Florida’s Property Insurance Reform is Starting to Work
Bottom Line: First, the not-so-good news. No, your property insurance bill isn’t likely to come down anytime soon. Now for the better news. Yes, you are likely to have access to more property insurance options soon 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 – the need for relief is no doubt here. Florida’s officials prepared us for the likelihood that the reforms which were passed last year would take years to fully feel the effects of. And the primary reason for that is the need for Florida’s existing claims and lawsuits to work their way out of the system. And for perspective on just how long that can be, the final deadline for 2017’s Hurricane Irma claims was June 1st of this year. But while it may take years to see and feel the full effects of the reforms, the first sign as to if we’re on the right path is stability. And that’s what we’re starting to see.
Talking about the inner workings of the property insurance market is wonky so I’ll hit the highlights of what we just learned. Aon has released a mid-year report on the worldwide property insurance market. And it just so happened that Florida’s improvements were a key storyline not just for the Florida property insurance market but throughout the world. Quoting the report: While still early days, there are encouraging signs of future growth opportunities for insurers and reinsurers in Florida. As tort reform leads to lower overall loss costs, insurance and reinsurance capital is likely to flow back into the market. Florida’s windstorm insurer of last resort, Citizens Property Insurance Corporation, continues to grow, creating opportunities for profitable depopulation. The key to the assessment is that the insurance industry is now starting to see Florida as a growth opportunity, as opposed to a market they’re eager to bail from. And the key catalyst as mentioned is tort reform which was a key cog of fixing Florida’s property insurance puzzle as we’d previously accounted for 8% of the country’s property insurance policies, but close to 80% of the country’s property insurance lawsuits.
As Aon mentioned, it’s still early days in Florida, it took years for the property insurance crisis to develop, unfortunately it will take years to fully unwind it as well. However, the first important aspects of the reform that can take hold are appearing to take hold and that should mean more companies offering property insurance policies, creating options and price competition for policies. We’ve got a long way to go but we now have our first evidence that last year’s reforms are starting to work.