Trust This. Surplus Lines Insurance: Florida’s Real Estate Lifeline โ€” Tampa Bay’s Resilience

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๐Ÿ‘‹ Happy Friday! Welcome to 2025. I celebrated my birthday and National Science Fiction Day yesterday

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Trust This.

By Joseph E. Seagle, Esq. โ— Jan 03, 2025

Smart Brevityยฎ count: 6 mins...1640 words

๐Ÿ‘‹ Happy Friday! Welcome to 2025. I celebrated my birthday and National Science Fiction Day yesterday by watching Star Trek episodes until I drove everyone around me crazy with boredom.

1 big thing: Surplus Lines Insurance: A Lifeline for Florida Real Estate Investors?

AI image of a house suspended over a weak net

The big picture: Floridaโ€™s property insurance crisisโ€”marked by climbing premiums, insurer insolvencies, and rising claimsโ€”has forced many homeowners and real estate investors to seek alternatives. Enter surplus lines insurance, a niche market offering coverage where traditional insurers fear to tread.

Why it matters: Surplus lines insurance can be cheaper but can be gone in an instant with no backup coverage available if the insurer goes under.

Surplus lines insurance comes from non-admitted insurersโ€”companies not regulated by Floridaโ€™s Office of Insurance Regulation (OIR). These policies:

  • Cover high-risk properties or situations standard insurers wonโ€™t.

  • โ€ข Allow greater flexibility in pricing and coverage terms.

  • Are backed by financially stable companies, though without state guarantee funds.

Why it matters: With insurers exiting the Florida market, surplus lines can fill a critical gap, particularly for investors with unique or high-risk properties.

The advantages:

  1. Availability: Covers risks that admitted insurers decline, including older homes, waterfront properties, or properties in hurricane-prone areas.

  2. Customization: Flexible terms can tailor coverage for investment properties with specific risks.

  3. Speed: Policies are often quicker to underwrite and approve.

The pitfalls:

  1. Limited regulation: These insurers arenโ€™t beholden to state pricing restrictions or claim-handling standards, which may lead to higher premiums or disputes.

  2. No state guarantee: Floridaโ€™s insurance guaranty fund does not back surplus lines policies, leaving policyholders exposed if the insurer fails.

  3. Exclusions: Coverage may exclude critical hazards, such as windstorm or flood damage, unless explicitly added.

For Florida real estate entrepreneurs:

  • Surplus lines insurance can be a valuable tool for protecting high-risk investments, but vigilance is key.

What to watch for:

  1. Understand exclusions: Scrutinize policy terms to ensure key risksโ€”like hurricanesโ€”are covered.

  2. Check financial strength: Research the insurerโ€™s AM Best rating or equivalent metrics to gauge solvency.

  3. Consider cost-effectiveness: Compare surplus lines quotes against state-backed Citizens Property Insurance or other alternatives.

The bottom line: Surplus lines insurance offers flexibility and protection in a tight market, but itโ€™s no panacea. Real estate investors must weigh the benefits against the risks and be prepared to navigate claims without the safety net of state oversight.

2. Tampa Bay Housing Market Shows Resilience Post-Hurricane Milton

a pirate flexing his muscles as a hurricane approaches

Hurricane Milton, which struck Tampa Bay as a Category 3 storm in October, initially caused significant disruptions in the local housing market. However, data from Altos Research shows that the market rebounded quickly, signaling resilience and opportunities for real estate investors in 2025.

Driving the news: As Hurricane Milton approached, the Tampa Bay housing market froze.

  • New home listings dropped by up to 81% in affected cities, including Clearwater, Largo, and Riverview.

  • Pending sales fell between 45% and 79%.

  • However, within weeks, listings surged by 175%-650%, while pending sales in Tampa and Brandon climbed by over 180%.

โ€ข Inventory: Overall housing inventory dipped less than 10% during the hurricane but began recovering steadily by Novemberโ€™s end.

โ€ข Prices: Despite volatility in listings and sales, home prices remained stable, indicating strong demand and market fundamentals.

Why it matters: For Tampa Bayโ€™s real estate professionals, this rapid rebound highlights the marketโ€™s adaptability to natural disasters. Investors can leverage these insights to predict future trends and prepare for potential disruptions.

Whatโ€™s next: As the region rebuilds, the focus shifts to long-term strategies:

  1. New Construction Boom: With inventory recovering and demand holding steady, opportunities abound for developers. Projects addressing storm resilience could attract premium buyers.

  2. Insurance Implications: The storm has renewed attention on homeowner and property insurance, critical for safeguarding investments in a hurricane-prone area.

  3. Policy and Infrastructure: Advocates may push for improved building codes and infrastructure to mitigate damage from future storms.

What weโ€™re watching: The speed of recovery after Milton underscores Tampa Bayโ€™s position as a desirable market, but it also serves as a reminder of the increasing risks of climate change. Investors must weigh the cost of resilience upgrades against potential returns.

The bottom line: Tampa Bayโ€™s housing market has demonstrated robust resilience, bouncing back from Hurricane Milton with impressive speed. For real estate professionals, the post-storm data offers valuable lessons on market behavior and highlights the need for proactive investment strategies in a dynamic environment.

Go deeper: HousingWire (Subscription required)

3. Catch up fast

a house driving a car and screeching to a stop at a stop sign
  1. U.S. pending home sales have risen to the highest level since 2023, but the average 30-year fixed mortgage rate is also pushing higher toward 7%. Bloomberg (gift link good for 7 days)

  2. A deep data dive shows that the best news in 2024 was that housing inventory for sale rose to levels last seen in 2019, getting the market closer to โ€œnormal.โ€ HousingWire (subscription required)

  3. Floridaโ€™s insurance commissioner floats the idea of phasing out the use of asphalt shingles for roofs. Orlando Sentinel (gift link)

  4. For this new year, embrace radical โ€œdoabilityโ€ if you want to change your life for good. Wall Street Journal

  5. December saw the biggest seasonal slowdown in the housing market in two years. Realtor

4. Closing Thought: Confident humility in leadership

A black Labrador Retriever lying on a white dog bed on a hardwood floor beside a marble table
The Arctic Blast arrived in Asheville earlier this week, and Edward was having none of it.

I always look for lessons in leadership everywhere I can.

  • Sometimes the lessons come from the least expected places.

Why it matters: On Wednesday evening, we watched The Six Triple Eight on Netflix. It was full of leadership lessons. (Spoilers follow if you havenโ€™t seen it yet.)

Itโ€™s a historical recounting of the only battalion of African American Womenโ€™s Army Corps sent to Europe in WWII.

Families back home hadnโ€™t received any mail from their soldiers in at least 10 months. and soldiersโ€™ morale was suffering because they hadnโ€™t received any letters from home during the same time.

All mail processing and transportation had been deprioritized for months to instead focus on the D-Day invasion and the all-out offensive to defeat Hitlerโ€™s fascist regime.

Other battalions had been sent in to clear up the backlog of mail processing and transporting, but all had failed. Dr. Mary McLeod Bethune worked with Eleanor Roosevelt and FDR to press the generals to use the 6888 W.A.C. Battalion to clear up the backlog and get the mail moving again.

Major Charity Adams commanded the 6888. She is a study in great leadership.

Faced with over 10 million pieces of mail overflowing in 10 airline hangars, she marshaled her 855 soldiers to action. With her leadership, they turned a run down school campus into a barracks and mail processing facility. The generals gave her six months to clear up the backlog.

Her troops came to Scotland in a small passenger ship, tossed in rough seas for days. They were tired and sea sick, but she โ€” following her commandersโ€™ orders โ€” marched them from the dock to their station.

The soldiers had been given menial tasks for months leading up to the deployment, handling phones, transcriptions, and other secretarial work. When they heard that they were going to be processing mail, they felt that it was going to be just another menial task to complete.

But Major Adams clearly drew the line between the mission and their daily task: They would be responsible for bolstering support for the soldiers and the war effort back home. At the same time, they would be rebuilding the morale of the field soldiers who hadnโ€™t heard from home for months. She explained the value of the task of handling millions of pieces of paper and packages: They werenโ€™t just pushing paper. They were winning the war.

At first, she tried to lead with a top-down approach, micro-managing the processing and transporting of the mail. However, when thousands of pieces were returned as undeliverable, she humbly asked her soldiers what they thought could fix the problems.

Immediately, the soldiers came forward with dozens of new ideas, information, processes, and tricks to get the mail to the correct recipients.

She thought outside the rules and agreed to allow her soldiers to open the mail and read the letters for clues whenever they couldnโ€™t read the scribble on the envelopes.

She stood up to the generals and others working against her, personally, and those treating her soldiers as less than worthy of respect.

She demanded perfection and held her soldiers to a high standard, but she was humble enough to know when she needed help from those same soldiers.

In the end, the 6888 cleared the backlog of mail in less than 90 days and then did it again in the Pacific with an even larger backlog.

The bottom line: Major (and later, Lt. Col.) Charity Adams:

  • exemplified the power of connecting the dots of the vision and mission to the tedious daily tasks her followers were expected to do. She gave them the big picture clearly and made sure they understood their role in helping to win the war.

  • exhibited humble yet confident leadership. She wasnโ€™t afraid to ask her followers for their input and then put those ideas into action.

  • focused on processes and people to get the job done perfectly and under deadline without letting her ego be an impediment.

  • created 855 future leaders, some of whom are still alive today at over 100 years old. And that is the true testament to her leadership abilities, as well as something we can all use as a touchstone of great leadership.

We hope you found this helpful โ€” any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

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