Florida…A Stormy Insurance Market in Transition

Mar 10, 2023 / by Linda Jancik

Don’t let the beautiful Florida sunshine blind you to the storm brewing in the personal lines property market. 

At the recent Florida Insurance Market Summit (FIMS), the legal and governmental consulting firm Colodny Fass presented some sobering statistics regarding the magnitude of the Florida homeowners insurance market “storm” in 2022:

  • Florida domestic property insurers had cumulative net underwriting losses in excess of negative $3 Billion.
  • 11 carriers have gone into liquidation since 2017.
  • There is an overpopulation of Citizens Property Insurance Corporation.
  • Floridians pay 3x as much in premiums as the U.S. annual average.
  • Florida has 9% of all property homeowners claims and 79% of all lawsuits nationwide.
  • In the last 10 years, $51 billion was paid in claims by insurers; 71% of which went to attorneys and public adjusters
Based on these stats, the results of an Insurance Market Survey among stakeholders in the Florida market conducted by AAIS were no surprise. Among respondents attending FIMS showed the top three concerns were:
  1. The Florida Homeowners Insurance Market
  2. Reinsurance/Capital
  3. Assignment of Benefits Litigation

Climate risk and natural catastrophes continue to affect carriers, with 77% of FIMS respondents extremely or moderately concerned, due in part to the impact on losses, reserves, and financial results, as well as the availability of reinsurance capacity and pricing.

Concern over Assignment of Benefits Litigation is particularly high with 50% of respondents from FIMS extremely concerned, and another 27% moderately concerned. At a recent AAIS Pulse event, Professor Bob Hartwig from the University of South Carolina said legal/tort system abuses can be attributed to an aggressive trial bar, social inflation, class action lawsuits, and issues like the Assignment of Benefits in Florida. Although litigation affects every industry, there is none more than the insurance industry.

Against this backdrop, the Florida senate enacted a sweeping property insurance reform bill that addresses several of the issues concerning Florida insurance carriers by ending one-way attorney fees and Assignment of Benefits agreements. The Senate bill addresses both the insurance market and consumer concerns, but there are questions about other provisions, including a major shift in policy on rates from the Citizens Property Insurance Corporation, a government entity that provides homeowners and other property insurance policies for those who cannot find coverage elsewhere. It includes a state-backed reinsurance plan designed to offer insurers a low-cost alternative to the prices in the private reinsurance market.

Subject to various effective dates/circumstances, the following changes are anticipated to improve the Florida property insurance market as a result:

  • Addressing inability to access re-insurance.
  • Elimination of one-way attorney fees.
  • Eliminating the assignment of benefits.
  • Shortening the time period to open a claim.
  • Bad faith litigation reform.
  • Citizen’s depopulation measures.
There are other expected changes that are important including eliminating mandatory binding arbitration, flood notices going on the declarations page, and updates to the Homeowner Claims Bill of Rights.

According to Colodny Fass, the following are benefits to the consumer from the Senate bill provisions:

  • Access to more affordable and comprehensive property insurance.
  • Shortened response times for communications and determinations.
  • Greater transparency in the claims process.
  • Increased regulatory review of carrier activity.
  • Increased funding to the Florida OIR for increased financial oversight.

So where does this leave the Florida insurance market?

Companies do not have to weather this storm alone, even though there are a number of changes being made under tight time frames. AAIS can help carriers succeed in a unique Florida property market. AAIS has state-specific by-peril homeowner property forms and continues to make its forms current, compliant, and unique to state differences.

Tags: Personal Lines, Homeowners, Florida Insurance Market, Florida

Linda Jancik

Written by Linda Jancik

Linda is AAIS’s Personal Lines Product Manager, responsible for product development, deployment and management for AAIS’s Personal Lines suite, including Dwelling Properties, Cyber, Flood, Florida Homeowners By-Peril and Homeowners coverages. Linda has more than 30 years of Personal Lines experience in Underwriting, Product Management, Sales and Business Operations, as well as Communications. Linda has a Bachelors degree from Utah State University.

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