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125% Increase in Florida Property Insurance Bills Wreaks Havoc
(Bloomberg) — For Filicia Porter, the insurance bills were the last straw. They were rising sharply for their assisted living business as Florida was hit by increasingly powerful storms, and eventually the numbers stopped rising.
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Then, in March, she finally decided to call it quits, closing the facility near Palm Beach that she opened just two years ago. It came four months after she closed a longtime location in Port St. Lucie that opened in 2017. Together, they left a dozen residents scrambling to find another place to live.
“Every year you see an increase. Why pay more?” said Porter, who founded The House of Cares to capitalize on the growing demand for senior care as baby boomers flooded the Sunshine State. But now, as her premiums increased, on top of all the other costs, she simply couldn’t “keep burning out.”
Porter is just one small example among many in Florida where two major generational forces are colliding: the impact of climate change and the challenge of caring for an aging society. Drawn by the state’s warm climate and low taxes, baby boomers have been flocking to the retiree paradise for years, leaving it with one of the oldest populations in the US. That’s making it a harbinger for other states, as the consequences of rising temperatures ripple through the economy in ways few imagined.
With Florida threatened by more powerful hurricanes, commercial property insurance costs last year rose at nearly five times the national pace, according to credit rating firm AM Best Co. — a tax on an industry that already faces labor shortages, rising wages and rising supply costs.
The result? More and more nursing homes close every year, while others default on debt payments. At the same time, the costs of elderly care – at every level, from independent living to 24-hour nursing – are rising, threatening to become unaffordable for a growing number of retirees.
“We’re heading toward a train wreck,” said Pilar Carvajal, founder and CEO of Innovation Senior Living, a Winter Park-based operator with 339 residents at its facilities that offers services including memory care and assisted living. Your insurance costs have increased by at least 50% in the last five years. “We need help to solve this social problem,” she said.
The story continues
While climate change has increased commercial property insurance premiums across the country, few places have been hit harder than Florida. In the five-year period ending in 2023, costs increased by 125%. Last year, annual premiums rose about 27% in the state — for the second year in a row — while nationally the growth rate slowed to nearly 6%, from about 15%, according to AM Best.
“We have a lot of clients who can’t afford coverage,” said Patrick McConachie, senior vice president at Marsh McLennan Agency in Tampa, which helps senior living carriers negotiate policies. “Recently, in many cases in Florida, the operator will simply return the keys to the owner.”
Read more: There’s a new financial crisis brewing in uninsurable homes in the US
Palm Garden Healthcare closed its assisted living facilities earlier this year due to skyrocketing costs, said President and CEO Rob Greene. The property insurance bill for its 14-site nursing home chain more than doubled in two years to $2.2 million. And although Greene is paying more to be insured, he said coverage for $75 million in damages is far below the at least $200 million he needs.
So far, Palm Garden hasn’t suffered any major storm damage since it opened for business in the late 1980s, but “in June, we got a little nervous,” Greene said.
‘Feeling the pinch’
From 2019 to 2023, damage from natural disasters such as tropical cyclones and severe storms has at least doubled, to as much as $200 billion, from the previous 10 years, according to the National Centers for Environmental Information. That five-year tally includes Hurricane Ian — the third costliest hurricane in U.S. history.
The rise in claims has led some homeowners insurers to fold, driving up rates. But this year, seven new companies are expected to enter the market, according to Mark Friedlander, director of corporate communications at the Insurance Information Institute. And negotiations with reinsurers have gone well, which could mean flat or smaller premium increases this year, said Jack Walker, senior sales executive at AssuredPartners, an Orlando-based insurer specializing in senior housing.
However, until that happens, operators like Innovation and Palm Garden will have to find ways to pay the growing bills. Palm Garden seniors qualify for Medicaid, but the reimbursements are never enough, according to Greene. “We can’t afford to be a McDonald’s, to be able to pass on costs,” he said.
For carriers that serve wealthier retirees and can raise and pass on the price, even they will become “unaffordable” at some point, said Margaret Johnson, senior director at Fitch Ratings.
“Residents are feeling the pinch,” said Raoul Nowitz, senior managing director at SOLIC Capital Advisors, which specializes in restructuring distressed companies and investment banking. And operators are struggling to have enough cash flow to cover debt, he added.
While rising insurance costs are a major problem for all groups in Florida – from homeowners to hotels – it is particularly crippling for this industry. Fitch’s Johnson has a negative credit outlook for the sector.
When he talks to chief financial officers of Florida senior living communities, labor and property insurance costs are “at the top of the list of things that keep them up at night,” said Richard Scanlon, senior managing director at BC Ziegler and Company.
Most of the first debt payments issued to Florida retirement communities since 2009 occurred after the pandemic — 21 of 34 — according to Municipal Market Analytics. The default rate for seniors living in Florida is 18% — more than double the national rate of nearly 8%, according to data compiled by Bloomberg.
Read more: More defaults for seniors living as debt matures
Supply and demand
This tension has caused the closure of dozens of facilities. In the five years ending in 2023, an average of 146 nursing homes or assisted living facilities closed each year, according to data from the Florida Agency for Health Care Administration. During this period, 2022 saw the highest number of closures – coinciding with the arrival of Hurricane Ian, along with the reduction in federal pandemic aid.
Constant closures occur as demand increases and prospects for new facilities diminish. Florida is the second-fastest growing state in the country based on population, behind only Texas, according to the US Census Bureau, and ranks second among US states in terms of seniors, at about 22% aged 65 and over, compared to just 17% for the entire US. .
New facilities have to open at a faster pace to keep up with demographic expansion, said Lisa Washburn, chief credit officer at Municipal Market Analytics, adding that “construction has slowed significantly” in the US. There needs to be some kind of government involvement to subsidize or facilitate construction, she said.
“In Florida you may not have an income tax,” but insurance is a tax, Washburn said.
After Hurricane Ian, Carvajal had to install a new $200,000 roof at one of his six facilities to remain insured.
“How do you make this work when things like property insurance are becoming so costly and unpredictable?” she said. “Looking ahead, if things are going to get worse, I don’t know what we’re going to do.”
(Adds comment to 18th paragraph and updates 7th paragraph with more details about Innovation in Senior Living.)
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The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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