Report: Florida insurance market stabilizing after reform

FORT MYERS, Fla. (WINK)—Florida's home insurance market is starting to  stabilize after reform, innovation, and lower operating costs, according to a new report. 

AM Best, one of the world's largest rating agencies, finds that personal property insurance companies recorded nearly $1 billion worth of underwriting gains in Florida. This follows a $132 million underwriting loss just two years ago.

Underwriting is how insurance companies determine risk. Essentially, it demonstrates profits - showing that insurance companies are starting to make money. That could be a good sign for homeowners, according to Chris Draghi, a director at AM Best. 

"It's probably creating some space for rates to come down," Draghi said. "We haven't seen that really happen dramatically yet, but I think the expectation is that forward looking there should be some easing now."

AM Best said it identified 51 Florida insurance carriers that predominately underwrite personal property in the state.

It did not look at insurers affiliated with large national carriers or state-backed Citizens Property Insurance Corporation. Instead, the agency focused on smaller companies that are relatively new to Florida. 

Gov. Ron DeSantis signed tort reform legislation that helped drive gains, Draghi said. In 2023, the governor signed legislation that makes it harder to sue insurance companies. 

Lisa Miller, former Florida deputy insurance commissioner, previously said that frivolous litigation increased costs for insurance companies.

The state accounted for roughly 80% of the nation's home insurance litigation, Miller said, but just 8% of its claims. 

"A lot of times there was no reason to sue an insurance company," Miller said. "It was just profitable to do so."

Florida insurers defense costs dropped to approximately $131 million, AM Best said. That marks a 68% reduction from 2024 and nearly an 80% drop from the high in 2022.

Technological innovations, like Artificial Intelligence, are also helping lower costs. 

Modest reductions in reinsurance costs also provided a boost, the report said.Reinsurance is essentially 'insurance for insurance companies,' according to Investopedia. It's when an insurer transfers some of its risk to reduce liability. 

Despite the positive signs, many people in downtown Fort Myers expressed frustration with Florida's insurance industry, pointing to higher costs and lower payouts. 

Florida home insurance premiums have increased 75% over the last four years, according to the Coalition for an Insurable Future.

That's higher than anywhere else in the country. 

Chris Cosden of Fort Myers said his premiums have increased 10%.

"Well, insurance companies are in business to collect as much as they can and to pay as little as they can," Cosden said. "That's how they make money."

Kevin Garcia of Cape Coral said he shopped around for home insurance before settling on a plan. 

"It's either purchase the home or keep renting," Garcia said. "And we wanted to purchase a home, so we put up with the insurance costs."

Michael Hamilton of Fort Myers said he is still shopping around for an insurance policy. Hamilton lives in an older mobile home that was just renovated. He said several insurance companies declined to issue a policy, because of the home's age. 

Hamilton isn't confident that he will have a policy this hurricane season. 

"I don't want to pay a bunch and get nothing, or pay a little bit and get nothing," Hamilton said. "Because that defeats the purpose of the insurance."