(TheRedWire.com) – Florida’s extreme weather events may soon cause the state to be uninsurable. While those living in the Sunshine State have always been aware that these weather phenomena occasionally occur, and have taken this into account when insuring their belongings, recently, there has been an increase in floods, hurricanes, tornadoes, and droughts because of climate change.
As a result, both Floridians and insurers need to adapt to this new situation. Several experts have argued that the rise in extreme phenomena could lead to Florida becoming “uninsurable” while other states, including California, could be on the same track.
Over the past year, 15 major insurers, like Farmers, have withdrawn from Florida due to its severe weather conditions.
Florida State University Dr. William T. Hold, associate professor of risk management and insurance, Charles Nyce, stated that the crisis in Florida has been developing over time. He argued that this started in the 1990s when Hurricane Andrew caused landfall in southeast Florida. This was the first time that the insurance industry became aware of the catastrophic events that could take place in Florida.
Hurricane Andrew 1992 resulted in insured losses of $16 to $20 billion. From 2004 to 2005, the seven storms that hit the state collectively resulted in insured losses of around $35 billion.
However, Nyce argued that this is not only a result of climate change. As he pointed out, Florida is also suffering from a fraud problem, as 75 percent of all homeowners’ litigation comes out of the state.
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