OKEECHOBEE, Fla.—Steve Cates was walking back to his house from his mailbox, flipping through a clutch of newly delivered letters, when one envelope stopped him in his driveway. It was from his insurance company.

His home felt sturdy, but he knew getting insurance in this bucolic community on the north side of Lake Okeechobee was a struggle. His fiancée and several friends had had their policies canceled. His was dropped, too, the year before, although a few weeks later the insurance company had renewed the policy at a rate of a few hundred dollars more. The annual rate had jumped by 180 percent in six years, to $4,742, but he sent a check right in anyway.

Now, standing in his driveway, staring at yet another non-renewal letter, his hand shook. He still owed $30,000 on his mortgage. Going without insurance, as some people he knew were doing, would be difficult, because his mortgage company required insurance. He feared the life he had built in this home over two decades was about to end.

Insurance experts have warned repeatedly that rising economic losses from extreme weather events driven by climate change threaten the industry with collapse—and with it, housing markets and families’ finances. Together with Louisiana and wildfire-wracked California, Florida, threatened by tropical cyclones barreling into its coasts, is where the crisis is hitting hardest. 

The risk is driving insurance companies to raise rates and withdraw from markets entirely, a situation that itself represents a crisis threatening to destabilize what for many Americans is their most important asset, their home. 

Much attention has focused on the threats to pricey real estate and resulting high premiums along the coast of South Florida. But an Inside Climate News analysis of data on home insurance non-renewals shows that already disadvantaged inland rural communities around Lake Okeechobee are an overlooked epicenter of the state’s insurance crisis.

That finding stems from data released in December by the U.S. Senate Committee on the Budget. The Senate committee asked large insurance companies to disclose the number of policies that were not renewed each year from 2018 to 2023. Committee staffers received data from 23 companies, collectively accounting for about two-thirds of the home insurance market across the nation. (The committee said it focused on non-renewals because industry experts say high non-renewal rates represent an early warning sign of market destabilization.)

The committee’s report drew a direct connection to climate change, noting that spiking non-renewal rates in 2022 and 2023 were concentrated in the counties facing the highest risk of climate-related disasters. “The stuff that scientists have predicted for decades about climate change is now starting to come true, and the leading indicator of that is the insurance industry,” Sen. Sheldon Whitehouse (D-R.I.), chairman of the committee at the time of the report’s release, told Inside Climate News. 

Insurance companies “look at places like Florida—which is seeing a combination of sea level rise and worsened storm activity and warming oceans around the state on three sides of it and more moisture held in the warmer air above it so that rain bursts are more dangerous—and they are starting to realize, ‘Wow. That’s going to be more risk than we can bear, and it’s also really hard to predict,’” he said.

“So that makes Florida—as they used to say in the movies—the preview of coming attractions.”

Poorer Inland Residents Are Most Vulnerable to Losing Coverage

Florida had the highest rates of home insurance non-renewal in the nation, rising to around 3 percent of policies statewide in each of 2022 and 2023. But within the state, Inside Climate News found a more complex picture that could not be explained simply by the risk of financial losses from hurricanes and other tropical storms: The highest non-renewal rates were not in coastal counties like Miami-Dade, Monroe, Lee and Broward that are in the direct firing line of landfalling storms. Instead, they were concentrated inland, in the four rural counties around Lake Okeechobee: Glades, Hendry, Highlands and Okeechobee.

To make sense of this finding, Inside Climate News turned to data from the Federal Emergency Management Agency’s National Risk Index, used to identify the U.S. communities most severely threatened by natural hazards. We found no relationship between county-level non-renewal rates and the Expected Annual Loss Rate for Buildings, a measure of the percentage losses in building values anticipated each year. Where the counties around Lake Okeechobee stood out was in a measure of risk that also accounted for social vulnerability and resilience in the face of natural disasters. 

In other words, non-renewals were highest in the Florida counties where climate-related hazards are compounded by poverty and other factors that make it harder to withstand and recover from extreme weather events. Glades County, with a median household income of less than $39,000 a year compared to the statewide figure of around $72,000, had the highest non-renewal rates and is the state’s poorest county.

The counties south of Lake Okeechobee constitute a region known as the Everglades Agricultural Area, which was set aside as the Everglades were drained for farming. The region is among the nation’s most bountiful, raising rice, sod, vegetables such as lettuce and sugarcane, making Florida the country’s top producer of the crop. Vast ranchlands stretch north of the lake, where Okeechobee County is situated. 

That county had the second-highest non-renewal rate in the state in 2022 and there too, insurance is a common worry. “It’s kind of like always in the back of your mind, that you’re just waiting for that shoe to drop,” said Okeechobee Mayor Dowling Watford, whose own policy has doubled in cost in recent years to some $6,000 annually. “We didn’t even think about not paying it or trying to find another insurance company. When you have insurance, you don’t want to do anything to jeopardize that.”

Even though they’re farther from the coast, Okeechobee and its neighboring counties have by no means avoided the consequences of severe storms. In the 1920s an unnamed hurricane caused Lake Okeechobee to overflow, killing thousands. The catastrophe prompted a massive federal effort to drain and contain the Everglades, including the construction of the earthen 143-mile Herbert Hoover Dike around the entire lake. In 2004 the region was battered again by Frances and Jeanne, two of four hurricanes that menaced the state that year within the span of six weeks. Last year Hurricane Milton spawned at least 45 tornadoes across central and south Florida.

“What we’re seeing here is a recognition of the risk of these storms causing damage anywhere in the state. I don’t think there is any part of Florida that is safe from storms,” said Chuck Nyce, a professor of risk management and insurance at Florida State University. “I think you’re seeing that companies really made a conscious effort to reduce their risk from central Florida, south.”

Meanwhile, a growing scarcity of insurance is but one aspect of the crisis facing Florida, especially the underserved counties of the state’s heartland. Policies also are increasingly unaffordable. The situation means that the homeowners who are most at risk of losing insurance are those with the least resources for dealing with disasters, and with no insurance they are even more exposed. 

Paying Premiums or Dropping Coverage

Inside Climate News also looked at changes in home insurance premiums, using data provided by Philip Mulder of the University of Wisconsin-Madison and Benjamin Keys of the University of Pennsylvania’s Wharton School. The pair have shown that, across the nation, premiums are rising fastest in communities facing the greatest threats from natural disasters. 

While premiums have risen in the counties around Lake Okeechobee, they remain lower and have risen somewhat less steeply than in wealthier coastal counties like Monroe, which includes the Florida Keys. There, the median annual premium exceeded $7,600 in 2023, compared to around $2,800 in Glades County.

This makes sense, according to Ishita Sen, an assistant professor of business administration at Harvard Business School who has studied the Florida insurance market. While the counties around Lake Okeechobee face lower risks of losses than wealthier coastal counties, their poorer residents are likely to respond to proposed premium hikes by switching from the large companies surveyed by the Senate Budget Committee to smaller local carriers. If they can’t find an insurance company willing to provide coverage, they will end up insured by Citizens Property Insurance Corp., the state-backed insurer of last resort—and if they have already paid off their mortgage and are no longer required to have insurance, may forgo coverage altogether. 

“Poorer communities have lower coverage to begin with, and they tend to drop coverage in response to premium increases,” Sen said.

The Senate Budget Committee aimed to gather data on non-renewals driven by insurers’ decisions to stop providing coverage. But the survey may also include non-renewals caused by homeowners deciding they can’t afford to pay increasing premiums. 

Doc Thrift, 69, initially put his Okeechobee house up for sale after receiving a renewal notice for $14,500. Thrift, who is experienced in construction, has lived for the last 20 years in a 2,000-square-foot stucco home his late wife designed and he built almost entirely himself. His wife suffered from a neuromuscular disease and died five years ago. He now lives here alone with his dog, Jake.

He eventually decided he could not part with the home and took out a personal loan to pay off the mortgage so that he can go without insurance, as many people he knows are doing.

“You can’t build something—design something and build it—and then walk away and not have feelings about it. Because my wife’s memory is here,” said Thrift. “Your whole world has been snatched away, and you have to start all over again.”

Even Citizens can cancel or decline to renew insurance if homeowners don’t meet the conditions of coverage. Monica Clark and her husband had the private insurance policy on their home canceled after the 2004 hurricane season and ended up insured by Citizens. The state-run insurer sent multiple cancellation letters through the years, each basing coverage on different contingencies Clark felt were unreasonable, such as undergoing another inspection or making additional upgrades to the property.   

The industry blames the collapse of so many insurers on a tide of lawsuits filed against them by law firms that have marketed their services to policyholders in the wake of major storms.

Mark Friedlander, spokesman for the Insurance Information Institute, an industry group, criticized the Senate Budget Committee’s report for its focus on the risks posed by climate change. “It just touched the surface and certainly didn’t explain why non-renewal rates were so high in Florida compared to other states,” said Friedlander, himself a Floridian. “Blaming it all on climate change is really a shallow way to look at this problem.”

Florida’s insurance consumer advocate, Tasha Carter, declined multiple requests for comment. Her staff referred inquiries to the state’s Office of Insurance Regulation, which did not respond to requests for comment.

Citizens, meanwhile, has shifted policies back to private-sector insurers through what it calls “depopulation,” offering financial incentives for companies to take over its policies. This leaves the state-backed provider holding the riskiest policies. “If there is a big hurricane, Citizens is not going to be able to make those payments,” Sen said. “It isn’t looking good.”

After the January fires in Los Angeles County, Citizens’ California counterpart, known as the FAIR Plan, faced a similar predicament and had to be given a $1 billion buyout. That money will come from private-sector insurers, who are expected to pass the cost onto their customers by hiking premiums. 

Citizens wouldn’t need to seek a specific buyout, however, because existing Florida law allows it to issue bonds to raise the necessary funds and then recoup the money over a number of years by imposing surcharges on the premiums paid by Florida homeowners—not just its own customers. It has already done so once before, after the severe hurricane seasons of 2004 and 2005, recovering the money it paid out over the following decade. 

“Citizens can never go broke,” said its spokesman, Michael Peltier.

But the same can’t be said of the customers who ultimately foot the bill. For his part, Steve Cates still is holding out hope his insurance company will renew his policy. If not, he is not sure whether he would pay off the mortgage and go without insurance or try to sell the house. Parting with the home would be difficult. Cates had thought about leaving the house to his son.

“What I really don’t understand is how they can drop so many people around the lake and not down on the coasts,” he said. “I’m just sitting here, and I don’t know which way to go. It’s unstable times for me right now.”