Status of the Property Insurance Market in Florida

Florida is frequently the target of increasingly severe natural disasters like hurricanes, floods, and other calamities that drastically affect the property insurance market. 

Source: ProgramBusiness | Published on August 29, 2023

Florida insurance crisis

Florida is a sun-kissed paradise known for scenic beaches and exhilarating amusement parks. It spans 65,758 square miles of diverse landscapes. And its 21 million multicultural residents make it the third-most populous U.S. state. But it is also frequently the target of increasingly severe natural disasters like hurricanes, floods, and other calamities that drastically affect the property insurance market.

While Mother Nature’s devastating blows are at the root of the state’s property insurance market crisis, many other factors compound them against a consistently high demand for homeowners insurance. This demand is despite Florida homeowners experiencing substantial premium hikes, as the Tampa Bay Times reports that according to LexisNexis Risk Solutions, home insurance costs have increased by a startling 57% in the state since 2015, nearly triple the 21% national average increase.

Growing Challenges As Insurers Leave the State

Farmers Insurance broke national news when it announced its exit from the Florida property insurance market in July 2023. It is one of several insurance companies recently leaving the state due to market challenges.

Farmers Insurance cited the following reasons for its decision to leave Florida:

  • The increasing frequency and severity of hurricanes
  • The rising cost of claims
  • The high cost of reinsurance
  • Fraud and abuse in the market

The decision by Farmers Insurance to leave Florida is a significant blow to the state’s property insurance market. Thousands of homeowners will be left without insurance, making it more difficult for others to find affordable coverage against rising demand.

Farmers’ decision to leave Florida shows the challenges facing the state’s property insurance market. As the market becomes increasingly unstable, the remaining carriers struggle to provide affordable coverage, exacerbating problems for already stressed homeowners, businesses, and the state government.

Legislative Action Buoys the Florida Property Insurance Market

The Florida Legislature passed Senate Bill 2A in December 2022 to address the crisis. The bill includes reforms aimed at reducing fraud and abuse in the property insurance market, including:

  • Eliminating “one-way attorney fees” for property insurance claims; both policyholders and insurers will now be responsible for paying their own attorneys’ fees, regardless of the outcome of the claim.
  • Eliminating the practice of assignment of benefits (AOBs); AOBs are agreements where property owners sign over their claims to contractors, who then work with insurers. The bill prohibits AOBs from being used for roof repairs, a common area of fraud in the Florida property insurance market.

Exploring Alternative Insurance Solutions

Traditional insurance options are becoming increasingly limited and expensive, necessitating the adoption of new perspectives. When faced with this difficulty, insurance agents can explore alternative insurance avenues.

Partnering with surplus line carriers or specialized insurance providers that cater to high-risk properties is a crucial strategy. Brokers can procure more customized and economically viable coverage solutions for their clients by entering these markets, ensuring they receive the best deal without sacrificing coverage.

Demotech’s Role in Defining the Market

Demotech is the financial analysis and rating service for the smaller companies that write about two-thirds of the residential property insurance market. By downgrading 17 smaller carriers, it reshaped the state’s property insurance market and significantly impacted the insurance industry in Florida.

The firm’s decision to suspend ratings for certain insurers raised concerns from the Florida insurance commissioner as it underscores the importance of financial solidity and adept risk management, especially given Florida’s unique insurance challenges.

Efforts to Lower Homeowners Insurance Premiums

According to an Insurance Business Magazine report, the Insurance Information Institute (Triple-I) has stated that recent reforms could reduce the price of homeowners insurance in Florida. Triple-I said in its issues brief, “Addressing Florida’s Property and Casualty Insurance Crisis,” that the reforms “could help to stop the bleeding” as insurers fail, leave the state, or cease writing important personal lines coverages such as auto and homeowners.

However, it is crucial to note that the full effects of the reforms will not be known for several years. It will take time for insurers to revise their rates and for the market to stabilize. In the interim, Florida homeowners should prepare to pay higher property insurance premiums. They should also take proactive steps to mitigate their risk of loss, such as purchasing applicable flood and wind policies for property protection not covered in standard homeowners’ coverage and seeking suitable alternative market options.

CPIC: A State-Run Insurer of Last Resort

The Citizens Property Insurance Corporation (CPIC) is a state-run insurer of last resort in Florida. It was created in 2002 to provide property insurance to homeowners who needed help obtaining coverage from private carriers.

CPIC is crucial in Florida’s property insurance market, particularly in high-risk areas susceptible to hurricanes and other natural disasters. CPIC protects property owners and the housing market by offering coverage to those whom private insurers have rejected.

However, the CPIC also faces obstacles. The frequency and severity of natural disasters in Florida have strained the resources of the CPIC. Claim costs continue to rise, and fraudulent claims hurt the company’s financial health. In addition, CPIC’s operations directly impact the private insurance sector, as the organization frequently competes with private insurers for customers.

Despite these challenges, CPIC remains integral to the Florida property insurance market. It provides essential coverage for those otherwise uninsured and helps stabilize the market during disruption.

Private Markets Add Diversity, Opportunity, and Challenges

The Florida property insurance market has changed significantly recently, transitioning from a state-run insurer to a more varied private market that counters carriers leaving the state to a degree. Nevertheless, due to the changes, Florida’s insurance agents and brokers face new obstacles and opportunities.

  • On the one hand, agents and brokers now have access to a wider variety of insurance carriers, which gives them more options to find the best coverage for their clients and can also result in increased commissions.
  • On the other hand, increased competition in the private market necessitates that agents and brokers work harder to distinguish themselves from the crowd. In addition, they must keep abreast of the constantly changing insurance industry regulations, which can be time-consuming and difficult.

Adapting to Changing Market Conditions in Florida Property Insurance

The Florida property insurance market is continuously evolving, and insurance agents and brokers must adapt to stay ahead of the curve. Here are some essential strategies brokers can employ to adapt to fluctuating market conditions:

  • Diversify insurance partnership arrangements. Putting only some of your eggs in one basket is essential in an unpredictable market. By diversifying your insurance partnerships, you can bypass restrictive underwriting practices and tap into a broader range of insurance products.
  • Utilize technology and analytical data. Data is worth its weight in gold in the digital age, and brokers who can effectively mine it can gain a significant competitive advantage. Risk profiling, client efficiency, and automation can all be accomplished with data analytics.
  • Maintain agility and accept change. Florida’s property insurance market is in a constant state of flux, so brokers must be able to adapt quickly. Such conditions necessitate attempting new strategies and being receptive to novel concepts.

By following these strategies, insurance brokers can adapt to changing market conditions and continue to provide valuable services to their clients.

Agents’ and Brokers’ Roles in Florida’s Evolving Property Insurance Market

For agents and brokers to navigate the Florida property insurance market successfully, they must comprehend the implications of these changes. By keeping abreast of the most recent trends and regulations, they can best serve their clients with the highest quality service possible.

Here are a few specific examples of the challenges and opportunities that the transition to a more diverse private market in Florida has created for insurance agents and brokers:


  • Despite Farmers and other carriers exiting, there are encouraging reports that more insurance companies, including the Tailrow Insurance startup, are competing for business in Florida, increasing competition for agents and brokers. Consequently, they must exert more effort to distinguish themselves from the competition and persuade clients to select them.
  • Changing regulations: As the insurance industry is in a constant state of flux, agents and brokers must remain current on the most recent rules, which is time-consuming and complicated, and it can be challenging to keep up with all the changes.


  • Agents and brokers now have access to a broader selection of insurance carriers, giving them more options for finding the best coverage for their clients. This innovation can significantly benefit customers by expanding their opportunities and helping them save money.
  • The increased competition in the private market has boosted commissions for agents and brokers, as carriers are more willing to pay higher commissions to agents and brokers who can help them acquire new business.

The transition to a more diverse private market presents challenges and opportunities for Florida’s insurance agents and brokers. Agents and brokers can position themselves for success in the evolving market by working to comprehend the implications of these changes.

Private Insurers in the Florida Property Insurance Market

Private insurers are crucial in the Florida property insurance market, providing more options and coverage types than the state-run CPIC. They also contribute to market stability by providing coverage for high-risk properties that CPIC may not insure.

The expanding presence of private insurers in the Florida property insurance market is favorable for policyholders, agents, and brokers. It means more options, lower prices, and improved customer service for policyholders. Here are some benefits of a more robust private market presence in the Florida property insurance industry:

  • Increased competition: More private insurers would increase competition, driving down prices, improving customer service, stabilizing the market, and protecting consumers against fraud.
  • More options: A broader range of private insurers would offer more options for policyholders, allowing them to find coverage that best suits their needs.
  • Reduced costs: With more competition, private insurers would be more likely to offer lower prices to attract customers.
  • Better customer service: Private insurers often have a reputation for better customer service than government-backed programs like CPIC.
  • Streamlined claims process: Private insurers often have more efficient claims handling procedures, which can result in faster and smoother claim resolution for policyholders.

Office of Insurance Regulation

The Office of Insurance Regulation (OIR) is the Florida state agency regulating the insurance industry. It protects policyholders’ interests while ensuring insurance companies operate fairly and competitively.

The OIR has several responsibilities, including:

  • Licensing and regulating insurance carriers
  • Overseeing their financial stability
  • Monitoring their compliance with state laws and regulations
  • Reviewing and approving insurance policy forms and rates
  • Monitoring the claims handling practices of insurance companies
  • Assessing the financial strength of insurance companies

The OIR’s Role in the Property Insurance Market

The OIR’s work is crucial to ensuring that the property insurance market in Florida is stable and fair for policyholders. By monitoring and regulating the industry, the OIR aids in preventing fraud, protecting consumers, and fostering competition.

Additionally, the OIR promotes competition in the property insurance market, which helps to maintain affordable premiums for policyholders. The OIR helps prevent one company from becoming too powerful and dominating the market by assuring that assorted insurance companies offer coverage in Florida.


The property insurance market in Florida is undergoing significant changes, with rising costs and capacity constraints posing challenges for insurance professionals and consumers. However, with challenges come opportunities.

Here are ways insurance agents and brokers can meet today’s changing market challenges:

Proactively address clients’ needs: Insurance brokers should take the time to understand their clients’ unique needs and concerns. This advice includes understanding their financial situation, risk tolerance, and specific property insurance requirements. By understanding their clients’ needs, insurance agents can better tailor their services and recommendations to meet those needs.

Explore alternative insurance solutions. Florida’s traditional property insurance market is becoming increasingly competitive and challenging. As a result, insurance agents and brokers must be prepared to explore alternative insurance solutions, such as surplus lines insurance and non-admitted insurance. These alternative solutions can provide coverage for high-risk properties or properties that are difficult to insure in the traditional market.

Keep abreast of market developments. The Florida property insurance market is ever-changing. Insurance brokers must remain informed of the most recent market developments, including changes in laws and regulations, insurance company underwriting guidelines, and the frequency and intensity of hurricanes.

Insurance agents can confidently assure their clients that they will benefit from the best coverage when they rely on top-notch resources like to find markets and stay informed about industry developments. Through such actions, agents position themselves as valuable partners who can expertly help their clients navigate the ever-changing Florida property insurance market.