Florida’s property insurance sector, grappling with prolonged challenges from legal system manipulation and fraudulent claims, is witnessing a turnaround as the 2024 Atlantic hurricane season approaches, as outlined in a recent report by the Insurance Information Institute (Triple-I).
Recent legislative changes in 2022 and 2023 have bolstered Florida’s insurance environment, according to the Triple-I report. Notably, the downsizing of Citizens Property Insurance Corp., once the state’s primary home insurer, and the approval of eight new property insurance providers by the state’s regulatory body are positive developments. These changes reflect a proactive approach to enhancing stability and competition in Florida’s insurance market.
Sean Kevelighan, CEO of Triple-I, emphasised, “Property insurers want to do business in a state like Florida which is growing, and there is now some hope that this could eventually happen more and more. However, it is important Florida’s public policymakers ensure the reform that is helping the market recover is not eroded by the billboard lawyers.”
Kevelighan also cautioned against the efforts of plaintiff attorneys to export their manipulative practices to other states following Florida’s adoption of stricter regulations on property claim lawsuits.
Although Florida insurers sustained underwriting losses for the eighth consecutive year in 2023, according to S&P Global, the magnitude of losses significantly diminished compared to previous years. The $190.8 million collective underwriting loss reported by the top 50 private insurers in Florida last year marked a notable improvement from the industry’s $1.80 billion loss in 2022 and $1.52 billion loss in 2021, as highlighted in Triple-I’s report.
In light of these positive trends, Triple-I foresees a continued rise in average home insurance premiums in Florida this year, albeit at a slower rate compared to recent years. Additionally, certain regional insurers have recently requested slight reductions in state wide average rates, as mentioned in the report.
Early signs indicate that recent legislative changes are beginning to yield favourable results. In 2023, Florida’s defense and cost-containment expense (DCCE) ratio, a critical measure of the impact of litigation, dropped significantly from 8.4 in 2022 to 3.1, according to S&P Global. This reduction is reflected in the decrease in direct incurred legal defence expenses to $739 million in 2023, a substantial decline from the $1.6 billion recorded in 2022.
To provide context, California, the largest insurance market in the US incurred defence costs of $401.6 million in 2023, followed by $284.7 million in Texas. These figures underscore the positive impact of legislative revisions in Florida’s insurance landscape.
