1000 Friends of Florida

Coastal Insurance in Florida

Florida is particularly vulnerable to the impacts of severe weather and sea level rise, with significant implications for Florida’s taxpayers and natural resources. 1000 Friends of Florida is a member of Stronger Safer Florida, a nonpartisan coalition comprised of business, consumer and environmental groups from throughout Florida. This diverse membership reflects the broad support for changes to the state-run Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund to better protect all Floridians as well as environmentally sensitive areas throughout the state.  Here are some useful resources on the subject:

1000 Friends of Florida

Why 1000 Friends of Florida cares about coastal development and insurance issues:

  • Because of artificially low premiums, state and federal insurance programs unintentionally encourage development in the coastal areas most subject to storm damage
  • State and federal taxpayers are responsible for covering  any losses that the insurance programs fail to cover
  • Why should people not living on the coast continue to subsidize these policies and also have to pay for any deficits these programs create?

February 2014 Webinar:  Florida’s Coastal Insurance Dilemma:  Who Should Pay?  — View the Broadcast and the  PowerPoint.

2014 Legislative Update Page — Please scroll to end to view section on  pending coastal legislation.

Charles Pattison March 2014 op eds  —  Miami Herald, Palm Beach Post, Sun Sentinel, Florida Keys Keynoter and Reporter, Property Casual 360.  Informative articles on the topic:  Nerdwallet

Stronger Safer Florida

  • Nonpartisan coalition of business, consumer and environmental groups, including 1000 Friends of Florida
  • Supporting changes to Florida’s Citizens Property Insurance and the Florida CAT fund
  • Right-sizing these programs protects taxpayers and the environment
  • To find out more please visit www.strongersaferflorida.org

Florida’s Citizens’ Property Insurance

  • Created by the State of Florida as the “insurer of last resort” after Hurricane Andrew when many private insurance companies pulled out of Florida
  • Provides wind damage coverage only
  • Currently just under 1 million policies in effect with $375 billion in coverage

2013 Stakeholder Recommendations on Citizens Property Insurance — See what was recommended to reform Citizens.

Recommendations on 2013 SB 1770/HB 909 — Find out what was proposed last year.

Florida’s Catastrophe Fund (CAT Fund)

  • $12 billion reserved to pay state share of federally declared storm damage and for use as a “reinsurer” for Citizens Property Insurance
  • Current total loss exposure is $17 billion
  • When claims exceed premiums paid in, deficits are covered by special assessments on all homeowner and car insurance premiums statewide
  • All such policies in Florida currently include assessments to cover deficits caused by the 2004-2005 hurricanes
  • Regional planners and NOAA in 2010 estimated that a theoretical Category 5 storm strike for  the Tampa Bay area would cause about $250 billion in economic, property and business losses.  Click here for more information.

How Florida “Distributes” the Costs of Hurricane Damage

  • Every homeowner’s insurance policy (including car insurance policies) is subject to an “assessment” from the Citizens Property Insurance Corp. to cover losses beyond the ability of the state Catastrophe Fund (CAT fund)
  • Currently “assessments” are on such policies now because Citizens and the CAT fund did not have enough money to pay off claims from the 2004-2005 hurricane season. Citizens did not charge its policyholders market-based rates, and the law allows Citizens and the CAT fund to recoup their losses from everybody, not just Citizens policyholders.  This means that ALL Floridians, not just Citizen policy holders, are subject to these assessments.  This applies to all property and casualty policies, including homeowners, auto and commercial insurance.
  • The fundamental issue is why property owners in locations that rely primarily on private insurance should be required to subsidize cheap insurance.  For example, counties like Sumter (97% privately insured), Volusia (86% private), Columbia (94% private) and Duval (97% private) versus counties like Palm Beach (71% private), Broward (61% private) and Pinellas (53% private). Many of these counties include large numbers of out-of-state residents and foreigners with second homes.

The National Flood Insurance Program


  • Federal program, now administered by FEMA, created  to provide storm damage insurance for coastal and riverine areas in exchange for certain improved building practices, especially building elevations above flood levels
  • Policy is required if federal mortgage backed financing involved
  • Coverage is up to $250,000 for residential plus $100,000 for contents, and up to $500,000 for non-residential plus $500,000 for contents
  • Second home/vacation homes constitute almost 20% of policies, while commercial properties account for almost 6%
  • Due to claims since Hurricane Katrina and Super Storm Sandy, NFIP has a $24 billion deficit
  • According to a 2013 survey by the Insurance Information Institute, almost 2/3 of Americans think flood insurance premiums should be raised to reflect the actual (not subsidized) risk of flooding

The National Flood Insurance Program in Florida:

  • Unsubsidized (actuarial) policies estimated to be between 1 to 13% of Florida policies
  • 40% of the national program exposure ($475 billion) is in Florida where there are almost 2 million policies (93 times as many as any state).
  • Florida is currently a donor state – paid in $16 billion in premiums and collected $3.7 billion in claims but this could quickly change if a major disaster hit Florida

Florida Trend:  The Effects of Changes in the National Flood Insurance Program on Florida (2013) –This provides an excellent overview of the issue.

GAO Reports on Private Flood Insurance (2014) — This report focuses on strategies for increasing private flood insurance.

Biggert-Waters Flood Insurance Reform Act of 2012

  • Adopted to make NFIP actuarially sound and to prevent the existing $24 billion deficit from growing larger
  • NFIP program covers $10 trillion in property values nationally, and Florida values are about a third of this total
  • Proposed rate increases created a backlash in Congress with both the House and Senate adopting differing language that either delays or slows rate increases
  • 87% of Florida NFIP policy holders are not affected by this Act
  • Congress passed and President Obama signed into law on March 21, 2014, the Homeowner Flood Insurance Affordability Act, which delays the implementation of Biggert-Waters Act of 2012.  The major results include:
    • Affordability
      * An annual individual property rate cap (18 percent) that will prevent year-over-year rate increases for homeowners.
      * FEMA must strive to keep flood insurance policies under one percent of a property’s total coverage and report when it is unable to do so while Congress works toward a long-term solution.
      * FEMA must review and report how new rates and surcharges are affecting small businesses, churches and nonprofits within 18 months.
    • Accurate Maps
      * Language requiring that FEMA’s flood maps are accurate and reliable, along with improved coordination and cooperation with communities during the mapping process.
      * Provide funding to reimburse individuals and communities that successfully appeal their FEMA flood map.
      * Ensures communities get credit for local levees and non-structural mitigation features in new FEMA flood maps.
    • Other
      * Providing homeowners, especially in dense urban areas living in row homes, more commonsense options to mitigate flooding.

The Coastal Resources Barrier Act

  • The Coastal Barrier Resources Act (CBRA) eliminates disaster assistance and federal flood insurance for undeveloped coastal barrier islands
  • CBRA was originally authored by U.S. Representative Thomas B. Evans, Jr. and Senator John Chaffee, who kept three objectives in mind: 1) to minimize the loss of human life by discouraging development in high risk areas vulnerable to storm surges and hurricane winds; 2) to reduce wasteful expenditure of Federal resources; and 3) to protect the natural resources associated with undeveloped coastal barriers
  • The US Fish and Wildlife Service (USFWS) has the primary authority in the implementation of this Act, and the designated Florida areas can be seen at:  http://www.fws.gov/habitatconservation/State_Locator_Maps/Small_FL.pdf
  • An economic study conducted by the USFWS in 2002 estimated that by 2010, CBRA will have saved American taxpayers nearly $1.3 billion by restricting Federal spending for roads, wastewater systems, potable water supply, and disaster relief  (http://www.fws.gov/cbra/Docs/TaxpayerSavingsfromCBRA.pdf)

Sea Level Rise in Florida


  • Climate Central, the website of an independent organization of leading scientists and journalists focusing on the changing climate, includes more detailed information on sea level rise, including a section devoted specifically to Florida.  See also their 2012 study, Florida and the Surging Sea.
  • In Florida and the Rising Sea, Climate Central notes that a recent Florida Atlantic University study estimated that:  “… just 6 more inches of sea level rise — very plausible within two decades — would cripple about half of South Florida’s flood control capacity.”  The article goes on to note:  “More than half the population of more than 100 Florida towns and cities lives on land below that 4-foot line. Miami-Dade and Broward counties each have more people below 4 feet than any state, except Florida itself and Louisiana.”
  • The state’s leading business magazine, Florida Trend, features a very comprehensive review and discussion on sea level rise impacts in the July 2013 article, A Rising Concern:  The impact of sea level rise on Florida.
  • In 2007, Tufts University released the study, Florida and Climate Change:  The Costs of Inaction.  Among other things it looked at public infrastructure at risk due to sea level rise.  Here are some excerpts:

“Sea-level rise will reach 23 inches by 2050, 27 inches by 2060 and 45 inches by 2100.  The vulnerable zone includes nine percent of  Florida’s current land area, or some 4,700 square miles. Absent successful steps to protect them,  these lands will be submerged at high tide. The vulnerable zone includes 99.6 percent, all but six square miles, of Monroe County (Florida’s southwest tip and the Keys). It also includes 70 percent of Miami-Dade County, and 10 to 22 percent of 14 other counties. Almost one tenth of Florida’s current population, or 1.5 million people, live in this vulnerable zone; one-quarter of the affected population lives in Miami-Dade County.”

“The vulnerable zone also includes residential real estate now valued at over $130 billion, half of Florida’s existing beaches, and 99 percent of its mangroves, as well as the following significant structures (among many others):  2 nuclear reactors; 3 prisons; 37 nursing homes; 68 hospitals; 74 airports; 82 low-income housing complexes; 115 solid waste disposal sites; 140 water treatment facilities; 171 assisted livings facilities; 247 gas stations 277 shopping centers;  334 public schools; 341 hazardous-material cleanup sites, including 5 Superfund sites; 1,025 churches, synagogues, and mosques; 1,362 hotels, motels, and inns; and 19,684 historic structures.  While efforts to protect at least some portions of the vulnerable zone will surely be taken, they may prove unavailing in some locales (and will be costly even where effective). As the Science and Technology Committee of the Miami-Dade County Climate Change Task Force recently noted, “the highly porous limestone and sand substrate of Miami-Dade County (which at present permits excellent drainage) will limit the effectiveness of widespread use of levees and dikes to wall off the encroaching sea.”

“Transportation infrastructure in Florida will be damaged by the effects of sea-level rise, particularly in combination with storm surges. Docks and jetties, for example, must be built at optimal heights relative to existing water levels, and rapid sea-level rise would force more frequent rebuilding. Roads, railroads, and airport runways in low-lying coastal areas all become more vulnerable to flooding as water levels rise, storm surges reach farther inward, and coastal erosion accelerates. Even roads further inland may be threatened, since road drainage systems become less effective as sea levels rise. Many roads are built lower than surrounding land to begin with, so reduced drainage capacity will increase their susceptibility to flooding during rainstorms. These effects will have significant impacts on Florida’s industries and infrastructure.

Tourism, one of Florida’s largest economic sectors, will be the hardest hit as much of the state’s wealth of natural beauty — sandy beaches, the Everglades, the Keys — disappears under the waves. … [C]osts of inaction are projected to total $9 billion by 2025, $40 billion by mid-century, and $167 billion at the end of the century.”

Useful Websites:

Stronger Safer Florida — Business, consumer and environmental groups have joined to support changes to Florida’s coastal insurance programs to better protect all Floridians and environmentally sensitive areas throughout the state.

Florida Sea Grant Coastal Insurance Page — This page covers the National Flood Insurance Program and Florida’s efforts to foster a private flood insurance market.

1000 Friends of Florida Coastal Resources Page — Includes information on state regulations and plans regarding Florida’s coastal areas.

1000 Friends of Florida Climate Change Page — Includes numerous links to state, regional and local plans, studies and regulations addressing strategies to adapt to and mitigate for climate change in Florida.

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