Florida’s Property Insurance Market Is Recovering - Top 3 Takeaways – March 22nd, 2024
- Florida’s property insurance recovery. Florida’s property insurance market has been like a slow-moving or even stalled out hurricane in recent years (some of which literally have contributed to the crisis). It’s been ominous, the damage has been accumulating, the costs associated with the disaster have been steadily rising and though you know that it will eventually move on – it still hasn’t. Well, I’ve got good news. The storm is on the move and we’re on the back side of the hurricane. As I’ve long covered, Florida’s property insurance crisis took years to create with a combination of assignment of benefits shenanigans, fraudulent claims and brutal hurricane seasons. Nothing will ever take away the reality that Florida is the highest risk state for property insurance claims. Our geography is what it is – which is both a blessing and a curse. But what could be taken away and slowly is starting to be taken away is this statistic that was at the root of Florida’s property insurance crisis. Entering 2023, Florida accounted for only 8% of the property insurance policies underwritten nationally, but that also accounted for 78% of the outstanding litigation. After a series of property insurance reforms were passed by the state which put an end to the ability for litigation abuse, we were left to have to wait for the storm to pass. It’s starting to. Last July we had the first signs of a recovery show up. As I noted at the time in my story: Florida’s Property Insurance Reform is Starting to Work: No, your property insurance bill isn’t likely to come down anytime soon. 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. 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. That proved to be accurate, and...
- Profit is the key. It’s what’s been missing from Florida’s market since the crisis began. The year was... The Big Bang Theory was the #1 TV show. Love Yourself by Justin Bieber was the top song. The Zika virus briefly became a thing. Brits voted for “Brexit” and Donald Trump was elected President of the United States. This was of course 2016. Guess what else happened that year? Florida’s property insurers turned a profit. That's right, not since James Comey came out to tell us that Hillary Clinton had in fact illegally maintained a private server with classified material but that “no reasonable prosecutor” would pursue the case have Florida’s property insurers turned a profit. It’s been and it always is easier to get mad about what’s happened, and is still happening, with the insurance companies...and to be sure some have been better actors than others...but the fact of the matter has been that the problem hasn’t been them. Imagine working for six consecutive years only ever losing money, and huge money at that (many billions of dollars). Any person, any business and certainly any industry in that situation will enter a state of crisis at that point and that’s exactly what happened. Here’s the better news. On the back of the reforms, and for the first time in seven years, Florida’s property insurance industry turned a profit. Quoting S&P Global’s analysis:
- Florida domestic residential property insurers' income in 2023 moved into positive territory for the first time in seven years. Thanks to a significant swing in investment income and much improved underwriting results, the group of around 50 insurers reported $147.3 million in net income for 2023, according to an analysis conducted by S&P Global Market Intelligence. The group excluded state-owned Citizens Property Insurance Corp. That compares to net losses of more than $1 billion in each of the previous two years. Florida property insurers benefited from a mild hurricane season and a meaningful increase in investment income in 2023. While the industry still recorded an underwriting loss, it was much narrower than in recent years, and there are early signs that recent legislative reforms will benefit the troubled market. S&P went on to note a significant decline in litigation cases being filed as key to the improvement and key to the recovery. None of this news helps you pay the bills today, but if it can be sustained, it will make your bills more affordable tomorrow (as in potentially upon your next insurance renewal cycle). Several new insurers have entered or reentered Florida’s property insurance market since the final round of reforms were past last year and more will be on their way if there’s money to be made. Profit is the key that’s been missing for all but those who’d legally abused our previous system. No doubt we could still use a hurricane free hurricane season in Florida. But as for the one that’s been stalled over the state for seven years or so...it’s moving on.