The Surfside condo collapse that killed an estimated 97 people in June is creating new challenges for Florida property insurers that were already dealing with rate increases and hurricane damage claims prior to the tragedy.
The industry’s risk models for insuring buildings in the state are being reassessed in the wake of the collapse, according to Joseph Petrelli, the president of Demotech Inc., which regularly ranks the financial health of more than 40 Florida insurers.
Insurers are now scrutinizing potential liabilities associated with buildings of a similar age and construction as the Surfside condo building, Petrelli said.
“They were supposed to have been built a certain way, subject to a certain building code with a type of sustainability if struck by (weather-related) events,” he told the Florida Record. “... What we have are buildings that are more susceptible to damage than we had thought.”
This damageability issue is leading Florida insurers to reassess whether they have purchased enough reinsurance to cover losses that could affect large buildings in the state, according to Petrelli.
“The companies have requested inspection reports on each building that’s of a similar vintage and a similar construction,” he said.
If those inspection reports uncover structural problems, insurers may decide not to renew policies in a particular building, according to Petrelli. That situation could result in the state-owned Citizens Property Insurance Corp. having to write more policies, forcing the state to take on additional liabilities, he said.
Generally, however, Petrelli doesn’t see a new wave of rate increases in the wake of the Surfside tragedy. Miami-Dade County’s policy of requiring recertification reports on buildings only every 40 years may need to be reconsidered, he said.
“I don’t think there’s going to be rate increases because of it,” Petrelli said. “I think this is a human tragedy.”
A number of class-action lawsuits have been filed by victims of the condo collapse, and a Miami-Dade County judge has said that those who suffered losses in the tragedy would get at least $150 million in initial compensation.