Florida Property Insurance Market: Challenges, Improvements, and Future Outlook

Florida home and condo owners face some of the highest insurance premiums in the nation. Considering the state’s vulnerability to hurricanes and frequent storm damage, property insurance remains a critical concern for Floridians.

Understanding Florida’s High Property Insurance Premiums

Florida’s unique combination of frequent hurricanes and significant litigation rates makes it difficult to maintain low insurance costs. As former State Senator Jeff Brandes, chairman of the new Patriot Select Property and Casualty Insurance Company, explains:

"You can’t be the most hurricane-prone state and the most litigious state and expect low property insurance rates. The math just doesn’t work."

Litigation vs. Hurricane Damage

• Florida accounts for 8% of total U.S. property claims.
• However, it represents 80% of all property insurance-related litigation nationwide.
• Litigation is noted by industry experts as the #1 contributor to escalating home insurance premiums.

Brandes emphasizes a critical insight:

"You can model hurricanes. You can’t model litigation. Florida was just overwhelmed with litigation. Nobody could tell you what the hurricane was going to cost, not because of the storm damage but because of the litigation post storm damage."

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Legislative Efforts and Property Insurance

This past legislative session addressed property insurance concerns. Florida House Speaker Daniel Perez highlighted the importance of the topic, stating:

"Property insurance matters to the people of Florida."

Although over 250 bills were passed, only a few had minor connections to home insurance. Some proposals included revisiting past policies such as the “One Way Attorney” statute, which deviates from the typical "American rule" followed in 49 other states, where each party pays its own legal fees. Florida’s deviation has contributed to the excessive litigation environment.

Signs of Improvement in Florida’s Property Insurance Market

Despite the challenges, the market is showing signs of recovery and expansion:

• Since 2022, 13 new insurance companies have entered the Florida market.
• Brandes describes this surge as the most significant in years.
• Patriot Select, Brandes’ company, is initially focusing on the standard HO-3 homeowners policy, targeting homes valued between $250,000 to $2.5 million.

Competitive Growth Driving Prices Down

"We’re really excited about the opportunities in the Florida marketplace, and there’s plenty of room for growth and competition. And that’s frankly what’s going to drive down pricing in Florida." — Jeff Brandes

This increase in insurers is fostering competition, a key factor that could help reduce property insurance premiums in the state.

The Role and Status of Citizens Property Insurance

Citizens Property Insurance, a state-created entity, offers insurance to homeowners unable to secure private market coverage. However, it once held:

• Approximately 1.4 million policies in 2022.
• Half a trillion dollars in risk exposure.

Currently, Citizens’ policy count is declining significantly, expected to decrease to around 650,000 policies by year-end, indicating better market conditions.

Why Choose a State-Licensed Insurance Carrier?

Brandes recommends opting for an “admitted carrier”—a state-licensed insurer—as opposed to an Excess & Surplus (E&S) carrier, which is exempt from many state regulations.

Benefits of Admitted Carriers include:

• Coverage by the Florida Insurance Guaranty Association (FIGA), which protects policyholders if an insurer becomes insolvent.
• Compliance with state insurance laws, ensuring a higher level of policyholder protections.

"If an E&S carrier fails to pay your claim and goes bankrupt, then there is essentially no protection out there for you," Brandes pointed out.

Future Challenges Impacting Florida Property Insurance

While the market trend is positive, several unpredictable factors could influence future insurance premiums:

• Rising home prices and the increasing cost of repairs and replacements.
• Potential impacts of tariffs on materials.
• Effects of labor shortages and regulatory actions like ICE raids on workforce availability.

Brandes remarks:

"It’s a unique product in the marketplace where we don’t know what our cost of goods sold are."

Florida’s Property Insurance Outlook: Optimistic but Cautious

Florida’s property insurance environment is improving due to increased competition and legislative awareness. However, significant caution remains regarding future storm activity and economic variables affecting construction and repair costs.

Key Takeaways

• Florida holds some of the highest home insurance premiums due to hurricane risk and litigation.
• The state has recently seen a surge in new insurance companies, fostering competition.
• Opting for state-licensed admitted carriers offers better policyholder protections.
• Market improvements could lead to lower rates, especially if the state avoids major storms.
• Rising home values and repair costs may still pressure premiums upwards.

For homeowners seeking detailed, state-specific insurance options, partnering with knowledgeable, Florida-focused providers like Patriot Select Property and Casualty Insurance can offer valuable coverage solutions amidst this evolving market.

Additional Resources

• Florida Insurance Guaranty Association (FIGA)
• Citizens Property Insurance Corporation
• Understanding Excess & Surplus Lines Insurance
• Latest Florida Hurricane Preparedness Information

Stay informed and prepared to make the best insurance choices in Florida’s dynamic property insurance landscape.