Q&A – Florida Property Insurance Costs w/Admitted vs Non-Admitted Policies

Q&A of the Day – Florida Property Insurance Costs w/Admitted vs Non-Admitted Policies 

Each day I feature a listener question sent by one of these methods.     

Email: brianmudd@iheartmedia.com    

Social: @brianmuddradio   

iHeartRadio: Use the Talkback feature – the microphone button on our station’s page in the iHeart app.      

Today’s Entry: Good Morning Brian, Yesterday you said (I am an avid listener) that the average homeowners insurance policy premium has dropped to $3600. Does that number include Florida "accepted" insurance policies only or all? It may be beneficial if you explained the difference and if there is a downside to insuring with a company that is not "accepted" in Florida. Thank you for ALL you do. You are the best!   

Bottom Line: This is a great next level question you’ve asked about Florida’s average property insurance premiums and it comes as we’re now watching Florida’s property insurance reforms of the previous couple years really start to take hold. Importantly we're starting to see the reforms pay off with desperately needed relief to homeowners. The story you’re referencing is what I entitled: The State of Florida’s Property Insurance Market Entering Hurricane Season. In it I covered the latest reporting from Florida’s Office of Insurance Regulation which provided the best overall information for Floridians entering hurricane season in years. The report included information that a total of 18 property insurance companies underwriting policies within the state have either filed for no increase in cost of premiums upon renewals this year or have even filed for decreases in cost. It also showed that the average premium increase across all property insurance policies is down to 1.6% this year – or less than half of the overall inflation rate. That’s the lowest increase entering hurricane season in over a decade. And yes, it also included the information that the average underwritten policy statewide was approximately $3,600. Like you, that caught my attention as well as the number was lower than any other third-party accounting of policy costs in Florida.  

For example: 

• Insurance.com pegs the average policy cost at: $4,419 
• The Insurance Information Institute has cited policy costs at approximately $6,000 
• Bankrate.com has it at a still higher $6,366 

For those reasons the state’s information really stood out because we’re talking about a dramatic cost difference between what’s being reported by industry analysts and what the state’s official records show. That takes us to your question today. Does the state’s number include “accepted” policies or all and what’s the difference?  

Florida’s Office of Insurance Regulation specifically stated: The average homeowner’s premium in the admitted market in Florida is approximately $3,600. 

The term “admitted” accounts for policies that have met the regulations laid out by state regulators, they are for “accepted” policies. Buying insurance coverage that’s not admitted means the coverage has not met the state’s requirements that typically underwrite what are known as “surplus lines” of insurance. Surplus lines are written by often unlicensed companies that are “non-admitted” policies that generally cover risks that are atypical or beyond the scope of what admitted companies are willing to insure.  

The disadvantages of non-admitted policies are that they are subject to state taxes, and they aren’t covered by the state’s guaranty associations...so you’re own your own if the company doesn’t pay up in a claim situation. These policies are commonly going to be far more expensive than admitted policies as well.  

Currently 81% of Florida’s property insurance policies are admitted policies. And to the root of your astute question this dynamic is what likely also delineates the significant difference in policy costs between the state’s figure and what third party analysts are reporting. For most Floridians the admitted standard is the more objective standard. For example, how much do the surplus lines of insurance cost for Mar-a-Lago? And does it really make sense to average Mar-a-Lago's insurance cost in with the rest of the underwritten property insurance policies in Palm Beach County?  

Great question/point and thank you for listening (and reading) and allowing me to do what I do!