• Florida lawmakers may take a “wait and see” approach to property insurance during the upcoming legislative session.
• At the same time, a new report finds experts doubtful that legislative changes will be enough to lower premiums.
• Experts cite three factors outside the control of state laws: hurricanes, other weather events, and inflation, all combining to drive up premium costs.
• Even so, there are some hints emerging that increased competitiveness in Florida could lower premiums for some.

As Florida grapples with its turbulent property insurance market, conflicting viewpoints have emerged on what property owners can expect in terms of future premiums. This week, key state lawmakers say they plan to adopt a “wait and see” approach to measure the impact of reforms made last year, while some outside experts claim that those reforms may not have a significant impact. Even so, there are fresh, albeit limited, signs of market competition that have cropped up, giving a glimmer of hope to beleaguered homeowners.

Lawmakers Hold Steady

Senate Banking and Insurance Chairman Jim Boyd recently told reporters that he does not anticipate major property-insurance changes in the upcoming 2024 legislative session. Instead, lawmakers plan to give more time for last year’s wide-ranging reforms to manifest results. Among those changes were efforts to shield property insurers from costly lawsuits and move policies away from Citizens Property Insurance, the state’s insurer of last resort, into the private market. Michael Yaworsky, the state Insurance Commissioner, and Tim Cerio, CEO of Citizens, have indicated that they see signs of improvement in the industry.

Experts Cast Doubt

But despite the optimistic outlook from lawmakers, Boston-based risk modeling firm Karen Clark & Company (KCC) issued a report on Monday that concluded that Florida’s legislative changes can’t possibly be enough to drive down premiums. The report argues that there are four primary factors that affect premium costs: hurricanes, other major weather events, inflation, and excessive litigation. But the state’s legislative reforms can only impact excessive litigation. There is little that state lawmakers can do, the report argues, to control the weather or the national economic picture.

The report also argues that factors like reinsurance costs, rising construction costs due to material and labor shortages, and already existing excessive litigation in Florida will continue to drive costs higher for insurers in the near future.

Signs of Market Competitiveness

Despite the grim forecast, some developments indicate a more competitive market may yet emerge. Since the litigation reforms were signed into law, state regulators have approved six more private insurance companies to come in to Florida and take an additional 153,000 policies off of the Citizens rolls. More private companies in the market results in increased competition to offer Florida homeowners lower rates. But the impact so far is limited, and not all homeowners are reaping the benefits. Some have complained about receiving new policies that are far more expensive than their existing coverage from Citizens.

The Road Ahead

Though many lawmakers seem confident in the potential of previous reforms, the degree to which these changes will affect property owners remains unclear, and still largely dependent on how the weather breaks. If the state can limp through 2023 without another major storm, it will relieve a great deal of pressure on insurance companies and reinsurance costs across Florida. Then, as 2024 comes into focus, property owners may find themselves wedged between cautious optimism from lawmakers, skepticism from experts, and a marketplace showing signs of both challenge and opportunity. The question that remains unanswered is whether the combination of legislative efforts and market dynamics will be enough to stabilize a volatile insurance landscape.