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The Makings of a Hard Market: Insights from an Ono Island and Orange Beach Homeowner

As both a homeowner on Ono Island and a real estate advisor in the Orange Beach, Alabama area, I’ve witnessed firsthand how the insurance market has evolved over recent years. Living in a coastal community has its undeniable beauty, but it also comes with unique challenges—one of the most pressing being the impact of the hardening insurance market. Whether you're a longtime resident or a new homeowner, understanding this shift is crucial in protecting your property.

1. 2016: Height of a Soft Market

Just a few years ago, in 2016, the insurance market was in what we call a "soft" phase. Premiums were low, and insurers were competing to offer the best deals. Homeowners on Ono Island, were able to secure comprehensive coverage with relatively affordable premiums. The same held true for many homeowners in Orange Beach and surrounding areas. It was a time when insurance was easy to come by and costs were manageable.

2. 2018: Start of a Hardening Market

The insurance landscape began to shift in 2018. A string of major natural disasters, particularly hurricanes, started to harden the market. With Orange Beach and Ono Island directly in the path of potential hurricanes, insurers became more cautious. Premiums began to rise, and securing full coverage became more difficult. The increase in weather-related claims across the Gulf Coast added pressure on insurers, causing them to reconsider the level of risk they were willing to take on.

3. 2019: Costliest Year for Natural Disasters

By 2019, it became clear that the market was hardening rapidly. Natural disasters, including hurricanes and wildfires across the U.S., led to significant insured losses. In coastal areas like Ono Island and Orange Beach, the risk profile for homes escalated. Premiums rose, and insurers became more selective about which homes they would cover, especially in flood-prone and hurricane-prone areas. For many, that meant reevaluating coverage and preparing for higher costs.

4. 2020: Reinsurance Costs and the Gulf Coast

In 2020, reinsurance costs skyrocketed, further complicating the situation for both insurers and homeowners. Reinsurance is the insurance that insurance companies buy to protect themselves from large-scale losses, and when those costs rise, they are passed down to policyholders. Coastal homeowners, like those on Ono Island and in Orange Beach, saw premiums jump significantly. This year also saw one of the most active hurricane seasons on record, compounding the already high risks associated with living on the Gulf Coast.

5. 2021: Social Inflation and Limited Capacity

Social inflation—an increase in insurance claims costs due to broader interpretations of coverage and higher jury awards—hit the market hard in 2021. This, combined with a lack of capacity (fewer insurers willing to write policies in high-risk areas), created even more challenges in Orange Beach and Ono Island. With rising litigation costs and a growing number of claims from coastal disasters, insurers became more reluctant to offer coverage in our region. Premiums soared, and finding the right insurance became a complex process.

6. 2022: A Fully Hard Market

By 2022, the insurance market had fully entered a hard phase. The demand for coverage in coastal areas like ours remained high, but insurers’ willingness to provide that coverage dwindled. Premiums increased across the board, and many homeowners in Ono Island and Orange Beach found it challenging to renew their policies or secure adequate coverage. The risk of hurricanes and flooding made insuring properties here a difficult proposition for many companies, leaving fewer options for homeowners.

7. 2023: Record-Breaking Natural Disasters

The hard market continued into 2023, with the U.S. experiencing 28 separate weather-related disasters, each causing over $1 billion in damages. Events like Hurricane Ian left a mark on the insurance industry and further affected us here on the Gulf Coast. Insurers were grappling with record-breaking claims, and once again, premiums spiked. Homeowners in Orange Beach and Ono Island faced higher costs, more stringent underwriting, and fewer coverage options. It’s a reality that every coastal homeowner now has to navigate.

What This Means for Ono Island and Orange Beach Homeowners

As a homeowner and real estate advisor on Ono Island, I know how frustrating these rising insurance costs can be. But it’s essential to understand the driving factors behind this hard market and take proactive steps to protect your property. Here’s how the hard market is impacting those of us on the Gulf Coast:

Hurricane Exposure: The regular threat of hurricanes has made the Alabama Gulf Coast, including Ono Island, a high-risk zone for insurers. Every season brings the possibility of severe damage, which is reflected in rising premiums.
Flooding and Re-mapping: Recent changes in flood zone mapping have placed many homes in higher-risk areas, increasing premiums. Even if your home has never flooded, these re-designations can lead to significant changes in your insurance rates.
Roof Age: Homes with older roofs—typically over 14 years—are now considered higher-risk by insurers. Many homeowners are opting for roof replacements to not only protect their properties but also to potentially reduce their premiums.

What Can You Do?

While we can’t control the market, there are steps homeowners in Ono Island and Orange Beach can take to mitigate rising insurance costs and protect their homes:

Strengthen Your Home: Programs like the Strengthen Alabama Homes grant offer up to $10,000 to fortify your home against wind damage. This can help you reduce the risk of hurricane damage and potentially lower your premiums.
Keep Your Flood Insurance: Despite the rising costs, maintaining flood insurance is critical. With changes to flood zone maps, it’s more important than ever to ensure your home is protected from water damage. Even if you're not required to carry it, flood insurance offers peace of mind in a high-risk area like ours.
Consider Window Protection: As I've previously recommended, installing window protection, such as window glazing or protective films, can safeguard your home from storm damage. Services offered by companies like Precision Glass and Alabama Glass Works provide an additional layer of protection while potentially lowering your insurance rates.

Final Thoughts as an Ono Island Homeowner

As a fellow homeowner in Ono Island and someone who advises clients throughout the Orange Beach area, I understand the frustration of rising insurance premiums and the difficulties of navigating this hard market. But with the right strategies in place—such as strengthening your home, keeping comprehensive insurance policies, and investing in protective measures—you can better manage these challenges.

If you're looking for advice or need assistance in finding the right insurance solutions, I’m here to help. My goal is to ensure that homeowners on Ono Island and in Orange Beach are well-prepared and well-protected as we navigate these complex times together.