October 14, 2024

Florida insurance markets OK despite double hurricane whammy, state says

Florida is recovering from a double whammy of hurricanes, but its property insurance market is getting healthier by the day, officials say.

Propery insurers had been fleeing the state in recent years due to the increased frequency and intensity of hurricane and tropical storms.

The state Office of Insurance regulation reports that Florida accounts for only 9% of the nation’s homeowners claims but 79% of homeowners insurance lawsuits. Over a 10-year period 71% of the $51 billion paid by Florida insurers went to attorneys’ fees and public adjusters.

Insurance Commissioner Michael Yaworsky pointed to a series of three bills passed by the Florida Legislature in May 2023 as working to stabilize the market.

Key measures included:

Reforms to Claims Handling: The legislation aimed to streamline the claims process and reduce litigation by modifying rules around attorney fees and the timeframe for filing claims.

Increased Funding for Reinsurance: The state allocated additional funds to help insurance companies cover catastrophic losses, which is intended to stabilize the market and reduce premiums for policyholders.

Regulatory Changes: The law included provisions for enhanced oversight of insurance companies, allowing regulators to review their financial stability and pricing practices more closely.

Encouraging Competition: Steps were taken to encourage new insurers to enter the market, fostering competition and potentially driving down costs for consumers.

‘Well-positioned to act’

Mark Friedlander , director of corporate communications at the Insurance Information Institute, said the property insurance market is ready to serve Florida residents cleaning up from the twin hurricanes Helene and Milton. Officials say they represent one of the most devastating series of hurricanes to ever hit the U.S. East Coast

“The Florida property insurance industry is well-positioned to act as financial first responders to its customers that may be impacted by Hurricane Milton,” he said. “The market is in its best financial condition in many years due to state legislative reforms in 2022 and 2023 that addressed the man-made factors which caused the Florida risk crisis – legal system abuse and claim fraud.”

National carriers “continue to expand their business in Florida’s market despite reducing their operating footprint elsewhere in the country,” Yaworsky joined Gov. Ron DeSantis in meeting with USAA representatives last week. The insurer “reaffirmed their commitment to investing in Florida’s burgeoning marketplace,” Yaworsky said.

“I am extremely pleased to share these announcements, as they point to continued strengthening of Florida’s property insurance market, which is contrary to the narrative that has been circulating about our industry in recent months” he added. Florida “will continue to work with all carriers in the state to bolster the significant progress that has been made and finish the year on a glidepath to sustained growth.”

Florida’s strengthening market is reinforced in recent rate filings, increased participation in the Citizens Property Insurance Corp. Depopulation Program, reduced reinsurance costs, and more carriers announcing their commitment to Florida’s insurance market, the insurance office said.

Things looking up

The insurance office shared the latest data on how Florida’s property insurance market is improving:

• Rate Filings. As of Oct. 9, 15 companies have made a total of 22 filings for a rate decrease impacting 1.5 million residential policies to take effect in 2024 and 29 companies have made 42 filings for a 0% increase impacting 1.9 million residential policies. The current 30-day average rate request for homeowners’ rates is 1.6%. One year ago, the 30-day average rate request was 7.03%. The current 180-day average request for homeowners’ rates is 0.9%. One year ago, the 180-day average rate request was 8.08%.

• Market Regulation. OIR’s market regulation units “continuously monitor the conduct of insurers in the marketplace, enforcing Florida law through remediation and administrative action utilizing market conduct investigations and examinations,” the release said.

If an issue is found, OIR has the authority to take action either through an informal inquiry, investigation or examination. Based on the findings of an examination or investigation, OIR’s market regulation units may take administrative action, impose administrative penalties, require restitution to consumers, and require corrective action in order to protect insurance consumers from unlawful or harmful business practices.

In fiscal year 2023-24, insurers have returned $8 million in monetary restitution directly to Florida consumers in addition to completing other corrective actions as required by OIR upon conclusion of market conduct investigations and examinations.

• Private Market Growth. OIR is seeing “continued growth in participation” in the Citizens Depopulation program. Eighteen companies have been approved to assume more than 1 million polices through November 2024. The latest takeout approvals include eight companies for a total of 235,035 personal residential policies for the November assumption date. The admitted market, particularly the homeowners line of business, has grown both through Citizens depopulation efforts and through increased writing, the release said.

Appetite for condominium association policies continues to increase as admitted carriers seek to take out these policies from Citizens resulting in a $15 billion reduction of exposure (January through August of 2024), the release said.

• Reinsurance. The cost of reinsurance continues to decrease for Florida carriers. This year, most companies paid less for reinsurance than they did in 2023, insurance officials said. The average risk-adjusted cost for 2024 was -0.7%, a large reduction from last year’s change of 27% increase from the prior year.

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