Rising Florida commercial property insurance premiums have forced hundreds of Florida nursing homes to close over the past five years.
Over the five-year period ending in 2023, an average of 146 nursing homes or assisted living facilities closed each year in Florida, according to the Florida Agency for Health Care Administration.
Over the same five-year period, commercial real estate insurance premiums in Florida increased by 125%.
Last year alone, annual premiums in the state increased by about 27 percent. According to Bloomberg News.
Nationally, annual premiums rose just 6% last year, down from about 15% in 2022, according to data from AM Best.
Nursing home owners told Bloomberg that those who haven’t closed their doors are struggling to pay off their debts as the cost of elderly care continues to rise.
Most first-time payment defaults on debt issued to Florida retirement communities since 2009 occurred after the pandemic, according to data from Municipal Market Analytics.
According to Bloomberg News, the default rate for senior citizens living in the United States is about 8% nationwide, but in Florida the default rate is 18%.
“We are facing a train wreck,” Pilar Carvajal, founder and CEO of Innovation Senior Living in Winter Park, told Bloomberg News.
Carvajal’s chain of nursing homes has 339 residents. She said her premiums have increased by at least 50% in the past five years.
“We need help to solve this social problem,” she said.
Hurricanes that hit Florida and a labor shortage are blamed for the soaring insurance premiums.
After Hurricane Ian struck the state in September 2022, Carbajal said her insurance company required her to install a $200,000 roof on one of the six properties she owns to maintain insurance coverage.
“How do you make it work when something like property insurance has become so cumbersome and unpredictable?” she said.
“Looking to the future, I don’t know what we would do if the situation worsened.”
Rob Green, CEO of Palm Garden Healthcare, said his insurance premiums for his chain of 14 nursing homes more than doubled in just two years to $2.2 million. He said he had to close one of his nursing homes earlier this year.
Florida’s nursing home closures coincide with a recent population boom.
According to U.S. Census Bureau statistics, Florida has the second-highest population growth rate after Texas.
Florida also has the second-highest proportion of seniors in the population. Approximately 22% of Florida residents are over the age of 65. In comparison, he is at 17% in the entire state of Florida.
Experts say surging population growth has made it imperative for Florida to build more nursing homes through federal grants and other state involvement.
Lisa Washburn, chief credit officer at Municipal Market Analytics, lamented the fact that there are “significant construction delays” across the country.
“Florida may not have an income tax, but insurance is a tax,” Washburn told Bloomberg News.
But the pace of entry into the market is less reassuring for existing nursing homes, which must find ways to pay soaring rates.
Several devastating hurricanes have caused many private insurance companies to go out of business and leave the state, but several new companies are expected to enter the market this year, leading to interest rates rising slightly or staying the same. There are growing expectations that it will remain in place.
Green told Bloomberg News that he needs at least $200 million to cover the cost of insuring the business, but that he “doesn’t have the luxury of being able to pass costs on like McDonald’s does.” Ta.
