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Remains of Fort Myers Beach Town Hall are pictured in Fort Myers Beach, Florida, USA, May 24, 2023. Thomson Reuters Foundation/Amie Santavicca
With hurricane season underway again, residents of the US state are struggling to find cover as insurers declare insolvency
This story is part of a series on weakening access to insurance protection in the United States in the face of growing losses from climate related disasters: End of insurance?
CAPE CORAL, Florida - When Hurricane Ian slammed into his home in Cape Coral, causing about $90,000 in damage, Tom Paulits faced significant rebuilding work - but at least he was insured.
Nine months after the devastating storm, however, his claim still has not been paid - and his provider, who had assured him of continuing coverage until at least the end of May this year, dropped his policy in March after becoming insolvent.
"The fact that they could just pick up and leave when you need it the most – that's just mind-boggling to me," Paulits said from his home in southwest Florida.
New insurance coverage, arranged through his mortgage provider, now has an effective annual premium of about $5,500 - well above his old rate of about $1,400.
He has looked into taking out a policy with Citizens Property Insurance Corporation, the fast-growing state-backed insurer of last resort, as an alternative.
But other private insurance providers will not take him on because his claim with his previous insurer remains unresolved, a situation he described as "just kind of in limbo".
With a new hurricane season underway, Paulits is one of thousands of Floridians scrambling to find affordable home insurance as a string of providers have been declared insolvent and others have become increasingly unwilling to write policies in higher risk areas.
Climate change is fueling fiercer hurricanes, including along Florida's Gulf Coast.
Ian, which slammed into the area last September, was the costliest hurricane in state history, according to the National Hurricane Center, causing $112 billion-plus in damages and sending shockwaves through the insurance industry.
Such losses have exacerbated a growing insurance crisis in the state that threatens to leave homeowners - and taxpayers - out of pocket for worsening losses.
Just one more big storm, especially in the heavily populated Miami region, could tip the system, some insurance experts say.
"If south Florida was hit with a catastrophic storm and had major losses, it could deplete the reserves of Citizens," said Mark Friedlander with the Insurance Information Institute, an industry research group.
"When that happens, every Florida consumer is on the hook."
Heavy losses from Hurricane Ian have accelerated some of the state's insurance woes, but many of the industry's issues predate Ian.
Six insurers became insolvent in 2022, and more than a dozen others either left the state or placed moratoriums on writing new business, according to Friedlander's group.
Average homeowners insurance premiums have risen to nearly $6,000 in Florida this year, about four times the national average, the group estimated.
Sara Warnecke, a resident of Cape Coral, close to storm-decimated Fort Myers Beach, has been going without homeowners insurance after she was dropped by her insurer earlier this year.
She is still weighing her options after seeing some quotes many times higher than the roughly $1,700 a year she was paying when she first moved to the state several years ago.
"Right now I'm thinking about just risking it," rather than pay a higher premium plus a deductible if damage happens, she said at her home, swiping through photos of Ian's aftermath on her phone.
"You bet on the chances, like you're gambling. (You think) 'if I don't have a storm for five years, well look how much I could bank.'"
Warnecke, like Paulits, was a customer of United Property & Casualty (UPC) Insurance Company, which was declared insolvent and ordered into receivership in February.
At the time, it had about 146,000 active policies in force, according to the state's Department of Financial Services.
UPC did not respond to several requests for comment.
Nine months after Ian, even neighborhoods in Cape Coral that escaped relatively lightly compared to hard-hit Fort Myers Beach are still dotted with blue tarps covering roofs.
Rita Montano of Lee County, which includes Fort Myers and Cape Coral, has seen her homeowners premium more than double, from about $2,900 to about $6,600 since Ian, which caused more than $200,000 in damages to her home and its contents.
She has searched for other quotes. But like Paulits, her claim history - including for damage from Ian - is limiting her options.
"I'm having a heck of a time because companies won't write down here anymore," Montano said. "At this point, I'm hoping (our current insurer) doesn't un-renew us because, right now, we're not able to get any quotes."
"At least we have insurance ... there are a lot of people who do not," she added.
As private insurers pull back, more people are enrolling in Citizens, set up in 2002 as a not-for-profit government entity to provide insurance to residents unable to find it on the private market.
As of the end of May, it had more than 1.3 million policies in force. Citizens has a statewide market share of about 16%.
Citizens policies have roughly tripled since 2019 and are projected to top 1.5 million by year-end as more people are either dropped by their carriers or left unable to afford the higher rates on their policies.
Unlike private insurance firms, Citizens can impose surcharges on its policyholders and, if necessary, other Florida insurance policyholders, to pay the costs if a strong storm depletes its reserves.
That ability could drive up prices for all insurance in the state - even automobile policies - if a particularly bad storm hits.
"We'd all be paying to bail out Citizens," said Friedlander, a Florida resident.
Citizens currently has a surplus of about $4.6 billion, according to spokesman Michael Peltier.
"The risk is not that Citizens will not be able to pay claims," he said. "The risk is that we will have to levy assessments if we get hit by a big storm."
As loss-hit private insurers struggle in Florida, residents like Paulits remain waiting for their Ian-related claims to be paid, a barrier to efforts to find cheaper insurance options.
"It's worrisome. We have mold growing in homes, we have people that are sick, we have kids that are sick, and insurance companies that are non-responsive," said lawyer Donna DeVaney Stockham.
"I understand the overall goal of 'let's save these companies so everything doesn't go into Citizens,'" said Stockham, whose firm works on property insurance issues.
"Nobody wants the insurance industry to go bankrupt. But it has to be balanced against these other interests."
Jim Atterholt, vice mayor of Fort Myers Beach, said insurance companies need to do a better job of paying claims in a timely manner or people who can will start canceling their policies and doing without cover - potentially upending the market even more.
"No one's going to pay higher rates, because if (insurance companies are) not paying your claims then (customers) lose faith in the system of insurance. So it's a circular problem and it's a challenge," he added.
Some newer companies – like Slide Insurance, founded in 2021 - have swooped in to snap up business as consumers are left with fewer options.
Besides facing storm losses, many older home insurance firms in Florida are saddled with a heavy burden of claims-related lawsuits filed by policyholders, under state rules that have made such claims relatively attractive to file.
Florida accounts for 79% of these lawsuits nationwide, even though it represents just 9% of homeowners insurance claims, Governor Ron DeSantis' office estimated last year.
The lawsuits - alongside rising reinsurance costs, insurance fraud and inflation - are helping push rates up, said Angel Conlin, chief insurance officer at Kin, a Chicago-based insurer that operates in Florida.
"The situation has decreased the number of insurers willing to write policies in Florida and made it difficult for customers to find coverage," Conlin said.
In December, Florida lawmakers passed legislation that makes it harder for plaintiffs in property insurance lawsuits to collect attorney's fees from insurers - one of several changes industry officials think will cut down on litigation and help shore up the market.
Bruce Lucas, CEO of Slide, said his company's lack of a backlog of open claims is one reason it can afford to write policies in Florida when others are wary.
But across the state, many homeowners are still struggling to figure out the way forward as more insurance firms buckle in the face of growing losses.
Paulits considers himself lucky compared to others whose homes were destroyed. He lost a boat dock and is dealing with ceiling damage, among other things.
But, he said, "it's stressful when finances come into play and you start worrying: Are we going to be able to repair our house?"
He questioned whether insurance firms still doing business in the state will hold up their end of the bargain moving forward.
"Who knows what they're going to do with the next hurricane?" he said.
"(Are they) going to go hopefully five to six years without a hurricane, collect all the premiums and then when another hurricane hits say 'we're out too'?"
(Reporting by David Sherfinski in Florida and Diana Baptista in Mexico City; Editing by Laurie Goering and Helen Popper)
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