Triple-I: Florida's Property Insurance Market Improving Due to Legislative Reforms Curbing Legal System Abuse, Fraud

After years of enduring rampant legal system abuse and claim fraud, Florida's property insurance market is showing signs of improvement as the 2024 Atlantic hurricane season nears, according to a new Issues Brief published today by the Insurance Information Institute (Triple-I).

Legislative reforms passed in 2022 and 2023 have created a pathway to a stable Florida market, according to Triple-I's Issues Brief. Among the positive actions are ongoing depopulation of Citizens Property Insurance Corp., the state-backed insurer of last resort which became the state's largest home insurer due to the risk crisis, and eight new property insurers being approved by the state's regulator to enter the market this year.

"Property insurers want to do business in a state like Florida which is growing, and there is now some hope that this could eventually happen more and more. However, it is important Florida's public policymakers ensure the reform that is helping the market recover is not eroded by the billboard lawyers," said Triple-I CEO Sean Kevelighan. He also warned that plaintiff attorneys are actively working to bring their abuse tactics to other states as Florida now has tighter regulations on filing property claim lawsuits.

While insurers in Florida recorded an underwriting loss for the eighth consecutive year in 2023, according to S&P Global, the loss was much smaller than in recent years. The $190.8 million cumulative underwriting loss posted by the top 50 private insurers in Florida last year was a big improvement from the industry's $1.80 billion underwriting loss in 2022 and $1.52 billion loss in 2021, the Issues Brief noted.

Despite the market improvements, average Florida home insurance premiums are expected to continue to increase this year, albeit at a "more moderate level" than recent years, according to Triple-I. The Issues Brief noted that some regional insurers recently filed for small statewide average rate decreases.

There are early signs that recent legislative reforms are beginning to bear fruit. In 2023, Florida's defense and cost-containment expense (DCCE) ratio ? a key measure of the impact of litigation ? fell to 3.1, from 8.4 in 2022, according to S&P Global. In dollar terms, 2023 saw $739 million in direct incurred legal defense expenses ? a major decline from 2022's $1.6 billion.

For perspective, incurred defense costs in the two largest U.S. insurance markets in 2023 were $401.6 million in California, followed by $284.7 million in Texas.

ADDITIONAL RESOURCES:

Triple-I Issues Briefs

Addressing Florida's Property/Casualty Insurance Crisis (February 2023)
Florida Homeowners' Insurance Crisis (August 2022)
Legal System Abuse

About the Insurance Information Institute

With more than 50 insurance company members ? including regional, super-regional, national, and global carriers ? the Insurance Information Institute (Triple-I) is the #1 online source for insurance information in the U.S. The organization's website, blog and social media channels offer a wealth of data-driven research studies, white papers, videos, articles, infographics and other resources solely dedicated to explaining insurance and enhancing knowledge.

Unlike other sources, Triple-I's sole focus is creating and disseminating information to empower consumers. It neither lobbies nor sells insurance. Triple-I offers objective, fact-based information about insurance ? information that is rooted in economic and actuarial soundness. Triple-I is affiliated with The Institutes Risk and Insurance Knowledge Group.