Florida's insurance market continues to strengthen in 2024

Florida insurance market continues to strengthen, showing signs that recent legislation is having positive impacts on the property and casualty insurance market.

Following the legislative reforms designed to promote market stability, eight property and casualty insurers were approved to enter Florida’s insurance market.

Speaking on Citizens Property Insurance Corporation (Citizens), the OIR noted that in 2023, Florida’s state-backed insurer showed improvements in its financial strength over previous years.

Florida insurance market continues to strengthen, showing signs that recent legislation

Florida’s insurance market has experienced difficulties in recent years, with some private insurers becoming insolvent, and others choosing to halt coverage there altogether because Florida insurers will have a challenging June reinsurance renewal, even with the implementation of the legislative reforms.

Seven insurers have been declared insolvent in Florida. Average annual property insurance premiums jumped 42% this year to $6,000 in Florida, compared to a national average of $1,700.

The 2023 year-end renewals experienced rate-adjusted rate increases for property reinsurance renewal averaging north of 35% as a cumulative result of losses caused by extreme weather events, economic/social inflation, and geopolitical uncertainty.

As the market continues to stabilize, OIR is seeing continued interest from authorized insurers in the Citizens Depopulation program. In 2024, OIR approved 13 companies to assume more than 354,000 policies from Citizens.

In 2023, more than 275,000 policies were assumed from Citizens, reducing Citizen’s exposure by more than $113 bn.

Florida insurance market continues to strengthen, showing signs that recent legislation

Florida’s insurance market continues to strengthen, showing signs recent legislation is having positive impacts to the property insurance market

Michael Yaworsky, Florida State’s Insurance Commissioner

OIR remains steadfast in efforts to stabilize Florida’s insurance market by implementing legislative reforms and recruiting more insurers to the state.

HCI announced in December last year that its majority-owned subsidiary, TypTap Insurance Company, had successfully assumed approximately $30 mn of in-force premium from Citizens. The number of policies assumed by TypTap was approximately 6,800 polices.

The introduction of the Reinsurance to Assist Policyholders Program and the Florida Operational Reinsurance Assistance Program will help soften the reinsurance market to some extent.

About 15% of homeowners in the state didn’t have property insurance, compared to the national average of 7%, according to the Insurance Information Institute, a research organization funded by the insurance industry.

AAA says it will not be renewing some insurance policies in Florida due to an “unprecedented” rise in reinsurance rates in the state following last year’s hurricane season, making the company the latest insurer to reduce its risk exposure in the Sunshine State.

Florida insurance market continues to strengthen, showing signs that recent legislation

Florida domestic property insurance companies reported they produced a combined net underwriting that almost broke even, a dramatic improvement from losing over a billion dollars in the past three consecutive years.

When combined with investments, these domestic carriers showed a net positive income in 2023 for the first time since 2016.

Insurers establish a loss reserve, which is the amount the insurer believes that claims will cost. At periodic points in time, an insurer goes back and evaluates how much those claims actually cost and uses that information to inform reserves going forward.

Year end 2023 data reported to OIR reflects a much lower degree of uncertainty in the property insurance market, as insurers reported lower loss reserve development.

From 2022 to 2023, Florida domestic insurers, including Citizens Property Insurance Corporation, have reported a 44.8% decrease from $772 mn to $398 mn in loss reserve development at the two-year look-back period and a 28% decrease from $224 mn to $161 mn at the one year mark.

Nataly Kramer   by Nataly Kramer