FLORIDA: An introduction to Insurance: Transactional & Regulatory

Florida’s Property Insurance Reform - A Beacon for New Investment

Summers are always hurricane season, but the summer of 2022 saw the Florida property insurance market in a state of disarray. Insurance companies operating in the state were incurring significant underwriting losses driven by the impact of a number of catastrophic windstorm events and a resulting explosion in insurance claims litigation. In 2021 and 2022 alone, seven Florida domestic property insurance companies were rendered insolvent and placed into receivership. Insurers that remained raised rates and reduced exposure, leaving policyholders scrambling for coverage options and shifting tens of thousands of policies to the state’s residual market, Citizens Property Insurance Corporation (Citizens). Capital was exiting the market and new entrants were virtually non-existent. The explosion in underwriting losses also had a significant impact on the reinsurance market. Several reinsurers turned sour on Florida, reducing capacity and raising rates, which in turn resulted in even higher premiums for insureds. With the reinsurance market requiring tighter terms and larger upfront deposits, several insurers had difficulty completing their reinsurance placements. Confronted with a deepening crisis that threatened the housing market and the economic viability of the state, the Florida Legislature reacted by enacting a series of reforms intended to provide stability to the insurance market and attract new investment.

Aims of reforms

The reforms were intended to address the cost drivers that were exacerbating underwriting losses, stem the spiraling rate increases impacting consumers and add new areas of regulatory enforcement and insurer accountability to policyholders. 

In recognizing that the rampant property claims litigation was having an adverse effect on the market, the Florida Legislature took action by repealing the one-way attorney fee statute, prohibiting the assignment of benefits (AOB) on insurance policies, allowing insurers to include mandatory arbitration binding language in their policies and requiring an insured to obtain a judgment for breach of contract as a condition precedent to bringing an action for bad faith.

Renewed investment interest

The implementation of the legislative reforms have sparked renewed interest in investing in the Florida insurance market. Since the passage of the reforms, fourteen new companies have entered the Florida marketplace, with several additional new entrants expected to come in the near future, providing enhanced competition. Moreover, some of the new entrants, along with certain existing insurers, are once again engaging in assuming insurance policies from Citizens policies through the company’s depopulation program. As of February 2025, Citizens had 847,571 policies in force, down from 1,228,718 in 2023, and the lowest number since 2021. It is expected this depopulation trend will continue, as Citizens projects ending 2025 having approximately 738,000 policies, according to statements made by Citizens’ president, Tim Cerio. The continued effort to depopulate Citizens will result in a healthier market with increased competition while providing consumers with more options and better coverage offerings.

A positive impact

While it will take more time to analyze the full impact of these legislative reforms, the initial indications are that the efforts currently put in place have had a positive impact on the Florida property insurance market.   At year-end 2024, Florida’s domestic property insurers reported total net income of USD944 million, up from USD292 million at year-end 2023. This represented a complete reversal of the industry’s 2022 USD741 million net loss. As further evidence of the impact of these reforms, the Florida Office of Insurance Regulation has reported that through June 2025, over 120 residential rate filings have been made requesting either a rate decrease, or a zero percent increase. Specifically in 2024, Florida had the lowest average homeowners premium increase in the country, at 1%, whereas some states experienced rate increases as high as 22%, increases similar to what Florida was experiencing prior to the enactment of the legislative reforms.

Decline in claims litigation

The biggest impact from these reforms, however, can be seen in the decline in claims litigation. Prior to the enactment of these reforms, Florida accounted for nearly 80% of all property claims litigation nationwide, despite only having approximately 7% of nationwide claims.  According to data compiled by the Florida Office of Insurance Regulation, claims related filings decreased 23% between 2023 and 2024 and nearly 25% in the first half of 2025 compared to the first half of 2024, representing a cumulative decline in claims litigation of nearly 36% since 2021. The reforms have also had a positive impact on the market’s defense and cost containment ratio, which was 2.8% in 2024, the lowest since 2015 and down from an all-time high of 8.4% in 2022.

Activity in the reinsurance market

Activity in the reinsurance market also shows encouraging responses to the reforms. Recognizing cedants’ improved financial health following the legislative reforms, reinsurers have reversed their prior pullback from the state and are now looking to expand their capital deployment. According to reports from Aon, reinsurance capacity was able to absorb increased demand from Florida property insurers. Further, the softening of the market allowed Florida insurers to obtain better terms than in years past, along with favorable pricing. It was particularly noted that claims from 2024 Hurricanes Milton and Helene performed in line with modeled expectations, and did not experience “loss creep,” where losses continued to develop well after the event, such as what happened with Hurricane Irma (2017) and Hurricane Ian (2022). The absence of loss creep in the recent storms is seen as evidence that the legislative reforms are working and have created an atmosphere of confidence amongst reinsurers that Florida is once again investable. 

A need for vigilance

Insurers, investors and other market participants will need to remain vigilant, however, as there were attempts made during Florida’s recent legislative session to reverse certain reforms and add new laws that would likely stifle further investment in the state. Specifically, legislation was proposed that would have reenacted the one-way attorney fee structure, the repeal of which was critical for reigning in the rampant explosion of claims litigation. Additionally, legislators offered bills that would require additional scrutiny of the managing general agent structure and fees paid by the insurer to affiliated service providers. While the industry was able to prevent these proposals from becoming law in 2025, we can expect certain players, such as the trial bar and public adjusters, to continue their attempts to undo the reforms that have so far proven to stabilize the marketplace. 

A work in progress

The effort to improve Florida’s critical property insurance market remains a work in progress as stakeholders continue to work to find solutions that will balance insurer solvency, competition and affordability for policyholders.