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Property Insurance: Florida’s Big Elephant in the Room

How long will we have to wait for property insurance premiums to stabilize?

TALLAHASSEE, FLORIDA — “The state has no defined legislative strategy for property insurance,” former state Senator Jeff Brandes told The Florida Standard.

After news that Farmers Insurance – another major property and casualty insurance company – will drop close to 100,000 policies, including home and auto – state officials are scrambling to stop the hemorrhaging.

Florida Insurance Commissioner Michael Yaworsky and CFO Jimmy Patronis both sent heavy-handed letters to Farmers Insurance Group seeking answers and citing “historic reforms” recently made at the state level.

But Farmers said their decision to stop writing homeowner’s insurance policies in Florida is based on risk and said similar decisions were made by the group in other states such as California.


Investors have lost close to a billion dollars each year for the last five years in property insurance companies. Every one of the 12 companies which left the state – after recapitalizing over and over – said their parent companies or their investors can’t continue to fund huge losses, and the lawsuits were overwhelming.

Previously, The Florida Standard reported on the excessive litigation that has plagued insurance companies. Republicans in Florida’s legislature vowed to fix that problem in last year’s special session, but could it have come sooner?

Jeff Brandes, who started The Florida Policy Project to research and provide education on critical issues affecting Floridians, says Florida is way behind on property insurance and must act quickly to catch up.

Brandes tried for years to bring legislation to the Senate floor in order to get ahead of problems that were already beginning to spiral out of control.

But without a clear strategy on how to tackle the issues, Brandes says inaction the last few years by state legislators – including Republicans – added to the problem. Whenever legislation is passed that affects property insurance, Brandes says the standard disclaimer is that it can take 18 to 24 months before changes are seen in the market. And so we wait.

Some of Florida’s new laws regulating property insurance took effect in January – and other measures, such as the change in assignment of benefits and the elimination of one-way attorney fees – didn’t take effect until April.

“The 18 to 24 months time frame doesn’t start when they pass the legislation – it starts when the legislation becomes effective,” Brandes told The Florida Standard.

“We’re looking at mid-2025 before we expect to see rates stabilize and see changes in the market,” Brandes said. “They’re gonna stabilize. I fully expect rates to go up another ten to 15 percent in 2024 and then stabilize in 2025.


So why did it take so long for legislators to make the necessary changes to stabilize the market? Long before Hurricane Ian struck the southwest coast of Florida, DeSantis told the legislature that he would sign insurance reforms.

The industry complained that Florida was responsible for eight percent of total U.S. property insurance claims, but almost 80 percent of the nationwide litigation.

“It made no sense,” Brandes said. “They had 25,000 lawsuits filed in one day.”

In 2022, Citizens, the state-backed insurer of last resort, saw 900 lawsuits filed against it each month and was spending $100 million on litigation defense alone.

“If you think about it, why was Florida’s legislature able to pass the legislation in December that they couldn’t pass in May when they had the previous special session? Brandes asked. “What changed?”


In April of last year, DeSantis issued an official proclamation “to consider legislation related to property insurance, reinsurance and changes to the Florida Building Code to improve the affordability of property insurance.”

But Republican lawmakers failed to make the most significant changes during the mid-year special session. Then, after Hurricane Ian pummeled southwest Florida, the governor pushed the legislature to hold another special session.

DeSantis announced that after the November election, incoming Republican leadership would make those necessary changes to curb excessive litigation. The governor also said the state would provide property tax rebates to those affected by Hurricane Ian, which left more than 100 people dead and destroyed coastal communities.

In October, then Speaker-designate Paul Renner (R-Palm Coast) told The Florida Standard that the state is on track to bring new insurers to Florida, even after the storm. “We will not allow Florida’s insurance market to fail,” he said.

Could DeSantis have pushed harder and sooner given that it takes 18 to 24 months to see effects in the insurance market?

This year, the governor signed significant legislation to reduce the number of frivolous lawsuits against insurance companies, but he was criticized for not directly lowering rates.

According to Brandes, everyone in the industry and Tallahassee knew that insurance companies were spending billions to fight frivolous lawsuits. But every year the trial bar came back to lawmakers and asked them to do nothing about property insurance.

“And what’s the easiest thing for legislators to do? Nothing,” Brandes says.


Will we have to wait until mid-2025 to see insurance premiums stabilize? Will more companies leave the state if we have a major storm this hurricane season?

The Florida Standard spoke to multiple insurance industry officials, lobbyists and lawmakers and they all agreed that a major driver of premium costs is reinsurance. Reinsurance – referred to as insurance for insurance companies – allows a company to transfer some of its insured risk to the reinsurance company.

In Florida, reinsurance rates went up 30 to 40 percent in 2023 for most companies.

Premiums paid to the Florida Hurricane Catastrophe Fund (Cat Fund) by insurers have increased exponentially due to the way the fund’s retention level is set. Those increases have caused insurance companies to call on state officials to cut the retention level in half, from around $8.5 billion to around $4.5 billion.

The move would still give the $11 billion Cat Fund enough reserves but it would shave close to ten percent off the amount of reinsurance that must be purchased by insurance companies – a savings that could be passed on to consumers.

“The Cat Fund sits as kind of this doughnut hole and there’s a space below the Cat Fund, and there’s a space above the cap,” Brandes told The Florida Standard.

Cat Fund officials keep raising the doughnut hole every year, according to Brandes. Florida officials have hesitated to reset the level because in the event of a major storm, the bottom portion of the fund would be exposed sooner and they don’t want that exposure.

But as more insurance companies leave Florida, the state-backed Citizens Insurance company is left absorbing those policies – bringing an even greater risk when a storm arrives.

Why? Charlie Crist’s decision to cap rates on Citizens’ policies means the risk is not accurately assessed. Insurance policy premiums at state-run Citizens is close to 30 percent below market statewide and almost 50 percent in Miami-Dade county.

Unlike private insurers, Citizens has the ability to write policies that are not actuarially sound, adding more risk to the company each time it absorbs a policy from another insurer that goes insolvent.

In 2022, Melissa Burt DeVriese, president of Ormond Beach-based Security First Insurance, told Insurance Journal that the Cat Fund failed to average the results of all seven approved hurricane-loss computer models. Instead, the fund used a single model that predicts a more dire situation than most of the other models.

“Since that wasn’t done, the reinsurance costs paid [to the Cat Fund] by Florida’s consumers increased by $150 million,” DeVriese explained.


“Florida requires replacement costs on roofs,” Brandes says. “It's like a nanny state.”

For years, the insurance industry has tried to push the Florida Legislature to use a property insurance endorsement that would pay a claim on the actual cash value (ACV) of a damaged roof, similar to 40 other states in the U.S. This policy change would likely reduce the amount of homeowners who are forced by their insurance company to replace their roof even though it still has several years of life left.

Independent adjuster Ben Mandell told Insurance Journal in May that Florida insurance policies have “one glaring endorsement that is missing” – roof endorsements that could have “eliminated or greatly minimized” Florida’s insurance crises.

Mandell argued that offering a stated value endorsement would limit the insurance company’s maximum exposure and keep premiums more affordable.

Under ACV, the amount an insurance company pays for a damaged roof would be based on the pre-damaged roof’s current value, considering its condition and age. The same method is used by automobile insurance companies when paying out claims based on the actual depreciated value of the vehicle.

Under Florida law, If your car is totaled in an accident, you don’t get a brand new car, you get the value of your current car at the time of the accident. So why is Florida requiring a brand new roof if a 15-year-old roof is damaged by hail?

By changing the law, consumers could save money on their premiums and still purchase additional coverage to replace their roof at full replacement value if they choose.