How Florida's insurance crisis is haunting Ron DeSantis' campaign

Donald Trump has a list of familiar taunts for his leading challenger, Ron DeSantis: mocking the Florida governor's tone and his last name. But recently, Trump has begun slamming DeSantis on a more kitchen-table issue.

"The DeSanctimonious super-PAC, Always Back Down, should focus more on Florida property and auto insurance, which has zoomed to highest-in-the-nation status, and highest by far," the former president said in a video posted to social media earlier this month. "Come home, Ron, where you belong. Get those insurance rates way down, because what's happening in Florida shouldn't happen anywhere."

Florida's insurance market, which has been unstable since the 90s, has grown even more volatile in recent years. According to industry estimates, the average price of homeowners' insurance premiums has more than doubled since DeSantis took office in 2019, and more than a dozen insurers have become insolvent in the state during that time. Earlier this month, Farmers Insurance announced that it would end its home and auto coverage in Florida entirely.

A recent study put Florida at the top of the list for the most expensive home insurance in the country. Insurance comparison shopping website Insurify found that Florida residents on average pay an annual premium of $7,788. The next state, Oklahoma, pays an average premium of $6,853. Nationwide, the average cost of homeowners insurance is expected to increase in 2023 from $1,636 to $1,784, Insurify found.

With hurricane season looming this summer, DeSantis is now being pressed to answer for the issue: from Trump, the race's frontrunner, who has begun to regularly repeat the insult during his rallies on the national campaign trail, and from other politicians in Florida.

"Governor, come home and take care of your state," said Democratic State Sen. Tracie Davis, who is asking DeSantis to call a special session and provide immediate financial relief for policyholders, during a recent news conference. "We all know that he's running for president, but we have real problems, real issues."

While the problem predates DeSantis' time in office, it marks a moment of irony for the presidential candidate who made a name for himself dismissing climate-informed financial decision making as a "woke" ideological ploy, rather than a reasoned response to the physical reality of climate change, which scientists believe is making precipitation from hurricanes more intense.

As governor, DeSantis has overseen bipartisan legislation that attempts to crack down on bad-faith lawsuits filed against insurance companies. According to industry representatives, while Floridians hold only 9% of homeowners insurance claims, a whopping 79% of homeowners insurance lawsuits originate in the state. Many companies that have become insolvent cite that as the reason for their financial troubles.

"Florida has encountered a property insurance crisis for many years due primarily to two man-made factors: legal system abuse and claim fraud. It is not because of hurricane losses," Mark Friedlander, a spokesperson for the industry association Insurance Information Institute, wrote in an email to ABC News.

However, Daniel Schwarcz, an insurance expert and law professor at the University of Minnesota, called the litigation issue "a sideshow." He said he believes the real problem is that premiums are not commensurate with the actual risk facing shoreline properties.

"My real assessment is that there's been an effort to avoid reality here," said Schwarcz. "These efforts to focus on lawyers, or focus on lawsuits, are an effort to distract from the main point. I think the main point is climate change."

While scientists say it is still difficult to determine exactly how climate change is affecting hurricanes, they believe that severe hurricanes have become more common in recent decades, and that climate change is making precipitation from those hurricanes more intense, according to the latest authoritative United Nations report. The economic cost from those storms is also growing in Florida, as it continues to build properties in vulnerable coastal areas.

But while climate change may be contributing to long-term increased risk, it alone cannot explain the shorter-term variation in premiums, said Shahid Hamid is a professor at Florida International University who works on the state's model that predicts hurricane losses.

"There's no question that the physical risk has gone up, but, incrementally," Hamid said. "Climate change and so on doesn't justify the doubling of premiums in the past five years."

DeSantis is urging patience on the matter, saying that the benefits of the laws he passed wouldn't kick in until after hurricane season this year, which generally lasts from June through November. Reached for comment, the DeSantis campaign referred ABC News to the governor's recent remarks to media personality Howie Carr.

"Knock on wood, we won't have a big storm this summer. Then I think you're going to start to see companies see an advantage," DeSantis told Carr earlier this month. "Because we did those reforms, it now is more economical for companies to come in. I think they're going to wait through this hurricane season and then I think they're going to be willing to deploy more capital to Florida."

Left in the lurch

In the meantime, insurers' recent decisions to scale back their coverage in Florida have left thousands scrambling for a replacement policy. Lawrence Kolin is one of them.

Until recently, Kolin paid a $10,000 annual premium for his stucco and brick home in Orlando, up from $3,000 when he moved there in 2003. His insurer informed him earlier this month that his policy would be dropped in August -- about halfway through Florida's summer hurricane season.

"I have a few weeks [of coverage] left, and I hope that something will materialize," he said. "Because you never know what's gonna happen with storm season."

Kolin considers himself luckier than most to respond to that disruption. His work as a trial attorney and mediator gives him a stable income that will allow him to absorb the shakeup, which he expects could cost him an additional $2,000 per year. He's not sure some of his fellow Floridians will be so lucky.

"I don't know that your average earner is going to find any coverage," Kolin said. "I don't understand why people aren't in the streets at this point, because it's just untenable."

Kolin said that from his perspective, Florida's new laws "did nothing to impact premiums," and were "basically all about the insurers, and not about the consumer."

At the start of hurricane season, the market stands at a precarious equilibrium. Hamid said that as things stand this year, the system could absorb the economic cost of one hurricane.

"The insurance industry has a capacity of about $50 billion, and a lot of backstops," he said. "If we have multiple hurricanes…the capacity is going to be tested -- the ability to pay claims and so on."

For comparison, Hurricane Ian, which was one of the costliest natural disasters to date when it occurred in September 2022, cost private insurers roughly $60 billion.

Has DeSantis done enough?

Some experts don't share DeSantis' optimism that the reforms he oversaw will stabilize the market. Birny Birnbaum, a longtime insurance analyst and the director of the consumer advocacy nonprofit Center for Economic Justice, has found that in Florida, insurers paid 13 cents of the premium dollar to settle homeowners insurance claims, compared to 9.5 cents nationwide.

In other words, he wrote in an email, "the cost of so-called 'frivolous' litigation is a few pennies of the premium dollar, nothing of the magnitude to drive the premium increases we've seen."

Friedlander noted that unlike most states, Florida's marketplace is dominated by small, regional companies. That makes them more vulnerable to this kind of litigation.

"Typically, a state's home insurance market is composed of 80% of national and super-regional carriers. Small, regional companies do not have the capital position of larger insurers and are unable to absorb the high costs of legal system abuse and claim fraud," Friedlander wrote.

There is also some disagreement on how best to shift the market toward a more stable outcome. Schwarcz said he believes that the main issue is regulation on insurance companies, which prohibits them from making insurance rates commensurate with actual risk. Counterintuitively, he says, voter preferences might be clashing with DeSantis' typical free-market stance.

"People within Florida don't want to see rates increasing," he said. "On the other hand, if there's heavy handed regulatory action, that is sort of inconsistent with the classic Republican narrative of being anti-regulation."

Birnbaum said he believes that the problem is not regulation, but the lack of it. He instead pointed to the reinsurance industry – that is, those who insure insurance companies – as a more likely driver of cost increases. Reinsurance rates have risen by double digits in recent years, sometimes as high as 50%, which Birnbaum said forces insurers to raise their own rates in turn.

Both Birnbaum and Friedlander agreed that the way to secure Florida against future losses is by making the state less vulnerable to environmental risks. DeSantis has supported efforts to adapt to climate change, championing the use of technologies such as sea walls to offset the impact of sea level rise and creating a "Chief Resilience Officer" position in the state's government.

At the same time, DeSantis broadly opposes efforts to address climate change at its source. He vocally dismisses the issue on the campaign trail, recently calling climate concerns the "politicization of the weather," and turning down over $300 million in federal funds to improve Florida's energy efficiency.

"It's a very difficult situation for everyone, including the politicians," said Hamid, the risk modeler. "We're vulnerable -- there's no question -- and we've had some big hurricanes recently. And the prediction is that we're going to have bigger and more intense hurricanes in the future. So it is an issue that's going to remain with us."