Researchers at the Insurance Information Institute have determined that home insurance premiums in Florida rose at a much lower rate than originally projected in 2022 (41% less), 2023 (80% less) and 2024 (60% less).

The differences in premium averages reflect the impact of legislative legal system abuse reforms as well as lower levels of inflation in replacement costs.

Both factors were not anticipated at the time Triple-I’s estimates were made.

  • Industry data from the National Association of Insurance Commissioners (NAIC) and Florida Office of Insurance Regulation (OIR) shows average statewide home premiums were $3,340 in 2023, 80% less than Triple-I’s estimate of $6,000.
  • In 2022, average Florida premiums were $3,040, 41% less than Triple-I’s estimate of $4,300.

Triple-I has noted significant improvements in the Florida home insurance marketplace this year due to legislative reform:

  • Average statewide premium increases are running below 2% year-to-date, according to the OIR.
  • Eight companies have filed for rate reductions with the OIR while 10 have filed for no rate change this year.
  • State-backed Citizens Property Insurance Corp. has depopulated nearly 400,000 policies since last October to private insurers, showing the private market’s capacity to take on more risk.
  • Eight property insurers have been approved by the OIR to enter the Florida market, with other new entrants expected this year.

Legislative reforms on Florida’s insurance market

Legislative reforms on Florida’s insurance market

Legislative reforms in Florida implemented in 2022 and early 2023 aimed at curbing legal system abuse and assignment of benefits (AOB) claim fraud in Florida are beginning to stabilize the state’s property and casualty insurance market.

Claims-related litigation has decreased, the “depopulation” of the state’s insurer of last resort is progressing, and underwriting profitability has improved, though it remains negative.

However, the crisis developed over time, and it will take a while for these reforms and other changes to impact policyholder premiums.

The top 50 private insurers in Florida posted a cumulative underwriting loss of $190.8 million, a marked improvement from the $1.80 billion loss in 2022 and $1.52 billion loss in 2021.

Florida’s Domestic Property Insurers

Florida’s Domestic Property Insurers
Source: S&P Global Market Intelligence

S&P’s report excluded data from Citizens Property Insurance Corp., Florida’s state-run insurer of last resort and the largest residential insurer in the state. As private insurers failed or exited the market, Citizens saw a surge in new policies and lawsuits.

According to S&P Global, Florida insurers reported a smaller underwriting loss in 2023 compared to recent years.

Citizens Property Insurance Homeowners’ Policies

Citizens Property Insurance Homeowners’ Policies
Source: Citizens Property Insurance Corp

Homeowners should not expect their rates to decline in 2024, despite the improved industry performance, although some regional insurers have filed for small decreases.

Rates may moderate some compared to prior years, but rising replacement costs – combined with expected higher reinsurance costs for the June 1 renewals – are going to continue to drive average premiums upward in 2024

Mark Friedlander, Triple-I director of corporate communications

Insurers also benefited from a mild Atlantic hurricane season and a significant rise in investment income, resulting in a net profit for the first time in seven years.

Starting 2023 with approximately 1.16 million in-force policies, Citizens peaked at 1.41 million policies by the end of September. Efforts to transfer policyholders to private insurers reduced this number to 1.23 million by year-end.

The Florida Office of Insurance Regulation approved the transfer of 650,399 policies from Citizens to private insurers in 2023, an 800 percent increase from the previous year.

Pressure on insurance rates

Florida’s defense and cost-containment expense

One factor keeping upward pressure on insurance rates is fraud and legal system abuse. With only 15% of U.S. homeowners insurance claims, the state accounts for nearly 71% of the nation’s homeowners claim-related litigation, according to the OIR.

In 2023, Florida’s defense and cost-containment expense (DCCE) ratio – a key measure of the impact of litigation – fell to 3.1, from 8.4 in 2022

Citizens expects a budget shortfall of $100 million to $200 million due to higher-than-anticipated property claim lawsuit costs. The surge in litigation before legal reforms has strained their legal defense budget.

Florida Defense and Cost-Containment Expenses Fall

Florida Defense and Cost-Containment Expenses Fall
Source: S&P Global Market Intelligence. *Excludes US territories

Data is sourced from Exhibit of Premiums and Losses of the annual property and casualty NAIC regulatory filings. Defense and cost containment expense information combines as-reported information for fire, allied lines and homeowners lines of business.

In 2023, direct incurred legal defense expenses totaled $739 million, a significant drop from 2022’s $1.6 billion.

California and Texas led incurred defense costs in the U.S. with $401.6 million and $284.7 million, respectively. Florida’s DCCE ratio consistently surpasses the national average, even in its best years.

Active Atlantic hurricane season in the U.S

Despite an active Atlantic hurricane season in 2023, the U.S. avoided major storms intensified by record-warm oceans.

Only Category 3 Hurricane Idalia made landfall in Florida. Hurricanes Lee (Category 5) and Franklin (Category 4) did not hit U.S. shores. For 2024, Colorado State University predicts an “extremely active” hurricane season.

Dr. Philip Klotzbach from CSU notes that record-warm sea surface temperatures in the Atlantic will likely persist, creating a favorable environment for hurricane formation and intensification.

Active Atlantic hurricane season in the U.S

Swiss Re highlights that stricter building standards after hurricanes Charley in 2004 and Irma in 2017 have reduced hurricane-related losses in Florida.

However, flood insurance protection remains inadequate, necessitating further investment in infrastructure.

Florida faces risks beyond hurricanes, including wildfires and severe convective storms. A wetter winter than the previous year has given way to drier conditions, increasing wildfire risks.

The Florida Division of Emergency Management currently rates the wildfire threat as “low,” but state Agriculture Commissioner Wilton Simpson advises property owners to clear debris.

Severe convective storms are frequent and damaging in the U.S., resulting from rising warm, moist air.

Since April, losses have escalated due to major events, such as severe thunderstorms in Dallas and a derecho in Houston, leaving over 2.07 mn Texans without power (see Severe Thunderstorms the Main Driver for Insured NatCat losses).

The recent events add uncertainty to the loss projections. Based on past occurrences, these events will likely result in several billion dollars in damages.

These storms can cause thunderstorms, tornadoes, hail, and destructive winds. In 2023, insured losses from such storms hit nearly $60 billion, compared to $1.23 billion in hurricane losses.

Early 2024 saw significant flooding from these storms in Florida and neighboring states. As of April, Florida had 34 confirmed tornadoes, ranking second in the U.S. after Ohio’s 43.

Triple-I’s Friedlander emphasizes that while hurricanes dominate media coverage, severe convective storms cause comparable losses. A severe hurricane season can negate the benefits of several mild years.


AUTHOR: Mark Friedlander – Triple-I director of corporate communications

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