Insurance and Climate Repricing — The New Reality of Miami Carry Cost

If you have not bought property in Florida since 2021, the cost of insuring it has changed more than any other line item in the carrying calculus. Premiums have doubled, in some cases tripled. Several major carriers have exited the state entirely. The structural pricing of climate risk has, for the first time in two generations, become a primary variable in Florida real estate underwriting — not a tail risk to be ignored.

This essay sets out what has actually happened in the Florida insurance market, what current pricing looks like by product type, and how the Shibui investment thesis incorporates the repricing.

What has actually happened — the structural drivers

Three forces are converging. First, a sequence of severe storm seasons in the Gulf and Caribbean (Ian 2022, Idalia 2023, Helene and Milton 2024) has raised carrier reinsurance costs significantly. Second, Florida's legal environment — historically dominated by assignment of benefits (AOB) litigation and one-way attorney fee statutes — produced loss ratios out of line with neighboring states; 2022's SB 2A and follow-on legislation have begun to address this but the carrier confidence rebuild is multi-year. Third, post-Surfside (Champlain Towers South collapse, 2021) structural integrity reserve study requirements under SB 4-D have changed the underwriting of older condo product specifically, often producing master-policy increases and special assessments simultaneously.

The result is an insurance market that has both repriced and contracted. Several large private carriers have non-renewed Florida policies (Farmers, Bankers, Lexington meaningfully reducing exposure; United Property & Casualty insolvent); the state-backed Citizens Property Insurance Corporation has become a fallback for a much larger share of the market than it was designed for, and is currently working through depopulation programs to shift policies back to private carriers as the market stabilizes.

What insurance actually costs now

Rough orientation for representative Miami-Dade luxury product, 2026:

For most coastal product, the headline 'premium' figure also understates the true cost — flood coverage above NFIP limits often requires a separate excess policy, and wind deductibles of 2% to 5% of replacement value are now standard (meaning the first $100k–$250k of windstorm damage is borne by the owner).

How we underwrite it

We model insurance at the high end of current carrier quotes plus a 5% to 7% annual escalation for the hold period. We avoid building products with significant deferred capex on the structural envelope — older roofs, single-pane glazing, unreinforced masonry coastal product. We do not underwrite condo product built before 1990 without a full structural review under SB 4-D and a clear read on master insurance, recent assessments, and reserve adequacy.

On the upside, the repricing has already filtered into asset values for the marginal product. Trophy single-family in protected submarkets — Coconut Grove interior, Coral Gables Granada/Country Club, North Pinecrest — has been more resilient than the vertical condo market, where insurance and assessment uncertainty has weighed materially on pricing since 2022. The pricing gap has, in our view, opened a genuine opportunity for capital that can underwrite the carry honestly.

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