Florida Gets Great News for Insurance Crisis

Positive Developments in Insurance Crisis for Florida

In a positive turn of events, residents of Florida who have been grappling with soaring insurance premiums and limited choices to address them have received a boost from government measures that could ease some of their financial burdens. This relief also brings some respite to Governor Ron DeSantis.

Thanks to legislative reforms aimed at tackling rising homeowner expenses and market uncertainty, the Indiana-based Orion180 recently secured approval for its two carriers to operate and issue policies in Florida. This approval was granted by the Florida Office of Insurance Regulation (OIR). These two carriers mark the third and fourth property and casualty insurers to be approved this year, following Mainsail Insurance Company in August and Tailrow Insurance Company in April.

Kenneth Gregg, the founder and CEO of Orion180, expressed, “Orion180 has consistently prioritized delivering an exceptional insurance experience for both customers and independent agents. We see Florida as an appealing insurance market for sustainable growth in the long run. With our strong capital foundation, robust reinsurance support, and disciplined underwriting approach, we believe we are well-positioned to offer top-tier insurance solutions to Floridians.”

OIR Commissioner Michael Yaworsky stated in a release on August 22 that his agency has been diligently working to attract more companies, employment opportunities, and capital to Florida following these reforms. Yaworsky added, “Today’s announcement is another indicator that these reforms are positively influencing Florida’s insurance market. We anticipate maintaining this momentum and expanding consumer options in the homeowners insurance market.”

In the midst of these developments, Governor Ron DeSantis, who is vying for the GOP nomination for the presidency and has consistently polled as the second-highest contender after former President Donald Trump, is currently closely monitoring Tropical Storm Idalia. Predicted to potentially make a “significant” impact on Florida, the storm could reach speeds of up to 100 miles per hour and could approach Florida’s Gulf Coast as early as Monday.

This recent announcement by OIR coincides with a period of significant year-over-year changes in insurance premiums for residents. According to the Insurance Information Institute, the average insurance premium for Florida homeowners surged by 42 percent to an average of $6,000 this year. During this time, at least 12 companies ceased issuing policies since January 2022, and an additional three companies are in the process of completely withdrawing from the Florida market.

The decision of these companies to depart is attributed to factors such as Florida’s extreme weather conditions and their subsequent consequences. Mark Friedlander, the director of corporate communications at the Insurance Information Institute, conveyed that the insurance crisis in Florida has been predominantly driven by human-induced factors, particularly the abuse of the legal system and fraudulent claims. He emphasized that this crisis was already unfolding before Hurricane Ian struck last year, with six companies declared insolvent prior to the hurricane’s impact.

Friedlander noted that even in years without hurricanes or major catastrophes (2019-2021), Florida’s insurance industry incurred average underwriting losses of over $1 billion annually. He pointed out that more than 100,000 property claim lawsuits have been filed against residential insurers in Florida on average for the past three years. This situation led insurers to spend approximately $3 billion per year, accounting for about 80 percent of property claim suits in the United States between 2020 and 2023.

Friedlander attributed this unique situation to lenient regulations and a court system susceptible to frivolous lawsuits. While certain state reforms have been introduced, such as bans on one-way attorney fees and assignment of benefits, the insurance market in Florida remains volatile due to years of turmoil. The announcement about Orion180 by the Florida OIR is taking place alongside developments involving Citizens Property Insurance, a state-run entity with around 1.35 million policyholders. The insurer’s proposal for a 12 percent property insurance rate increase was recently denied by state regulators, though some form of increase remains probable. Citizens Property Insurance has the opportunity to revise its proposal within 30 days before potentially transferring customers to a private insurer in October.

Friedlander pointed out that the reforms constitute the first phase, with the second phase involving attracting more insurers to operate in Florida. Among the four insurers approved by the state, three demonstrate practicality in the insurance market due to their lack of debt and their capacity to enter with fresh financial foundations. Friedlander concluded that while these new entrants signify steps toward a stable market, the insurance sector is not yet stable. He expressed that these steps are crucial in moving toward a stable position.