Analysis of Florida Homeowners Insurance Rates
For many South Florida homeowners who rely on Citizens Property Insurance, the recent announcement of lower rates offered a glimmer of hope. But will this translate to actual savings on their insurance bills?
While the underlying insurance rate for most common homeowner’s policies is decreasing for Citizens policyholders in much of South Florida, it’s important to note that the insurance rate is only one part in the equation. The actual premium homeowners pay is based on several other contributing factors.
“Annual premiums could increase primarily because of replacement costs,” remarked Mark Friedlander with the Insurance Information Institute.
Florida Governor Ron DeSantis announced an average decrease of 6.3% in insurance rates for homeowners in Miami-Dade County and an average of 4.5% in Broward County. Palm Beach County policyholders will see an average decrease of 5.2% . These are average rates, not individual premiums. Ultimately homeowners must wait to see how the changes affect their personal costs.
Replacing a home today is significantly more expensive than before the pandemic. Home values and replacement costs went up in tandem. Home prices went up because of high demand, while supply chain issues sent replacement expenses even higher. Fortunately, replacement costs are starting to stabilize..
Different homes have unique characteristics. Also, homeowners may opt for differing coverage choices that can influence their insurance premiums. The insurance rate reductions for many in South Florida were announced just one year after rising coverage costs. State lawmakers have since approved reforms intended to stabilize the property insurance market and attract more competition. Citizens, the state-backed insurer of last resort, grew to cover over one million homes. This occurred as private insurers reduced their coverage in Florida or left the state.
South Florida homeowners rely on Citizens as the insurer of last resort more than any other region in the state. As such, the region is impacted more by changes to Citizen’s rate changes and other forces influencing homeowner premiums.
Citizens had requested permission from state insurance regulators to increase its regular homeowners rate by 13.5% statewide beginning in the summer. However, the Florida Office of Insurance Regulation rejected that request and instead approved a much smaller average statewide rate increase of 6.5%, which is the company’s smallest rate increase in three years.
This data applies to the most common property insurance used by homeowners to cover their homes. HO3 insurance covers standard risks like fire, water damage, and wind damage. According to an analysis by S&P Global, Florida had the lowest insurance rate increase of any state. The effective homeowners insurance rate went up just 1% while the rate was up over 10% nationwide. However, that slowdown comes after a five-year cumulative rate increase of 54%.
“The 2025 rates reflect the many positive developments that have taken place in the Florida property insurance market since our original recommendations were filed,” Citizens said in a statement. “One of the biggest reasons why we’re seeing the decline in Citizens rates is similar to what we’ve seen in the private market. Defense containment costs are coming down.”
This refers to homeowners filing fewer lawsuits against their insurers. In 2022, lawmakers passed a bill that eliminated one-way attorney fees. The insurance industry blamed these fees for what it claimed were frivolous lawsuits. The law removed the decades-old practice of requiring insurers to pay the legal fees of a homeowner if a jury awarded the homeowner more than what the insurance company offered in a claims dispute.
Other reforms may have been passed with an eye toward reducing insurance lawsuits. Reduced expenses for insurers to defend lawsuits translates into savings for consumers.
Lower insurance costs for Citizens also helped. Reinsurance protects insurance companies from major disasters. The cost of this coverage has fallen following double-digit increases in recent years. As such, customers did not need to have their rates increased to cover those higher costs.
A third factor in South Florida’s rates is the relatively calm hurricane seasons. The last hurricane to make landfall in South Florida was Irma in 2017 in the Keys. The Atlantic coast has experienced a direct hit from only one hurricane, Nicole, in the last decade. The Gulf Coast and Big Bend areas, by contrast, have seen five hurricanes, including two category 5 storms since 2018. “That’s why you’re seeing a better rate picture for South Florida Citizens policyholders versus Gulf Coast Citizens policyholders,” Friedlander said.
