Florida’s personal property insurance market is starting to stabilize after years of turmoil, marked by rising premiums and insurer losses. Recent reports indicate that the market is seeing more competition and new players, which is a positive sign for consumers.
In 2024, Florida’s property insurers achieved a collective underwriting profit of $206.7 million, a significant turnaround from the previous year’s loss of $174.4 million. This shift comes after eight years of financial struggles for insurers in the state. The improvement is attributed to legislative reforms enacted in 2022, which aimed to reduce litigation that had burdened insurers financially.
One major reform, Senate Bill 2A, removed provisions that allowed for attorney’s fees to be shifted in property lawsuits. This change was intended to lessen the volume of insurance litigation, which had been a costly issue for insurers. As a result, not only did existing insurers benefit, but new companies also entered the market, increasing competition and capacity.
However, the market still faces challenges. Over the past few years, several insurers have gone bankrupt, with a notable spike in insolvencies in 2021 and 2022. While only one insurer failed in early 2023, the overall trend indicates that the market is slowly improving as rate increases take effect.
The decline in litigation costs has also contributed to better financial results. A recent report showed that defense and cost-containment expenses dropped significantly, indicating fewer and less expensive claims disputes.
Another aspect of the market is Citizens Property Insurance Corporation, Florida’s insurer of last resort. The number of policies held by Citizens has surged over 150% since early 2021, reaching more than 1.4 million policies. This growth raises concerns about the financial risk in the event of a major disaster, which could deplete Citizens’ resources and lead to higher costs for all insurance consumers.
To mitigate these risks, Citizens has been actively transferring policies to private insurers and has secured substantial reinsurance for protection against catastrophic losses. In 2024, Citizens plans to obtain $4.54 billion in private reinsurance, which includes new risk transfers and existing catastrophe bonds.
Despite the challenges, there are signs of recovery in Florida’s insurance market. With ongoing legislative support and a more favorable environment for insurers, the outlook is gradually improving. However, the market remains sensitive to external factors, including natural disasters and economic conditions, which could impact its stability in the future.