Fort Myers Beach at epicenter of rising insurance rates
Countywide, statewide, issue
The increase in flood insurance rates in Southwest Florida is a byproduct of the impact from Hurricane Ian as well as an overall increase insurance rates being felt throughout Florida.As of publication, Lee County residents were awaiting a decision from FEMA on whether flood insurance rates could get worse if the agency approves a measure to take away the county’s 25% discount through the National Flood Insurance Program. The municipalities of Bonita Springs, Cape Coral, Estero and Fort Myers Beach could also be impacted by the decision, as well as the unincorporated areas of Lee County. The city of Fort Myers and Sanibel are impacted by the action which is largely related to whether the communities are properly managing the regulation of permitting for construction work since Hurricane Ian .The effects of rising insurance rates are already being felt across local communities from individual property owners, condo homeowner associations and to the real estate market.Fort Myers Beach Realtor Chris Loffreno sees the rising insurance rates cooling down the local real estate market and elsewhere around the state.”It is all over the state,” Loffreno said. “Wind and flood insurance went up substantially.” Loffreno said the rate increases are affecting homeowners as well as homebuyers who are on a budget.”It’s quite a hit,” he said. “It’s a big topic that is brought up” among those in the real estate market and those looking to purchase properties, Loffreno said.One of the major places the impact is being felt is at condos, where homeowner’s association fees are increasing to make up for not only the increase in insurance rates but shortfalls in reimbursements from insurance companies from Hurricane Ian. Many condo associations on hard-hit Fort Myers Beach are still entangled in litigation with their insurance companies over payouts from Hurricane Ian damage. ”Because of that, their assessments and maintenance fees are going up,” Loffreno said. Loffreno said he has seen some condos raising their monthly maintenance and insurance fees up to as much as $2,000. ”It’s hard to make those numbers work for people who want to make an investment,” Loffreno said. “It’s the reality.” Many of the condos on Fort Myers Beach are used as vacation rentals by businesses and individuals who earn income on their properties. “Your profits are taken away because of the insurance,” Loffreno said.Island Winds Condominium Association President Dave Nusbaum said he is estimating an increase of $30,000 or more on the property’s flood insurance premiums on top of a previous increase for the current year. ”Sadly, many condominiums on Fort Myers Beach, including Island Winds, still continue to battle the flood carriers and FEMA for our Hurricane Ian payments 17 months after landfall,” Nusbaum said.
Pink Shell Beach Resort co-owner Robert Boykin said the insurance for its hotel and condo buildings went up substantially after Hurricane Ian, which brought tens of millions of dollars in damage to the resort.
“We’ve been buying our insurance from Lloyd’s of London every year,” Boykin said. “I go there every year. We had difficult meetings after Ian.”
Boykin said the resort faced a “horrendous” hit after Ian, with its premium doubling, its deductible doubling and coverage decreasing.
Boykin said the resort did not see an increase this year on its insurance.
“The market is coming down,” he said.
Most of the rooms in the hotel are condos, which are owned by individuals in a partnership with the hotel’s owners. Boykin said he believes the insurance increases will impact the real estate market.
Boykin would like to see the state of Florida serve as a backstop to the insurance market by setting a high cap on the payouts by insurance companies, with the state picking up the rest.
“That would give insurance companies comfort that they wouldn’t have unlimited exposures on this stuff,” Boykin said. The state could spread out its insurance coverage across coastal Florida, which would limit the risk to insurance companies and bring the cost of insurance down, he said.
While the state legislature works on bills to fix its insurance market, Loffreno said the state faces a problem in insurance options. ”We have a limited number of insurance companies,” Loffreno said. “Insurance companies have pulled out of the state. I think the government is behind it. It seems the insurance companies can raise their rates as much as they want.” The state legislature and Gov. Ron DeSantis approved legislation in 2023 making it harder to sue insurance companies. The state legislature has been working at several potential remedies to the rising flood insurance rates. Outgoing Rep. Spencer Roach, of North Fort Myers, had proposed a measure that would take Citizens Property Insurance out of the flood insurance market and repurpose it to focus solely on wind insurance. ”We are undergoing the worst property insurance crisis we have ever faced,” Roach said. “What we are doing is not working.” In addition to the Roach bill, there are other proposals to retool Citizens, the property insurance carrier of last resort for Floridians. Sen. Jonathan Martin, R-33, whose district covers most of Lee County, said there are several bills being considered to fix the state’s property insurance market though he was not available to comment further as of publication deadline. In March, the Florida Senate announced the passage of bills to reduce property insurance costs through a one-year relief for residential property insurance policyholders, covering the cost of insurance premium tax and the State Fire Marshal assessment for residential property insurance policies for a 12-month coverage period through Sept. 30, 2025. The bill also includes a one-year insurance premium tax relief on flood insurance policies. Messages left with the office of DeSantis regarding the insurance market were not returned as of publication. Roach said at least two property insurance carriers in the state have announced rate increases of more than 50%. ”Some people are paying more for their premiums than their mortgages,” he said. In the meantime, Loffreno said the real estate market has seen a slowdown in the last couple of months. ”We’re starting to see price adjustments,” Loffreno said. “Owners have to get a little more realistic if they want to sell. With interest rates being high, that doesn’t help.” Loffreno said more homebuyers are now concerned about living on the coast and are looking to move further inland. Some who lived on Fort Myers Beach are also moving further out. Loffreno said a lot of work needs to be done to fix the property insurance market. ”I don’t see it changing anytime soon,” he said.
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