A new state report shows that for the first time in nearly a decade, Florida property insurers have collected more in premiums than they spent on claims — but whether that translates into savings for policyholders remains another question.
The July 1 report, based on the first quarter of 2024, comes in addition to the news this year that Florida insurers turned their first overall profit in seven years last year because of market investment gains. Those two pieces of good news have industry-watchers and politicians saying legislation passed in 2022 and 2023 reforming state tort laws are having the desired effect.
The industry is healing from rampant fraudulent claims and frivolous lawsuits, they say. The goal of the changes to the rules governing lawsuits in Florida was to limit and reduce insurance-related litigation, with the objective of ultimately reducing costs and, presumably, passing savings on to policyholders.
“We acknowledged at the outset it would take 18 months to 24 months for us to recognize and realize some reductions in rates and benefits as a result of these reforms we made,” said Republican state Sen. Jim Boyd of Palmetto, whose 2022 legislation increased the threshold for suing an insurer. “We are absolutely starting to see it, and that’s a very positive and encouraging sign.”
Others, however, point to statistics that show Floridians are still paying the highest average premiums in the country. That’s not going to change, they say, and the tort reforms have left consumers with few avenues to hold insurers accountable for not paying on policies.
“We gave quite a bit to the industry and asked for nothing in return,” said Mel Montagne, vice president of the Insurance Office of America agency in Marathon.
Hurricanes Matthew and Irma part of a bigger 'perfect storm' in Florida
State reports show insurance companies in Florida were showing healthy net income and underwriting gains in the storm-free years between 2012 and 2015. But then Hurricane Matthew hit in 2015, and was followed by Hurricane Irma in 2017.
The storms are only part of the problem, says Tim Cerio, president and CEO of Citizens Property Insurance Corp, the state-backed nonprofit charged with taking the customers no other companies want. Citizens now insures more Florida property than any other company.
“I think there was a perfect storm — no pun intended,” Cerio said, describing a domino effect of storms spurring fraudulent legal claims, which in turn spook the markets that insurance companies pay to share the risk of what they are insuring.
Seven property insurers went bankrupt in 2021 and 2022 and others scaled back their Sunshine State operations. The industry was deemed on life support in 2022, when Gov. Ron DeSantis called a special legislative session to address the issue. The governor noted that Florida accounted for 79% of the country’s homeowners’ insurance lawsuits from just 9% of the country’s homeowners’ insurance claims.
By March 2023, a longtime state tradition that allowed the prevailing side to collect attorneys’ fees was largely ended along with allowing a third-party, such as a roofing contractor, to collect the insurance settlement without the involvement of the owner.
Boyd says accountability measures for insurers were baked into reforms, like prohibiting the cancellation of policies on unrepaired properties. But Montagne said he doesn’t think the new laws are any sort of a win for consumers.
The Legislature stated, “we’re going to leave it up to you all to reduce rates,” Montagne said. “Insurance companies are for-profit entities, so I don’t anticipate rate reductions.”
Florida insurance customers still in sticker shock over premium spike hikes
Jared Laub of Boca Raton said he wishes he could go back to 2023 when he didn’t even notice his insurance bill. He doesn’t recall how much he was paying for insurance when his insurer, the United Property & Casualty Insurance Co., ended its Florida operations last year.
After his policy was canceled, Laub estimates that the first policy he was offered, with an $11,000 premium from Slide Insurance Co., was probably double what he was paying before. And now he’s waiting to see how much renewing the current policy he has with Citizens will cost.
“I have never had to deal with this stuff before,” Laub said, explaining that United Property & Casualty had insured him from 2011 to 2023 without any problems.
Citizens has announced its intention to increase rates for its customers, such as Laub, by an average of 14% in 2025. That increase, subject to approval from the state Office of Insurance Regulation, is part of the state-created, nonprofit’s effort to convince customers to sign up with for-profit insurers, company officials told its Board of Governors this week. A host of new insurance companies have opened up for business in the state, presenting consumers with new choices.
Outside Citizens’ rate increases, state insurance regulators are reporting that for-profit companies’ premium rate filings are coming in with an average increase of less than 2%, said Mark Friedlander, spokesperson for the industry-funded Insurance Information Institute, based in St. Johns County.
Nine companies have filed for rate decreases, state officials say. Four of those are among the state’s 20 largest insurers. That means Florida’s insured are seeing their rates increase at the slowest rate in the country, Friedlander said. Ten others have filed for to keep premiums level for the next year, according to the state Office of Insurance Regulation.
“That’s an incredible result,” Friedlander said.
Still, the average insurance premium in Florida remains higher than the national average.
Insurify, a national insurance comparison shopping website, projects that Floridians will be paying an average of $11,759 for their insurance premium in 2024, almost five times the national average of $2,522. Another consumer services company, Bankrate, puts the average Florida insurance premium at $5,533 for a $300,000 home compared to the $2,230 national average for a home valued at the same level.
The higher price is not surprising, given Florida’s geography, Boyd said. Adding to the drama, hurricane forecasters are predicting one of the busiest hurricane seasons because of high ocean temperatures and other factors.
“We are a peninsula in the middle of a lot of water, so there are those challenges just in straight up insurance terms, irrespective of any other challenges that we may have,” said the state senator.
Legal costs for insurance companies dropping after spike in lawsuits in early 2023
The reforms put Florida more in line with litigation rules in other states, Friedlander said, and insurance companies are already spending less on defending Florida lawsuits, even if the tort reform didn’t go into effect until March 2023. There was a spike in suits that month, as cases were filed to beat the legislation that went into effect upon its passage.
“There was $730.9 million spent to defend lawsuits last year compared to $1.6 billion the year prior,” Friedlander said.
The state Office of Insurance Regulation’s July 1 Property Insurance Stability Report shows the number of filings for intent to initiate litigation has not been a straight decrease since the tort reform passed and the rolling, 12-month average has remained largely flat.
Friedlander attributed that to averaging out the spike that hit before tort reform took effect.
Joe Ligman, a lawyer with offices in Miami, Fort Myers and West Palm Beach, specializes in insurance claims. He says his insurance cases have dropped by 75% since the tort reform was passed,
“It’s pretty sad because really the public was sold that this would be a way to reduce your premiums,” Ligman said. “And they are still increasing the premiums.”
Republican state Rep. Mike Caruso, who represents a Palm Beach County district, said that he’s glad to see reports that litigation has dropped, but the co-sponsor of some of the passed reform legislation also thinks there’s more the Legislature could tackle to lower the cost of premiums.
He said that insurance companies shouldn’t be on the hook, for example, for the full cost of a new roof if the one that was insured and then damaged was 10 years old.
“There’s a lot of work to be done, and I look forward to addressing that issue in 2025,” he said.
Anne Geggis is the insurance reporter atThe Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com.Help support our journalism. Subscribe today.
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