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Writer's pictureEd DiMarco MS, MA
Oct 103 min read

Naples, Florida Homeowners Insurance Market: Bracing for Challenges

Naples, Florida Homeowners Insurance Market

The homeowners insurance market in Naples, Florida, is facing unprecedented challenges, primarily driven by recent hurricane activity, rising costs, and systemic issues within the state. The combination of increased hurricane frequency, changes to state insurance programs, and the withdrawal of significant insurers creates a complex environment for Naples homeowners seeking affordable and reliable coverage.


Impact of Hurricanes on Naples

Naples, like much of coastal Florida, is increasingly vulnerable to the impacts of hurricanes. The recent devastation caused by Hurricane Helene and the looming threat of Hurricane Milton, now a Category 5 storm, has further strained the homeowner's insurance market. Naples residents are experiencing some of the highest insurance premium increases as insurers brace for massive payouts in the wake of these storms. The average annual premium for homeowners in Florida reached $10,996 in 2023 and is projected to rise by an additional 7% to $11,759 by the end of 2024.


The frequency and severity of hurricanes have left many insurers cautious about their exposure in high-risk areas like Naples. This caution has translated into a rise in premiums, reduced coverage options, and increased policy non-renewals. Even those homeowners who can afford higher premiums are scrambling to secure coverage, as multiple insurers have either exited the market or significantly scaled back their presence in Florida due to insolvency or financial risks.


Changes to Citizens Property Insurance and Their Impact on Naples

Citizens Property Insurance, Florida’s insurer of last resort, has become a significant option for many homeowners in Naples. However, recent legislative changes under House Bill 1503 have introduced new dynamics to the Citizens insurance landscape. The law allows surplus line carriers to take over policies that are not primary residences, such as vacation homes, to help reduce the number of policies held by Citizens. This depopulation effort aims to lower the financial risk associated with having a large concentration of policies within one insurer, especially in hurricane-prone areas like Naples.


While this move may help reduce the burden on Citizens, it also means that many secondary property owners in Naples may see their coverage shift to surplus line carriers, whose rates can be 50% to 100% higher compared to traditional insurers. As surplus lines carriers are not subject to the same rate regulations, the cost for coverage in Naples could further escalate, putting additional pressure on homeowners with secondary properties.


Insurer Insolvency and Market Exit

The instability in the insurance market is compounded by a series of insurer insolvencies since 2022. At least seven insurance companies have been declared insolvent, and several significant providers have either ceased operations in Florida or significantly reduced their coverage offerings. This includes companies that have dropped tens of thousands of policies to reduce their exposure to Florida’s growing insurance risk. As a result, homeowners in Naples are finding it increasingly difficult to find and retain coverage at reasonable rates, with many turning to Citizens as a last resort.


A Perfect Storm for Homeowners in Naples

Naples residents face what can only be described as a perfect storm—rising premiums, reduced coverage availability, and a market that is becoming ever more volatile due to climate risks and economic pressures. The state’s legislative attempts to reform and stabilize the market have yet to yield meaningful relief for homeowners, and the continued threat of major hurricanes only adds to the uncertainty.


For homeowners in Naples, the key to navigating these turbulent times is to stay informed about market changes, explore all available coverage options, and work with knowledgeable insurance agents who understand the region's unique challenges. With Hurricane Milton now threatening to make landfall, the need for proactive risk management and adequate insurance coverage has never been greater.


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