Florida’s Climate-Fueled Insurance Crisis

BY: Jack Sanner, RBFL Editor

Americans are moving to Florida in droves. According to Redfin, Florida is home to five of the top ten U.S. metro areas with the highest rate of growth. Many of these new residents have flocked to sunny coastal cities like Miami and Fort Lauderdale, leading to skyrocketing real estate prices as demand for beachfront property outpaces supply. This influx of new homeowners is remarkable given that Florida faces some of the greatest climate-related risks in the country, with the future of many of its most popular destinations uncertain.

Climate change is already significantly impacting Florida homeowners, with floods and hurricanes increasingly causing significant damage in the state. Just last year, Hurricane Ian caused an estimated $65 billion in property damage alone. The fallout from these natural disasters has had a particularly pronounced impact on the state’s property insurance market. Property insurers paid over $100 billion in claims in 2022 – an increase of 50% over the average yearly payout in the 2010s – and fifteen property insurers have declared insolvency since 2020. Those property insurers who have remained in the market have been forced to increase rates, further fueling the rise in home prices.

Without a robust regulatory response, Florida’s insurance market will continue to suffer, and homeowners will be left with unaffordable, inadequate coverage. Florida’s legislature passed Senate Bill 2-A in December 2022 to address excessive insurance claim litigation, but true change will only come from addressing the root causes of the crisis. Those causes include excessive development in areas at high risk of damage from storms and flooding, inadequate flood risk disclosure laws, and a general failure to implement sound climate policy. Making matters worse, the National Flood Insurance Program (“NFIP”), which provides the majority of flood insurance policies in the U.S., is also in desperate need of reform. In an effort to keep flood insurance affordable, the NFIP has long received Treasury Department subsidies. These subsidies allow the Federal Emergency Management Agency (“FEMA”) to set NFIP rates as low as thirty-five percent of what they would be under standard risk assessment practices. As a result, the actual risk associated with owning a home in an area susceptible to frequent flooding is hidden from the homeowner. This encourages further development in high-risk locales, like coastal cities in Florida.

Recent updates to the NFIP’s methodology for determining flood risk provide some grounds for optimism, and the program is committed to ultimately eliminating policy subsidies for high-risk properties. Florida has a clear opportunity to take advantage of the momentum provided by these updates and enact change of its own. Senate Bill 2-A is likely only the first of many reforms in Florida’s future, as insolvencies and retreats from the property insurance market threaten the state’s homeowners. With climate change fueling more and more property damage, creating a healthier insurance market will likely become a top priority for Florida lawmakers.


Redfin, https://www.redfin.com/state/Florida/housing-market#overview (last visited Mar. 3, 2023).

Natalie Barefoot, et al., There Will Be Floods: Armoring the People of Florida To Make Informed Decisions on Flood Risk, 94 Bar J. 28, 28 (2020).

Akshat Rathi, Climate is Forcing the Most Risk-Averse Industry to Reinvent Itself, Bloomberg Green Newsletter, Jan. 24, 2023.

Siddhartha Jha, Closing the Insurance Coverage Gap in Risky Coastal Areas, PropertyCasualty360, Jan. 12, 2023, https://www.propertycasualty360.com/2023/01/12/closing-the-insurance-coverage-gap-in-risky-coastal-areas/.

Steve Dickson & Dan Reichl, Florida Lawmakers Pass Bill to Tame Soaring Insurance Costs, Bloomberg, December 14, 2022 (commenting on passage and goals of Florida Senate Bill 2-A).

Jennifer Wriggins, Flood Money: The Challenge of U.S. Flood Insurance Reform in a Warming World, 119 Penn St. L. Rev. 361 (2014).

Diane P. Horn, Cong. Rsch. Serv., R45999, National Flood Insurance Program: The Current Rating Structure and Risk Rating 2.0 1 (2022).

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