Florida’s population is growing rapidly, with over 23 million residents currently, and a projected growth of approximately 1.24% annually. Florida’s attractive business climate and tax policies, in contrast to states like New York and California, keep its competitive draw for large business migration and investment.
However, Florida businesses are facing increasing costs of operation, with high insurance premiums dimming some of that sunshine appeal and creating an affordability crisis for some. Commercial insurance rates in high-risk areas in recent years have seen double-digit percentage increases, thanks to rising property values and increased risks associated with environmental exposures, such as hurricanes and floods.
During and post-pandemic, the flexibility of remote work inspired a massive increase in domestic migration to Florida, with a net inflow of 400,000-plus new residents in 2022. But more recent data indicates a sharp decline in net migration, with under 25,000 people moving in in 2025.
The question becomes increasingly relevant “Is the cost to sustain this growth too high?”
Increased Development Raises Risk and Pressures Premiums
Many of Florida’s recent developments are located in coastal areas and represent high-value residential and commercial properties. This growth has provided many economic opportunities, but it also concentrates risk. With more capital invested in these areas susceptible to environmental damage, the impact of potential disasters increases.
Accordingly, insurers are charging premiums that reflect both the likelihood of a disaster and the potential magnitude of related claims tied to the value of the asset. Additionally, several insurers have either reduced their participation in Florida or tightened their underwriting requirements due to high catastrophe losses and litigation trends.
Timing of Increasing Costs and Cash Flow Considerations
Some Florida businesses are deferring expansion, reconsidering hiring practices and limiting their capital expenditures to manage the increasing and unpredictable nature of their insurance costs.
An aspect of insurance demanding attention is the timing in which premiums must be paid. Oftentimes, premiums must be paid entirely upon inception of the policy period. Therefore, if premiums are increasing, the amount owed at inception creates a significant financial burden. If a business pays its employees weekly and incurs expenses monthly, then cash flow becomes an issue.
Although financially successful companies can find difficulty paying large sums at once, it is particularly difficult for smaller and medium-sized businesses whose cash flow is limited. Therefore, while the total cost of insurance is a concern, equal importance is placed on whether that cost fits into the company’s existing financial framework.
Costs aren’t the only area experiencing volatility in Florida’s insurance industry. Annual premium prices may fluctuate greatly from one year to another based upon natural catastrophes, insurer appetite for writing new business, and overall capacity. These variables add complexity to forecasting costs for businesses.
Flexibility Redefining Affordability
Rather than viewing insurance premium costs solely as one-time costs, payable upon inception of a policy, many companies seek flexible arrangements that allow them to spread these costs over a series of years.
Such arrangements allow companies to reduce immediate financial burdens and retain working capital for use in supporting their ongoing operations and future growth. While flexibility does not diminish the overall cost of insurance or alleviate underlying causes of higher premiums, it does affect how businesses experience and manage their costs.
In light of this reality, flexibility on premium payments is emerging beyond a beneficial resource to an indispensable means for managing risk and facilitating ongoing viability in Florida’s evolving business environment.
William (Bill) Koppelmann is the president, chief executive officer and co-founder of Standard Premium, a premium finance company based in Miami. He is an entrepreneur with more than 30 years of experience in the premium finance industry. He has served on the board of the Florida Premium Finance Association for more than 15 years and is the immediate past president. He also is a member of the Florida Association of Insurance Agents, Professional Insurance Agents Association, Latin American Insurance Association and Independent Insurance Agents of Dade County.
Topics
Florida
The most important insurance news,in your inbox every business day.
Get the insurance industry’s trusted newsletter
