The weather in many parts of Florida has been awful for several days. Rain and flooding has plagued many low lying areas and it reminds us of tropical storm weather. Looking to a resource I mentioned in my prior post, A.M. Best issued a Best Special Report about the Florida insurance market and the potential for storms.

It is not a matter of if another Hurricane will slam Florida’s coasts, the question is just when and which area will be hardest hit. Our population has grown rapidly and many sections of Florida have not been directly affected by a bad storm in years, and in some areas, decades.

Our insurance providers have also changed, and this is what the Special Best Report analyzed. Take a read here.

A.M. Best knows that the carriers must do constant risk analysis and the report explains that evaluation is done with sophisticated and automated processes that tell the insurance companies about loss frequency and severity. The seasoned carriers also have past data to use as a base line, but the new “take-out” companies that now how a large percentage of Florida’s homeowners and have not been tested.

Here is chart that shows the market share from 2004 and 2014:

Click here to view the image.

It is hard to believe that Citizens Property Insurance Corporation was only started in 2002. In that year alone, approximately 600,000 policies were in place. In 2002 there was lots of speculation, catastrophe models, and hurricane projections, but the 5 storms that slammed Florida in 2004 and 2005 were still unbelievable. The insurer of last resort- Citizens ended up with 1.5 million policies after the storms because many insurance companies didn’t want the risky properties.

Now that tide has changed again, and with brand new companies assuming many of Florida’s homes, are Floridians in a risky situation if another catastrophe or two or three hits?

From studying over 12 years of homeowners’ policies, it is clear that Floridians are not as well protected. Much of what used to be covered, how now been taken out of the policies. More exclusions, limitations and just plain bad endorsements fill homeowners’ policies now. This seems to signal that carriers will also dispute claims that should be sent a check. I hope I am wrong.