Even though she doesn’t live in a hurricane evacuation zone, Stacy Miller does live in Florida.
Tampa, Florida.
Where three hurricanes — Debby, Helene and Milton — ripped through and battered the Tampa Bay region over a 65 day-period in 2024. With a home 10 miles off the western coast of Florida, Miller, founder of Bayview Financial Planning in Tampa, has seen her own annual homeowners-insurance premium surge by 300% over the last decade, from $1,600 to $4,900.
This year she is buying flood insurance and advising clients with home in zones vulnerable to hurricanes to consider the protection offered through the National Flood Insurance Program, even if they don’t live in evacuation zones. “People thought they were prepared, but they weren’t,” she says, adding that her own home escaped the extensive flooding and storm surges that damaged many properties last year.
As homeowners and their insurers grapple with the surge in insured losses generated by natural catastrophes around the world — the global insurance industry absorbed $154 billion in insured losses just last year alone — financial advisors have their work cut out for them.
According to the Geneva Association, a think tank for the insurance and reinsurance industry based in Geneva, Switzerland, the average homeowners-insurance rate increased by more than 11% in the United States in 2023. Between 2020 and 2023, Florida led the pack with an increase of 52%, followed by Louisiana at 55%. Rounding out the top five over this period were Washington D.C. (51%), Colorado (43%) and Utah (42%).
Personnel cutbacks at the Federal Emergency Management Agency (FEMA) and the Trump Administration’s efforts to reduce the agency’s role also have many worried about support efforts should disaster strike. As hurricane season kicked off June 1, David Richardson, the newly appointed head of FEMA, said, “I didn’t realize it was a season,” the Wall Street Journal reported.
Big Risk for Clients Age 50+
Residential properties, located along coastlines and waterways and in hills and canyons, frequently carry greater exposure to natural disaster risks than commercial properties, which tend to be located inland and closer to central transportation areas. And many of these residential properties are owned by people in the second half of their life.
Nathan Sebesta, a certified financial planner and owner of Access Wealth Strategies in Artesia, N.M., says rising property insurance premiums are absolutely on the firm’s radar. “Particularly for clients 50 and older, many of whom are retiring to high-risk areas like coastal or mountainous regions,” he says.
The increase in natural disasters has made insurance carriers more selective, even exiting markets entirely in some cases. In Texas, for example, homeowners-insurance premiums have increased from 20% to 40% in just the past 11 to 18 months, especially in areas prone to hail or flooding.
Many financial advisors are starting to factor in higher insurance costs as a line item in retirement income planning, especially for clients relocating or downsizing, says Sebesta. “Clients are often surprised by how significantly premiums impact their cash flow in retirement,” he says. “Some are rethinking vacation homes, opting for more insurable locations, or increasing their deductibles to lower annual costs.”
His firm is coaching clients to review coverage annually, work with independent agents and understand the true replacement value of their properties. “Insurance is no longer a ‘set it and forget it’ topic,” he says. “It now requires active planning and client education.”
Embracing More Proactive Policy-Shopping
Michelle Dockter, senior vice president and a financial advisor at D.A. Davidson & Co., in Colorado Springs, Colo. said annual insurance premium increases of 2% to 3% are no longer the rule. Financial advisors should prepare homeowners with properties next to forests to be ready for increases of 6% to 7% while those in flood zones can expect increases of 11% or higher.
“We’re advising clients to put their insurance contracts out for bid every two to three years,” she says, adding that rebidding a contract after a year is unlikely to produce a significant different in premiums,” she says.
Stephen Maggard, a financial advisor at Abacus Planning Group in Columbia, S.C., is also paying close attention to insurance costs. “We are very involved with helping our clients manage the increasingly expensive property and casualty landscape,” he says. “We are seeing insurers tighten, restrict and reduce coverages across the board. Clients are asking us to look at their policies to see what they could afford to not insure” and areas where they can self-insure.
Client Frustration is Growing
Abacus is finding its clients living along the coast are increasing frustrated by the higher expenses accompanying insurance premiums, property taxes and maintenance costs. Some clients along the South Carlina coast are even moving inland, says Alex Chastain, a financial planner at Abacus Planning Group who is helping shape the firm’s response as clients navigate a maze of coverage changes and cost increases.
Homeowners are leaving the beach areas and heading to lakes, such as Lake Murray and Lake Keowee, which have lower insurance and maintenance costs but still provide a waterfront experience, she notes.
As insurers tighten restrictions on home coverage, some insurers are asking homeowners to replace their home’s roof before it is needed. “We recently had a client who was required to replace their 40-year roof at 20 years, or lose coverage,” Chastain says. Maggard adds that one carrier will no longer write new insurance on a home unless the roof is less than 10 years old.
“We are seeing it across the board: home, auto and umbrella. But it’s not just in the form of increases to premiums; insurers are also looking for ways to trim down their exposure to risk,” says Maggard. Two clients were told their carrier would not renew their $4 million liability policy. Instead, it would be dropped to a $2 million policy, Maggard says, adding, “There was no room for discussion and if the client wanted $4 million, they would have to change carriers.”
Chaos in California
In California, financial advisors and their clients have their hands full as insurance carriers leave the state.
“The California property and casualty insurance market is in chaos and serious trouble,” says Tina Florence, CFP, a partner with Lane Florence LLC in Folsom and director of advocacy for the Northern California Financial Planning Association.
“Please be sure to make your payments on time and don’t let the policies lapse,” she says. “If you still have homeowners’ coverage, you’re in a good place.” She also advises homeowners to follow instructions from local authorities to make their properties fire-safe. “The carriers are using drones to observe properties and non-renewing or cancelling coverage if they find shrubs and trees surrounding the houses.”
Florence also cautions advisors and their clients to “beware of the FAIR Plan as we still cannot determine if the Plan is solvent or has adequate reserves to process claims for all the insurance it has issued.” The California Fair Access to Insurance Requirements (FAIR) Plan is a last-resort program that provides basic fire insurance coverage for property owners who cannot obtain coverage from traditional insurance companies. It’s a private association of California insurance companies, not a government program.
“It’s a serious situation and we’re doing what we can,” says Florence, who saw her own annual insurance premium for a home that is not in a fire zone increase from $2,645 in 2023 to $4,306 in 2024. She is hoping the insurer does not drop her coverage when the renewal comes up in August 2025.
Florence says state insurance commissioner Ricardo Lara has made it extremely difficult for carriers to continue functioning in California. “It continues to be a very unfortunate situation for homeowners, who are our clients,” she says.
Balancing Peace of Mind and Risk
To help clients cope with increasing insurance costs, Abacus Planning has developed a nine-point guide for clients as a way to curb the premium increases. The firm’s financial advisors added a review of property and casualty insurance to the spring agenda meeting it holds with clients.
“We encourage our clients to have a higher deductible, at least $5,000 or 1% of dwelling value, and self-insure smaller losses in exchange for a lower premium,” Chastain says, adding this helps discourage small claims which can prompt an insurer to drop a policy at renewal. “We are encouraging clients to have their insurance agents re-run their insurance score and if the client’s credit has improved, it is helping soften the premium increase.”
Miller of Bayview Financial Planning says she includes insurance premium costs as a line item in the financial planning outlines devised for her clients. While she once gave many line items an inflation rate of 3%, that number has changed over the years and varies according to the expense. College education costs, for example, get an inflation rate of 5% to 10%. In Florida, she factors in a 10% annual inflation rate increase for homeowners insurance, though not in other states.
“It’s a constant balance,” Miller says, referring to the purchase of insurance coverage. “Between peace of mind and taking some risk on my own … deciding to pay for anything that is not insured.”
“Where is that happy balance?” she adds.
Paula L. Green is a New York City-based freelance journalist with more than three decades of reporting and editing experience that spans coverage of international business and finance issues to murders and politics at the Jersey Shore to presidential press conferences in Argentina and Mexico. She can be contacted by plgreen12004@gmail.com. To read more of her articles, click here.
