Significant legislative reforms have been credited with rejuvenating Florida’s troubled property insurance market, which was previously teetering on the edge of collapse. This resurgence follows the implementation of measures designed to curb excessive litigation and encourage market depopulation, particularly by Citizens Property Insurance Corp., the state-backed insurer.
Tim Cerio, President and CEO of Citizens Property Insurance Corp., detailed the positive impacts of these legislative reforms during a recent meeting with the board of directors. According to Cerio, the measures have effectively stabilized the market despite the state experiencing the devastation of three major hurricanes this year alone. He highlighted that the legislative changes, particularly those inhibiting frivolous lawsuits against insurers, played a key role in this recovery process.
In the face of skyrocketing premiums and insurance companies exiting the state, lawmakers in 2022 and 2023 enacted several initiatives. Key among these was a law that restricted the ease with which policyholders could sue insurance firms over disputes, aiming to deter opportunistic litigation. According to Cerio’s report, these changes are producing tangible results. A total of 15 insurance companies have submitted 22 filings for rate reductions, while another 29 companies have filed for no rate increases. Furthermore, many companies were able to reduce their reinsurance expenditures this year compared to 2023.
The ongoing effort to transfer policies from Citizens to private insurers has exceeded initial expectations. Citizens’ depopulation strategy, critical for reducing the number of policies it underwrites, is advancing more rapidly than forecasted. As a result, the number of policies held by Citizens is expected to fall to 907,000 by year-end, a significant decline from the 1.412 million recorded last year. The depopulation efforts are particularly concentrated in Broward, Miami-Dade, Palm Beach, Hillsborough, and Pinellas counties, where litigation rates have historically been high.
The reforms have encouraged private insurers to explore opportunities in previously avoided regions due to these positive outcomes. Cerio noted that Citizens, as a state-created entity, must prioritize reducing its market share to protect all state policyholders from potential assessments in the event of catastrophic financial shortfalls. This move is supported by a strategic focus from state leadership, including Governor Ron DeSantis and Chief Financial Officer Jimmy Patronis.
Despite recent hardships, including $516 million paid out for claims related to Hurricanes Debby, Helene, and Milton, the financial outlook is increasingly stable. Citizens has paid over $52.6 million for other storm-related expenses but maintains no profit motive, reaffirming its role as a nonprofit insurer dedicated to serving policyholders efficiently and fairly. Cerio emphasized, “We have every incentive to pay valid claims to our policyholders as promptly as possible.”
The legislative reforms in Florida have demonstrated promising results for the state’s property insurance market. By curbing litigation and promoting market depopulation, the state is moving towards a more sustainable and stable insurance environment. As private insurers grow more willing to enter areas they once avoided, the broader insurance landscape is seeing a rejuvenation that promises benefits for all policyholders. The ongoing commitment to these reforms underscores a strategic vision aimed at long-term stability and financial security in the face of natural disasters.
Source: FloridaRealtors
