Home insurers drop California, Florida policies at high rate

Florida and California, two states hit hard by natural disasters, lead the nation in non-renewal rates of homeowners insurance policies last year, a Weiss Ratings study found.

Weiss looked at National Association of Insurance Commissioners data for 2024 and also did a comparison with 2018 in 15 disaster-prone states.

Which states had the highest share of non-renewals

In Florida, 3.35% of homeowners with policies in force were non-renewed last year. This was an increase of 1.7 times the rate for 2018, of 1.96%. Florida was hit by two significant storms in 2024, Helene and Milton.

The next highest rate was California, at 3.18% for 2024. This was 3.9 times higher than the 2018 rate of 0.82%. Wildfires have been an ongoing problem in the state.

But the most significant increases in non-renewal rates was in Louisiana, up 5.4 times to 2.97% last year, fourth on the list; and Washington, 4.7 times higher than in 2018, to 1.86%. It was 11th on the list.

"You'd think insurance companies would want to keep their customers," Weiss Ratings founder Martin Weiss said in a press release. "Telling them to go away in much larger numbers is bad for the company's current business, bad for their future growth and terrible for homeowners who often have no viable alternative."

The average cancellation rate across all 15 states in the report was 2.32%, or 2.9 times higher than the 80 basis point rate in 2018.

Weiss claimed the high cancellation rates cannot be due to pressure on insurance company earnings, as income from underwriting and investments grew by 2.6% over the six-year time frame.

"If asked by reporters, a knee-jerk reaction of many insurance company executives is often to blame their own customers for filing 'fraudulent' claims or complain that states don't approve 'big enough' rate increases," Weiss said. "However, they're unable to explain why the abuses have increased so markedly over the years or why some companies (large and small) have been able to do right for their customers despite everything."

A September 2024 Weiss Ratings report said 13 of the largest homeowner insurers in the nation denied almost half of their claims the prior year. 

Valuepenguin, a subsidiary of Lendingtree, in a September report found that nearly one-in-every-five homes in the Miami area do not have property coverage. This is because 13.1% of monthly homeownership costs goes toward coverage; Tampa was third nationwide at 11.6%.

The nationwide average is 7%, the study found. Property coverage for the purposes of Valuepenguin's report also includes fire, hazard and flood policies.

How Florida has been affected by insurer outflow

A recent Deep Sky Research study found that active home insurance policies in Florida fell 78% over the past decade, while at the same time the state's insurer of last resort saw its market share grow to 63% from 6% and now covers the majority of homes.

In 2014, the state had 3.2 million of total active home insurance policies. Last year, this fell to 710,000.

New policies written in the quarter fell to 37,000 from 164,000. At the same time, average premiums for Florida policies increased 22% after inflation to $3,454 annually.

"The insurance crisis in Florida is the financial system's early warning of climate catastrophe," said Max Dugan-Knight, Deep Sky climate data scientist, in a press release for the report, Uninsurable: Florida's Home Insurance Collapse Signals National Trend.

Mortgage lenders could get caught up in the situation, Deep Sky warns. National banks hold hundreds of billions of mortgages secured by Florida properties that are likely to become distressed if damaged by a natural disaster.

Homeowners insurance, particularly replacement cost value coverage which is more expensive, is required by the conforming secondary market. Without affordable insurance, property sales cannot occur and that could impact home values.

"Time is running out," Dugan-Knight said. "One big storm this fall could bring catastrophic losses to thousands of uninsured Florida homes."

Previously, Deep Sky looked at the California market, where the state's FAIR Plan more than doubled in size between 2020 and 2024 due to wildfire risk.