Q&A of the Day – Is Florida’s Property Insurance Market Improving?
Each day I feature a listener question sent by one of these methods.
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Today’s Entry: @brianmuddradio Where's your latest analysis of the FL home insurance industry, given recent law changes, and it's impact to consumers. I'd like to compare and contrast with @LeaderBookFL's upcoming town hall event with @senpizzo and FL OIR Commissioner Yaworsky @FLOIR_comm
Bottom Line: It’s been about two months since I last provided an update on Florida’s property insurance market, and we’ve seen a few developments since then – most of them have been encouraging. First, to hit the reset button as for where we are in the recovery process... No, your property insurance bill isn’t likely to come down anytime soon. Yes, you now have access to more property insurance options which will provide the potential for you to be able to save in future years as the first meaningful signs of Florida’s property insurance reforms are starting to take hold in the insurance industry. It’s been years since we’ve had any positive news on Florida’s property insurance front. And with the average windstorm policy now in the neighborhood of $2,850 per single family home per year, an increase of $230 over a year ago – the need for relief is high. Florida’s officials prepared us for the likelihood that the reforms which were passed last year would take years to fully impact Florida's property insurance market. And the primary reason for that is the need for Florida’s existing claims and lawsuits to work their way out of the system. Let’s look at what’s changed over this summer in Florida’s property insurance market...
⦁ 1 insurer has pulled out of the state (Farmers)
⦁ 3 new insurers have entered the state (Mainsail Insurance Co., Tailrow Insurance Company and Orion180)
⦁ The property insurance industry (outside of Citizens) reported its first quarterly profit ($60 million) in the state since 2017
⦁ Florida’s Office of Insurance Regulation announced Citizens will begin to reduce its policy count with 130,000 policies to be transferred to private insurers by the end of November to four different insurers (Homeowners Choice Property & Casualty Insurance Co., Florida Peninsula Insurance Co., Monarch National Insurance Co. and Edison Insurance Co.)
⦁ Reinsurance is ⦁ now readily available with rates that are lower than anticipated
Out of five important developments in Florida’s property insurance market this summer, four have been positive. Another positive trend has been a significant reduction in new insurance lawsuits. After a flood of new suits to start the year, due to reforms which would inhibit shady practices by homeowners and contractors leading to lawsuits, we’ve had reports of significant declines in new lawsuits starting with the second quarter of the year. Litigation reform is central to a recovery in Florida’s property insurance market. That’s true for insurers, but also directly for us too. As I’ve covered previously, as of last year, the annual increase in policy premiums due to litigation alone was over $680. In other words, solving the litigation crisis has the potential to reduce property insurance premiums going forward by 26%.
Having covered both of Florida’s property insurance crises, the crisis following the ‘04-’05 hurricane cycle and subsequent Great Recession, and this one, my assessment of this situation is this. Following last year’s multiple legislative efforts to reform Florida’s property insurance market, I felt like more needed to be done. The legislative action taken this year to reduce the window of time claims from previous years (along with lawsuits may be filed), along with strong litigation reform including the elimination of one-way attorney's fees is being evidenced as effective. There are no longer any aspects of Florida’s property insurance crisis which have gone unaddressed and there are now many strong indications of a recovering market – one that has the potential to improve quicker than many, including myself, thought may be possible. Hurricane Idalia wasn’t helpful, but it also wasn’t significant enough to alter the recovery course. Avoiding another hurricane this season would prove especially helpful.