Years after teetering on the brink of financial disaster, Florida’s battered property insurance market has reached another milestone that makes it seem more likely it can withstand the calamities that show up on radar.
For the first time since 2015, Florida-based insurance companies in 2024 collected more in premiums than they paid out in claims, despite three hurricanes, Debby, Helene and Milton, making Florida landfall last year, according to the most recent Property Insurance Stability Report from the Florida Office of Insurance Regulation. This comes just four years after a low point in 2020, when the industry was collectively showing a loss of $1.2 billion, just prior to eight insurers going insolvent in 2021 and 2022.
“The underwriting profit achieved by the Florida property insurance industry in 2024 is very positive news for the market and is a measure of its vastly improved financial health,” said Mark Friedlander, senior director of media relations for the industry-backed Insurance Information Institute. “Rarely does any state’s property insurance market generate an underwriting profit in a year where it incurred three landfalling hurricanes, including two major hurricanes,” Helene and Milton.
Legislative changes protect insurers
Friedlander attributes the turnaround to changes that the Republican-dominated Legislature approved in 2022 as the entire market threatened to become unmoored. Policyholders were seeing double-digit increases in their premiums, even as a major ratings agency threatened to downgrade its assessment of dozens of Florida insurers’ financial health, which could have triggered a home-financing crisis.
“Legal system abuse and assignment of benefits claim fraud were the primary causes of eight consecutive years of underwriting losses in Florida,” Friedlander said.
The legislative changes to tort law made it so that attorney fees could not automatically be added to claims settlements, making it less attractive for attorneys to take disputed insurance settlement cases and making it more difficult for policyholders to contest their insurers’ offer for settling a claim. Prohibiting assignment of benefit agreements was aimed at stopping contractors from inflating repair bills so they could sue in the policyholder’s name.
Policyholders still concerned, politicians find
Democrats don’t appear inclined to stop pointing out the high cost of property insurance as a Republican failure, however. Florida Democratic Chair Nikki Fried noted that Florida’s new chief financial officer spent his first day in his new job focused on local government spending excesses with scant mention of property insurance. The Department of Financial Services that CFO Blaise Ingoglia now heads also handles complaints about property insurance.
“NUMBER 1 issue for Floridians is property insurance,” Fried posted on X on July 22, the day after Ingoglia was sworn in.
Ingoglia, in interviews following his swearing-in, says the reforms are working the way they should.
Floridians still pay some of the highest homeowner insurance premiums in the country, which is attributed to the state’s vulnerability to hurricanes and the high number of litigated claim disputes between policyholders and insurers. Also inflating Floridians’ insurance rates beyond the national average: the high costs Florida insurers face as they try to purchase capital that will serve as back-up funds should catastrophic levels of claims hit.
Since the legislative changes, insurance rate increases have eased from the years when they were increasing by up to a third. One company was recently approved to raise rates by 31.5%, but most others have had modest increases or remained flat. Citizens Property Insurance Corp., the state’s insurer of last resort, which insures the most property in the state, was approved to raise rates by an average of 6.6%.
More choices for property insurance
Robert Norberg, president of Arden Insurance in Lantana, said that most of his policyholders, at best, are paying slightly less for their premiums, while most are paying a little more because inflation has made replacing homes more expensive.
The biggest improvement, he said, is in the number of companies willing to insure older homes. Fourteen new companies have been certified to insure Florida property since the legislative changes started.
“It used to be in my locations, 70% or 80% were going straight to Citizens, and now it’s more like 30%,” Norberg said. “Because other carriers have found ways to be more competitive as the Citizens rate has gone up.”
The Insurance Information Institute’s Friedlander attributed insurers’ banner year to how 2024’s hurricanes caused mostly water damage, not destruction from high winds. Storm surge is not covered by most homeowners’ policies and neither is most other kinds of water damage, unless it’s the result of a breach in the structure from high winds, or a tree falling during a hurricane.
“Windstorm damage from Florida’s 2024 landfalling storms have been much less than estimated while the majority of the insured losses were flood related,” Friedlander wrote in an email. “Flood claims do not impact the bottom line of Florida property insurers because they are either covered by the National Flood Insurance Program or private flood carriers.”
Whether damage is caused by wind or water is one of the largest sources of disagreement between insurer and policyholders following a storm.
Policyholders’ complaints about property insurers have been on the rise, figures from the Florida Department of Financial Services show.
Anne Geggis is the insurance reporter atThe Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com.Help support our journalism. Subscribe today
This article originally appeared on Palm Beach Post: Florida insurers show best year since 2015 despite catastrophic insurance claims
Reporting by Anne Geggis, Palm Beach Post / Palm Beach Post
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