's everybody. (FADE THIS TAPE UNDER TRACKING AS A BED)
It’s not just Maria’s friends. There’s data on this. One in five Floridians are now going without home insurance.
For years I’ve been hearing anecdotes and reading headlines about Florida’s broken home insurance system. Now that I understand exactly how climate change is breaking it, it only leaves me with more questions.
What will happen after the next big storm?
Who will be able to afford to live in my home state?
And if Florida is the canary in the coal mine, what will that mean for the rest of the country?
OUTRO
Thanks for listening to Sea Change. This episode was hosted by Jessica meszaros and me Carlyle Calhoun. This episode was written and reported by Jessica Meszaros and Jack Rodolico. Editing by Jack Rodolico, and me with additional help from Halle Parker, Eva Tesfaye, Ryan Vasquez. This episode was fact-checked by Garret Hazelwood. I’m the managing producer. Our sound designer is Emily Jankowski and our theme music is by Jon Batiste.
Sea Change is a WWNO and WRKF production. We're a part of the NPR Podcast Network and distributed by PRX. SeaChange is made possible with major support from the Gulf Research Program of the National Academy of Sciences, Engineering, and Medicine. WWNO's Coastal Desk is supported by the Walton Family Foundation, the Meraux and the Greater New Orleans Foundation. We'll be back in two weeks!
