Florida Makes Major Change to Insurance Industry: What To Know
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
Governor Ron DeSantis signed Florida House Bill 5013 into law earlier this month, terminating one state-funded reinsurance program and substantially cutting funding for a second.
Newsweek contacted DeSantis' press office for comment on Friday via email outside regular office hours.
Why It Matters
In 2022, the Reinsurance to Assist Policyholders (RAP) program was created in Florida with taxpayer funding to reimburse insurers for losses related to hurricanes, providing additional funding for the Florida Hurricane Catastrophe Fund.
Securing insurance in Florida and other states impacted by extreme weather has become a major issue for many property owners, with premiums surging in recent years.
A reduction in state support for the reinsurance market could result in a greater reliance on private companies, potentially causing premiums to increase.
Florida Governor Ron DeSantis speaks during a press conference on April 10, 2025, in Miami.
Florida Governor Ron DeSantis speaks during a press conference on April 10, 2025, in Miami.
Joe Raedle/GETTY
What To Know
Florida House Bill 5013 reduces RAP program funding by $900 million and also repeals the legislation that created the Florida Operational Reinsurance Assistance Program (FORA), which received an additional $1 billion to cover reinsurance claims.
Initially, RAP was supposed to last for only two years, but the plan was extended after Hurricane Ian caused extensive property damage in 2022.
A report from industry publication ReInsurance Business found that payments under the RAP did not meet initial expectations. The 2022 Hurricane Nicole did not result in RAP disbursements because of threshold limits, while Hurricane Idalia in 2023 led to only $15 million being transferred, freeing up additional capital that is now being returned to the general state revenue.
By comparison, after Hurricane Ian, $800 million was transferred into the RAP, with the State Board of Administration forecasting that about 50 companies would receive full payouts from the plan.
The summary of Florida House Bill 5013 states: "HB 5013 reduces, from $2 billion to $900 million, the General Revenue (GR) Fund transfers authorized under the Reinsurance to Assist Policyholders (RAP) Program to reimburse eligible insurers for covered losses. The bill repeals the Florida Optional Reinsurance Assistance (FORA) Program, including $1 billion of authorized General Revenue Fund transfers that are available under the program to reimburse eligible insurers for covered losses.
"By reducing the cap for transfers to the RAP program and repealing the FORA program, the bill increases the amount of unallocated General Revenue funds available by $2.1 billion."
What Happens Next
It remains to be seen whether private insurers will be able to pick up the slack caused by the reduction in state support without increasing customer premiums. It will depend in part on the severity of future hurricanes that hit Florida.
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