The State of Florida’s Property Insurance Market Entering Hurricane Season
Bottom Line: As we’re on the precipice of this year’s hurricane season there’s been one major change over the past year. The state of the state’s property insurance industry. A year ago, on the back of multiple years of legislative reforms aimed at creating stability within the state’s property insurance market, the message from state agencies was patience. A year later as we’re set to enter hurricane season the message is one of recovery. On Friday Florida’s Office of Insurance Regulation issued an update on what they called the continued strengthening of Florida’s property and casualty insurance market. On that note here are the signs of progress as noted by Florida’s OIR:
Market Update
OIR continues to see overall market stabilization following the historic legislative reforms of 2022 and 2023 that enhanced protections for consumers, strengthened Citizens Property Insurance Corporation, and encouraged investment by insurers and reinsurers by providing clarity to the market and the risk they underwrite.
Rate Filings: Rate filings for 2024 show a slight trend downward for the first time in years, indicating stabilization of the property insurance market. Ten companies have filed a zero percent increase and at least eight companies have filed a rate decrease to take effect in 2024.
Reinsurance: The 2023 reinsurance market responded positively to these reforms. Early signs from the 2024 reinsurance purchasing season show further positive indications. Reinsurance is a direct and significant cost to consumers and relief in this area is a significant sign that the reforms are working.
Financial Strength: After years of consecutive underwriting losses, the insurers saw overall stability with many companies reporting a net profit in 2023.
Market Snapshot: As of Q4 2023, there are approximately 7.45 million residential insurance policies in force in the Florida property market.
- 81% of those policies are written by admitted insurers, as opposed to Surplus Lines companies or Citizens Property Insurance Corporation.
- Eight new companies have been approved to write homeowners policies in Florida since the reforms, and an additional company was acquired to expand its footprint in the state.
Citizens Property Insurance Corporation: Approximately 389k policies have been taken out of Citizens from January 2023 through March 2024.
Rates are beginning to stabilize. - A 30-day average request for homeowners’ rates was 1.6% compared to 7.6% one year ago. - The average homeowner’s premium in the admitted market in Florida is approximately $3,600. - Ten property insurance companies have filed a zero percent increase for their annual rate filing, and at least eight companies have filed a rate decrease to take effect in 2024.
Literally every property insurance category shows significant improvement over a year ago. Notably, the rise in cost in property insurance policies is half of the inflation rate and the average policy that’s being underwritten, at $3,600, is about $800 less than has been reported by third party resources. This could be an indication that more property owners who’ve paid off their properties are opting to drop property insurance coverage in lieu of self-insuring.
The bottom line is that Florida’s property insurance market is the best positioned it's been in years. Let’s hope for a similar outcome this hurricane season. A hurricane free year in Florida would likely bring much better news to Florida’s property insurance market next year.