Florida Nursing Homes Shut As Insurance Costs Soar

Hurricane-prone Florida has seen its property insurance surge 125% in the past five years at nearly five times the national growth rate.

Last year, annual premiums soared 27% for the second year in a row.

At the same time, Florida’s population has been surging with aging Baby Boomers, who have filled its senior care facilities, from independent living to skilled nursing and everything in between.

Now, the burden of higher property tax premiums has become effectively a new tax on an industry that already has had its margins squeezed by labor shortages, soaring wages and rising supply costs.

The result is that more and more nursing homes are shutting down and an increasing number of owners and operators are missing debt payments, Bloomberg reported.

 “Many of them can’t afford the coverage,” said Patrick McConachie, senior VP at Tampa-based Marsh McLennan Agency, which negotiates policies for senior-living operators. “In a lot of cases in Florida recently, the operator will simply turn the keys back over to the landlord.”

A Winter Park-based operator of memory care and assisted living facilities said the rising cost of property insurance has operators “headed into a train wreck,” the report said.

From 2019 to 2023, damage from hurricanes and severe storms at least doubled to close to $200B from the 10 years prior, according to the National Centers for Environmental Information, a tally that includes Hurricane Ian, which caused $117B of damage in the Fort Myers area in 2022.

Another disaster-prone state, California, has seen several large insurance companies pull back from the homeowners’ market demanding approval from the state for huge rate hikes.

Earlier this month, Gov. Gavin Newsom threw his support behind a bill that would require California’s Department of Insurance to complete reviews of proposed premium increases within 60 days to try to stop the exodus of carriers from the market.

As an increasing number of insurers in the Golden State are not renewing existing policyholders, have stopped writing new policies or have pulled out of the market, the insurer of last resort-the state-based FAIR Plan-has been flooded by applicants and is now on the hook for more than $3B in payouts, according to a report in the Los Angeles Times.

Ricardo Lara, California’s insurance commissioner, has introduced what he is calling a Sustainable Insurance Strategy that would allow insurers to include the cost of reinsurance they buy to protect themselves from large fires and other disasters into premium costs.

The plan also would allow them to set rates using sophisticated algorithms to predict the risk and cost of future fires, instead of basing them on past events.