Forbes Feature - Wealth Migration To And From Florida: Insurance Premium Consequences
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Brian Krogol, CPA, CFO of Standard Premium Finance (OTCQX: SPFX), gained recognition for earning the prestigious Elijah Watt Sells award.
The Sunshine State has always been an attractive lure for wealthy individuals, entrepreneurs and financial experts due to the lack of state income tax and a favorable business environment. During and after the Covid-19 pandemic, this wealth migration to Florida was exacerbated by an influx of relocations due to the availability of remote work and other migration drivers. This led to a significant increase in capital, investment and high-end real estate development across the coastal areas of Florida. However, recent reports have shown that the net migration to Florida has cooled dramatically, by approximately 93%, as rising costs for real estate and insurance and the heightened risk of natural disasters have reversed the migration trend.
The explosion of economic development that resulted from the pandemic wealth migration has been widely recognized, with unintended consequences affecting the insurance industry. However, these issues have only just made their way to broader attention and become a topic of conversation. While Florida continues to attract wealthy residents, it is a volatile region, vulnerable to hurricanes and coastal flooding. The value of insurable assets increases proportionally with the potential financial losses from natural disasters.
Over the past few years, studies have indicated over $4 million of wealth migrating to Florida per hour, culminating in billions of dollars flooding the popular coastal community. As of late 2025, Florida was still the number one state for net income migration and the 15th largest economy in the world. The wealth migration is not isolated to residential real estate but is also seen across business, investment firms and tech companies that are establishing themselves in Florida, particularly in the South Florida region.
Concentrating Risk In High-Value Coastal Markets
In terms of insurance, this migration has a direct impact on the level of risk exposure. With high-value residential properties, high-end condominium developments, office buildings and commercial properties concentrated in coastal areas, the potential for catastrophic loss increases. The result affects the premiums that must be paid for insurance, as the overall value of the properties being insured increases.
Florida is already one of the most complex insurance markets in the United States since it is vulnerable to wind damage and flooding. The sudden burst in high-value properties on the market brings with it a conundrum of how to balance the potential for growth with the potential for catastrophic loss.
In recent years, some legacy insurance companies have withdrawn from the Florida market or scaled back their operations due to rising claims costs and litigation pressures. At the same time, new companies have entered the market in order to capitalize on the growing demand for property and casualty insurance. This is a classic case of a dilemma, as the growing economic base of Florida presents a tremendous opportunity for insurance companies, but it also presents a tremendous risk of catastrophic loss.
Financial Reality Of Increasing Premium Costs
The financial implications of this situation can be very burdensome for property owners and businesses alike. For example, insurance premiums on large commercial properties or high-value residential properties located in coastal areas can easily exceed $100,000 per year. Many times, the insurance company will require payment of the entire premium prior to commencing the policy term.
Managing the increasing costs associated with these types of policies while maintaining liquidity is an essential part of the risk management function for companies in capital-intensive industries and regions with a high level of catastrophe risk. Managing the cost of insurance premiums represents a major expense for many businesses and should be factored into their overall planning process, along with other large expenditures.
Role Of Disasters In The Insurance Industry
A much larger issue exists than any specific policy. As more wealth and infrastructure are built in areas that are prone to disasters, the financial effects of disasters have increased in magnitude and complexity. This problem isn’t isolated to Florida. Wildfires across California, flooding in Texas and hurricane damage along the East Coast have all been in the headlines these past few years.
Over the last few decades, the U.S. has experienced a substantial increase in the total dollar amount of losses caused by disasters primarily because of the increased frequency of extreme weather events and the increasing values of exposed assets in areas that are prone to disasters.
Historically, federal programs such as the National Flood Insurance Program (NFIP) were created to fill the void where private insurers could not offer reasonably priced options for catastrophes. If additional wealth is attracted to areas that are prone to disasters, it is possible that the insurance industry will need to review its current disaster insurance systems to determine if they are adequate for the future.
The availability of insurance programs can address a coverage availability issue, but the affordability crisis presents an additional complication. What was once the entire annual premium may now just cover a small fraction of the total cost. These increasing costs are exceedingly difficult for households with little to no savings and small businesses on tight budgets. Insurance premium financing offers a complementary solution that makes insurance more accessible.
Looking Forward
There are a number of lessons from the history of Florida's growth that may be applicable to the insurance industry. The factors that have contributed to the economic success of Florida are similar to those that will result in the continued migration of wealth and population to areas with a high potential for damage from hurricanes and other natural disasters.
As a result, it will become increasingly important for insurers, investors and policymakers in the future to fully appreciate the complex interrelationship of capital migration, risk aggregation and insurance premium pricing. As wealth and populations continue to concentrate in areas with a high potential for loss from disasters, the financial systems supporting insurance coverage must evolve accordingly.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
