3 days ago
Florida Insurers Celebrate Record Profits as Premiums Surge For Residents
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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Florida home insurers are celebrating their best year in a decade as in 2024 they collected more premiums than paid out claims for the first time since 2015, according to the latest data by the Florida Office of Insurance Regulation (FLOIR).
Regulators' most recent Property Insurance Stability Report shows that Florida's home insurance sector has finally bounced back from a yearslong crisis, even as the state was hit by three devastating hurricanes—Debby, Helene, and Milton—last year.
From Losses To Gains
The Sunshine State is still in the process of recovering from a tumultuous time for its home insurance sector, as premiums skyrocketed over the past five years while carriers went bankrupt or cut coverage across the state to avoid rising costs.
The crisis that unfolded in the state, which saw both insurers and policyholders struggling, was due as much to the growing threat posed by more frequent and more severe natural disasters as to excessive litigation and widespread fraud in Florida's insurance market.
In an aerial view, homes along the Gulf of Mexico are seen after they were destroyed when Hurricane Milton passed through the area on October 12, 2024, in Manasota Key, Florida.
In an aerial view, homes along the Gulf of Mexico are seen after they were destroyed when Hurricane Milton passed through the area on October 12, 2024, in Manasota Key, Florida.A particularly low point was reached in 2020, when the Florida home insurance industry collectively reported a loss of $1.2 billion. Between 2021 and 2023 alone, nine insurers went insolvent, including three of the ten largest ones operating in Florida.
Faced with shrinking availability, homeowners in the state found themselves having to pay higher premiums or otherwise rely on Florida's insurer of last resort, Citizens, for continuous coverage. Citizens ballooned in size between 2020 and 2023, adding hundreds of thousands of policies to its count and raising concerns among experts and lawmakers of what could have happened should the state-backed insurer be unable to pay all their claims.
While extreme weather events, like hurricanes, are likely to continue hitting Florida more often and more violently in the coming years due to the impact of climate change, state lawmakers have intervened to stop the other factors contributing to the market's crisis.
Between 2022 and 2023, Florida lawmakers reformed the state's tort law so that it would be less profitable and less appealing for attorneys to take disputed insurance settlement cases. They also made contesting an insurer's offer for settling a claim harder to dispute for policyholders in the first place.
"Legislative actions addressed the crisis, resulting in a 40 percent year-over-year decline in new property claim lawsuits in 2024," Mark Friedlander, senior director of media relations at the Insurance Information Institute (Triple-I), previously told Newsweek.
"This has led to market stabilization and lower rates. The Florida Office of Insurance Regulation reported that average home premiums declined by 0.7 percent statewide in the fourth quarter of 2024, the first drop in nearly a decade."
Out Of The Crisis—But Not Out Of Trouble
Not only tort reform—Florida has also welcomed new, smaller insurers into its property insurance market in recent months, diversifying and increasing the options available for homeowners. This has happened at the same time as Citizens had dropped tens of thousands of policies to get back to a size that can be considered sustainable. As for the latest count, dating June 30, Citizens had less than 800,000 policies in force.
And yet, despite the progress made over the past couple of years to fix Florida's broken home insurance market, homeowners in the state might struggle to draw a sigh of relief, as they are still paying some of the highest premiums in the country.
According to Bankrate, the average annual premium for $300,000 dwelling coverage is $5,728 in Florida. That is still much higher than the national average of $2,397.
Many homeowners may also see insurers' profits as a personal slight. Out of 10,900 closed claims for residential properties damaged by Hurricane Debby closed, 7,397 were closed without payment, according to data by FLOIR.
Out of 67,266 closed claims related to Hurricane Helene, 37,951 were closed without payment. And out of a total of 254,574 closed claims linked to damage caused by Hurricane Milton, 111,150 were closed without payment.
There are several reasons a claim can be closed without payment, ranging from the policy not covering the damage claimed, duplicate claims, or the policyholder's decision to withdraw the claim. FLOIR data does not offer details about why these claims were closed without payment.
