Florida’s insurance market has faced a crisis in recent years, with skyrocketing premiums and insurer insolvencies leaving homeowners with limited choices. However, landmark reforms championed by Gov. Ron DeSantis and the Legislature appear to be turning the tide.
These strategic policy changes have brought much-needed stability, attracted new insurers, and provided homeowners with more options. Given this progress, it is crucial to allow the full effects of recent legislation to take hold. When Florida lawmakers convene their next two-month session on March 4, they should resist the urge to enact further changes that could derail the positive momentum.
The evidence of improvement is clear. In 2023 alone, over 10 new property and casualty insurers entered the Florida market. This influx of companies gives consumers more choices and fosters a more competitive landscape. A stable insurance environment encourages more capital investment, ultimately benefiting consumers. Regulatory changes at this stage, however, could deter new entrants and potentially drive up costs.
Even more encouraging, the market has seen 12 consecutive months of underwriting improvement, potentially leading to more rate reductions. Since January 2024, 17 companies have filed for rate decreases, while 34 companies have requested 0 percent increases. As these reductions accumulate, consumers will benefit from increased competition, leading to more affordable rates and, crucially, a financially viable market.
These transformational changes demonstrate recent reforms are working as intended, delivering the expected rate relief. When these measures were enacted, legislative leaders cautioned that it would take time for systemic changes to stabilize the market and lower insurance rates.
The real challenges facing Florida’s insurance market stem from external pressures, including natural disasters, rising reinsurance costs, and past litigation abuse. Recent hurricanes have driven up claims costs and strained insurers financially. To manage risk and keep coverage affordable, insurers rely on reinsurance, but its costs in Florida have surged, making it more expensive to operate.
Misconceptions about insurer profitability often overlook the significant expenses of running a property insurance company, including reinsurance, claim payouts, and operational costs. Most insurers operate on tight margins and must engage in responsible financial management to remain viable. The Office of Insurance Regulation has a robust framework to regulate affiliated party transactions and prevent unlawful asset distributions.
Excessive litigation was a major driver of Florida’s past insurance crisis. In response, lawmakers enacted strong reforms to curb such actions, emphasizing market stability. They also enhanced the Insurance Commissioner’s ability to hold insurers accountable. If companies fail to properly adjust and promptly pay claims, Commissioner Yaworsky now has a dedicated Deputy Commissioner and a proactive team tasked with enforcing insurers’ responsibilities.
Additional regulatory changes at this juncture could be premature and introduce further uncertainty. Given Florida’s reliance on catastrophe reinsurance, lawmakers may wish to consider harmonizing the state-created Florida Hurricane Catastrophe Fund to act as a stabilizing buffer during periods of stress and volatility.
While future legislation may be necessary or desirable, it is currently essential to let the reforms work and allow the data to guide informed legislative decisions. The Legislature has enacted comprehensive reforms to stabilize a struggling property insurance market, and the best course of action now is to allow these measures to take full effect. By maintaining a steady approach and fostering a competitive, stable insurance market, lawmakers can continue to protect Florida homeowners and support a resilient insurance industry.
Kevin McCarty is a former Florida Insurance Commissioner who served from 2003 to 2016. With decades of experience in insurance regulation and policy, he played a key role in shaping Florida’s insurance landscape. McCarty is a nationally recognized expert on insurance market stability and risk management, advising industry leaders and policymakers on best practices for maintaining a competitive and consumer-friendly market.
