Florida Insurance Crisis 2025: Can You Afford to Stay?

Key Points:

• Florida’s insurance crisis has improved with recent reforms that reduced litigation and limited AOB fraud, stabilizing the market and lowering costs for homeowners.

• New insurers are entering Florida, moving policies from Citizens Insurance, increasing competition and giving homeowners more coverage options.

• Florida’s insurance market remains financially strong despite 2023 storms, with adequate reinsurance preventing sharp premium hikes.

• Homeowners should review and update replacement cost coverage annually, as inflation has increased rebuild costs by 55% since 2020.

• Citizens Insurance still offers lower rates but faces restrictions, impacting long-term stability in Florida’s insurance market.

Florida’s Insurance Market 2025: What Homeowners Should Know

You feel like they went far enough and kind of what’s your view on everything that did take place to try and solve the problems? Buried with almost 300,000 lawsuits, not just for property insurers. We’re talking auto, we’re talking commercial, other types of insurance related lawsuits. No other state in the country has ever seen anything like this.

And that just buries the court system. Legislation was necessary to address Florida’s risk crisis and the billboard attorneys have not totally disappeared. However, many of them that are very famous, you see them once again, along the highways, they’re now taking their tactics into other states.

And we’re now seeing these type of problems ramp up in Georgia and Louisiana, specifically two more hurricane prone states. Hey, I think my company is insuring half these people that lost their house in Santa Maria Island. Am I going to potentially face coverage of the higher expenses these insurance companies have during this, this rebuild phase? So if you have not updated your policy in a few years, you could have a very large gap where you might suffer a catastrophic loss and get a check that’s a hundred thousand dollars less than what it costs to actually replace your home.

You’re going to say, I paid my premiums. I don’t understand this. Why did this happen to me? And there’s, there’s new carriers coming into the marketplace, which is, is awesome for, for Floridians to say, Hey, I’ve got a bigger market to compete for my business.

Is there anything that, that folks should look out for in relation to new carriers as they kind of make decisions going forward? Here’s our assessment at this point, the Florida insurance market is in its best financial position in nearly a decade because few topics can garner the concern of Floridians like Florida housing insurance, depending on where you live, your insurance might have tripled since just 2020. We’ve all heard the stories in the news of people having their insurance canceled unexpectedly. Then there’s others that I’ve heard from personally, that while their insurance wasn’t canceled, it jumped from three to 4,000 a year to nearly 14,000 a year.

And no matter where you live, even if you have a low, low interest rate from 2020 or 2021 of 3%. One thing that people cannot seem to get their head around on any given year is just what will their insurance cost next year. Now, as this nightmare has unfolded in Florida, there has been some things that have been passed through Tallahassee in order to create change in this volatile market segment.

But now in 2024, we’ve had a series of storms through the summer is the legislation that passed. Is it doing anything? If it has been improving things, will the recent storms of the summer cause costs to spiral anyways into 2025. Now today, I’ve brought a special guest to the channel to answer all these and more.

So you know exactly what to expect in the next year as it relates to our insurance situation here in Florida. Today, I’m excited to welcome Mark Freelander, Director of Corporate Communications for the Insurance Information Institute. He has more than 30 years of experience in the insurance and financial services industry, and he’s a leading voice in helping consumers and the media better understand our changing and constant, varying landscape here in Florida.

Now he spearheads media relations for Triple I, particularly for the state of Florida, and he obviously helps many focus on the complex challenges. And honestly, every time I do research, because obviously you may not know this about me, Mark, but I do a lot of real estate market information in the context of Florida and in some cases specifically Orlando, but I really cover a lot of real estate related matters, right? So shedding people or helping people understand what’s going on in Florida. And I would tell you that oddly enough, when I started doing this years ago, I never would expect the volume of comments, questions, and feedback from people about insurance.

It’s an every video thing. So it doesn’t matter what I’m talking about. And I’ll tell you this too, to your credit, the more that I ever, you know, I know now, I think more than I ever thought about insurance and particularly, you know, what’s going on in Florida.

And every time that I see someone kind of being, you know, I see someone in the news or I’m looking at mainstream news outlets throughout Florida. And every time I look, I see you being interviewed with helpful content to help people understand what’s going on and help them protect themselves to make sure they’re not, you know, compromised with how much and how fast things are changing. So thanks for coming aboard.

Thank you for acknowledging that we’re out there every day, trying to help consumers navigate the issues here in Florida. And that’s our job. That’s what we do.

How Florida’s 2023 Tort Reform Affects Insurance Lawsuits and Market Stability

For the longest time I’ve been talking about Florida and the main things that I’ve seen at my, you know, the degree that I understand about the process was that Florida had a looser standards in regards to how litigation would be done. So there was really wide open gaps in how attorneys could rack up fees. And then there was AOB fraud.

So contractors would bilk the insurance companies. And ultimately that combined with massive inflation of all things really created a massive burden, which a lot of insurance companies folded. They left the state.

They couldn’t even do business here profitably. That was the story. Now, fast forward, I think mainly through 2022, we had a lot of laws passed to try and reverse the biggest gaps in our problems and the holes that really have caused a compromise in our insurance industry.

Like how do you feel about the legislative changes that took place? Do you feel like they went far enough and kind of what’s view on everything that did take place to try and solve the problems? Legislation was necessary to address Florida’s risk crisis. Florida was an outlier when it came to the way lawsuits were being handled because it had a statute on the books called one-way attorney fees, which was basically an invitation to sue an insurer for any reason under the sun. Yes, there are always some legitimate disputes that might need to be settled through litigation, but we were seeing thousands and thousands of frivolous lawsuits, which were burying Florida insurers because Florida has a heavy market of regional insurers.

More than 75% of the Florida market are smaller regional companies. They can’t absorb the expenses of all these lawsuits. And literally seven companies were driven out of business between February of 22 and February of 23, a 13-month period, because they were buried in expenses of defending lawsuits.

It needed to get under control. And most states don’t have this one-way attorney fee provision. Florida was an outlier.

People think it’s like this across the country. It’s not. We don’t see typically more than a few hundred lawsuits for property claim issues in any other state.

Florida was seeing 100,000 or more a year. It’s insane. Now you can say, okay, Florida insurers are not paying their claims or there’s complaints about other issues related to how Florida insurers operate.

That’s just an excuse. I don’t care what the situation is. No state’s insurance market should ever see 100,000 lawsuits.

It’s just a ridiculous number. The billboard attorneys were just feeding off the insurance companies because not only were the one-way attorney fees paid, meaning the insurance companies on the hook for paying the legal fees of the plaintiff, but the other issue is there was a statute in Florida where there were additional fees tacked on to that called an attorney fee multiplier. So not only do you pay the fees, but you could have two to three times the hourly rates of the plaintiff’s attorneys tacked on to the verdict.

It was an insane process. It needed to get under control and it has made a huge difference in the viability of Florida’s insurance market. Good.

So yeah, I agree. There was a system built around how lax our laws were. So there was a system by the legal side.

There was a system by the contractors on the ground that really turned into a cash cow because I think I saw a statistic, I think maybe triple I had to even put it out. I think it was in 2020 or 2021, like 80% of all expense of these types of property claims were one single state. The 20% was actually the other 49 states.

And obviously we lost seven companies. There were many more that were put on financial watch lists because they were just like, they were scraping by and it was a risk they would become insolvent. So do you feel like it’s early, obviously, everybody wants to snap their fingers in legislation to solve everything overnight, but do you feel like it’s on a good track now? I heard right before the law went to effect, tons of lawsuits were pushed into the system at last minute, which then goes, okay, now we have to bottleneck through all that.

But do you feel like it’s on a better path to a better place for the cost and insurance and things for the people that are on the ground level? Let me address the first issue is the mass volume of losses that were filed before a second tort reform law was passed in early 2023 by the legislature. The industry, the insurance industry was buried with almost 300,000 lawsuits, not just for property insurance. We’re talking auto, we’re talking commercial, other types of insurance related lawsuits, a record level, no other state in the country has ever seen anything like this.

And that just buries the court system. And many of those suits are still working their way through the Florida judicial system, because sometimes it takes years to set a lawsuit. So it was an extreme level, because the bottom line is the billboard attorneys wanted to get those lawsuits on the books, get them filed before the law change, or one way attorney fees would now be banned for all types of lawsuits, not just property or home insurance every type of insurance related lawsuit.

Are New Laws and Depopulation Bringing Stability?

So this is what happened. Some of the well known billboard attorneys, you see them literally on the billboards and your drive on interstates across the state of Florida. They just slammed the court system with this.

It was extreme, but it is settled down. We’re in a better place, a much better place, but we’re still seeing the highest volume of property claim lawsuits in the country, as well as the highest volume of auto claim lawsuits. So has it disappeared completely? No, much better.

Let me give you an example. We’re still seeing about 2000 property claim lawsuits filed a month in Florida. Most states don’t see 2000 in a single year.

So we’re still an outlier, better than 100,000 a year, obviously. But on the auto personal injury side, particular personal injury lawsuits, we’re seeing about 30,000 a month. That is by far the highest level in the US.

And that’s a whole other issue for the legislature to address down the road. They’ve tried it before with auto insurance. It hasn’t gone forward.

There were problems with some bills that were passed. One was vetoed by the governor, which was a good thing because it would have made cost of auto insurance higher, not lower. We don’t need that.

We’re trying to keep costs down, not bring them up. But we still have a litigious society here in Florida, litigious environment, and the billboard attorneys have not totally disappeared. However, many of them that are very famous, you see them once again along the highways, they’re now taking their tactics into other states.

And we’re now seeing these type of problems ramp up in Georgia and Louisiana specifically, two more hurricane prone states. So we’re seeing legal system abuse. That’s the term we typically use.

We’re seeing the inroads of legal system abuse now in other states like Louisiana and Georgia. Hey, it’s me interrupting myself. Ready to make a move? Just one call, no hassle, put 23 years of experience in nearly 4,000 satisfied home sales to work for you.

So if the current existing insurers have, they have a backlog of, of legal situations from before the law is, is it fair to say that the, you know, cause I’m also seeing news that new insurers are coming and they’re opening up and they’re on the backside of now having laws in place. Is there a disparity in the competition ability between those, the parties that are still trying to deal with insurance versus, you know, is there an opportunity to save money by working with different vendors in the current climate? Cause obviously we come from a market where it’s like very hard to shop for insurance because you, you were going to citizens, you’re going to the insurer of last resort. If you’re in some counties, it was like, you didn’t have a lot of opportunity for shopping anything.

So do you feel like that’s something that we’re going to see in even the fall of this year going into next year? Is that kind of how it plays out with, with the law affecting the past and kind of the new, new springing up going forward? We’re finally starting to see a competitive market in Florida, nine new companies have entered the marketplace. And as you said, they don’t have the baggage of past lawsuits. So they have a much cleaner balance sheet coming in.

It means they are immediately ready to write business. And one of the areas they are moving into quickly is the depopulation of citizens. Another really strong sign that the market’s improving because private insurers, existing insurers, as well as the new insurers are taking on policies of citizens that shows they have what’s called risk capacity.

They can take on more risk. That’s a great sign. And we just saw recently several hundred thousand policies move from citizens to the private market in the October phase of depopulation.

That’s fabulous news for a couple reasons. Number one is risk capacity. Number two is the hurricanes have not damaged the improvements in the market, meaning all the hurricane activity we’ve seen this year in Florida has not been a detrimental impact on the recovery of the Florida insurance market.

Companies are still participating. They still want to take on more risk. They are full speed ahead on depopulation, working with citizens.

And we need to get citizens to a stable level as well. Citizens was as high as 1.4 million policies last year. They were over 1.2 million as of the end of September.

They will be well under 1 million by year end based on three phases of depopulation in the fourth quarter. That’s a great sign of a vastly improving market for the state of Florida and consumers. That is interesting.

That is a common question I get is the fact that we had some pretty severe storms come through this year. Central Florida, I don’t feel like has seen, and I’m in Orlando, I don’t feel like we’ve seen a real storm like we just saw come through with Milton to maybe back to Irma in 2017. So we see our fair share of down fences and missing roof shingles, but that is it.

We just had a lot of flooding on the West Coast, Tampa area, going towards Sarasota. So one of the common questions I’m getting now is, hey, is that going to set back? Are these recent larger storms going to reset the abatement of potential savings going forward, slow that process down? You’re saying, hey, you know what? Things are going to be fine and people should still expect to see continued improvement to 2025. That’s really good.

Here’s our assessment at this point. The Florida insurance market is in its best financial position in nearly a decade because of the legislative reforms that address legal system abuse and AOB claim fraud. That’s the big picture.

They are weathering these storms well. They have adequate levels of reinsurance, which is especially essential when you have a major windstorm like Hurricane Milton, much more a wind loss than a flood loss. Property insurers don’t write flood risk.

It’s a separate coverage either through the National Flood Insurance Program or a private flood insurer. But the important point is everybody floods. Like you said, we’ve had flooding in metro Orlando, central Florida from several hurricanes the past few years, not just this year.

Everybody is at risk of flood. Now, obviously, coastal areas are a much greater risk. If you have a mortgage, you’re typically required to purchase flood insurance in coastal zones.

But that doesn’t mean you’re not going to see flooding in other parts of the state. And it’s really essential for financial protection for homeowners across Florida to purchase flood insurance, whether you are required or not. And in most areas of the state, you can get flood insurance for $40 to $50 a month.

Are You Protected? Understanding Florida’s Insurance Options for 2025

If you’re in a lower risk area where you’re not prone to the highest risk of flooding, it doesn’t mean it won’t flood. It’s just you’re not at high risk like you are if you live on the beach. But it doesn’t mean you shouldn’t buy flood insurance.

Everybody in Florida, all 67 counties, should consider flood insurance because it floods everywhere in the state of Florida at some point every year. A common question we get here in Orlando area, and I’d say this is probably fair anywhere inland or maybe even on the east coast of Florida right now where they’re taking on fewer storms in the last seven or eight years. All the storms seem like they have the Gulf side’s number and the storm just comes up that side.

So with these other areas of Florida, let’s say that XYZ insurance company is highly exposed, Sarasota, Tampa, Punta Gorda where they got hit hard a couple years back. If you’re with the same XYZ insurance company inland, central, are you to expect a massive flood? Do those companies really share cost outside of counties, outside of zip codes? I guess that is a common question I get. It’s like, hey, I think my company is insuring half these people that lost their house in Anna Maria Island.

Am I going to potentially face coverage of the higher expenses these insurance companies have during this rebuild phase? What would you say to that? Yeah, big picture is the way risk is assessed in the state of Florida is a statewide issue. It’s not just one or two counties. So if there’s a lot of storm activity in one part of the state where you don’t live, it doesn’t mean you’re immune to the impacts of those losses.

Insurers need to spread their risk across the state of Florida. So if there’s heavy losses across state, we’ll all be impacted. But at this point, we don’t have enough data to say, will there be a negative impact down the road in terms of rates? I’ve been asked that a lot by media recently.

We just don’t have the data at this point. It typically takes nine to 12 months to really assess how much impacts there are from storm losses. So nothing happens overnight.

Insurers don’t react just to one event and say, well, I’ve got to raise rates in a couple of months. It doesn’t work that way. It’s a long term process.

And also there’s a wildcard factor here called reinsurance. All property insurers from Florida buy reinsurance on the global market. And if those rates change, they will have an impact on home insurance rates in Florida in the future.

At this point, we don’t know what the rates are going to be for reinsurance in 2025. If they increase, that’s probably going to be a trigger for higher costs of home insurance. If they stay flat, then we’re all in a great position.

But what I could tell you is the Florida insurance industry is acting as a financial first responder to all its customers impacted by Hurricanes Debbie, Helene, and Milton this year. They are on the ground working with their customers to help them recover as quickly as possible to file claims, to issue checks literally on the spot for temporary living, what’s called in an insurance policy, additional living expenses or loss of use. So these families could get into a hotel for temporary living if they’ve been displaced from their home due to the storms.

This is the role of the insurance industry, to act as a financial first responder, help individuals and communities recover as quickly as possible. And as I said before, the Florida insurance industry in a much stronger financial position than many years past, this is great news for consumers because it will aid in the recovery process and move claims along faster than maybe they’ve seen in the past. So Mark, we’ve obviously had a ton of inflation in all costs of everything, paint, material, everything that essentially is what is being insured.

They’re bringing checks to basically build things back. Is there risks in the economy that you see that consumers need to be aware of to protect themselves with all the changes that we’ve seen over the past three to five years? One important area to look at in your insurance policy is what’s called cover J or dwelling replacement costs. That is the value you have in your policy to replace your home if it is seriously damaged or destroyed from a catastrophic event like a hurricane.

We’ve seen a large insurance gap for many consumers because according to an insurance information institute study, cumulative replacement costs from 2020 through 2022 went up 55%. That’s four times the consumer price index during that same 36 month period. Why such a gap? Because of supply chain disruption, more expensive construction materials like lumber and labor shortages.

So if you have not updated your policy in a few years, you could have a very large gap where you might suffer a catastrophic loss and get a check that’s $100,000 less than what it costs to actually replace your home. You’re going to say, I paid my premiums. I don’t understand this.

Why did this happen to me? It’s because you need to keep your policies current. And we always recommend do an annual checkup with your insurance agent. Typically before hurricane season is an ideal time.

Make sure all the gaps are corrected. Make sure if you’re busy coverage like flood insurance, you get some quotes, consider that. Be prepared for catastrophes year round, but particularly we always focus on hurricane season because those are our biggest losses traditionally.

So you want to make sure your replacement cost once again called coverage A. You have a declarations page right at the top of your policy. It explains all your coverage levels. It explains your deductibles.

It gives you all the information, fingertip info. That’s what you want to focus on. Call your agent and say, I’m looking at my deck page.

Is it current? Do I need to do something to adjust this to make sure I am protected from the next storm? Awesome. Hey, and there’s, there’s new carriers coming into the marketplace, which is, is awesome for, for Floridians to say, Hey, I’ve got a bigger market to compete for my business. Is there anything that, that folks should look out for in relation to new carriers as they kind of make decisions going forward? You want to proceed with caution, not to say the new carriers aren’t good, but you know, some might have a track record because they were part of another company already operating in Florida.

Others are truly startups. You want to check them out, talk to your agent about them, see what kind of financial data you could get, make sure they are rated. Well, we typically say go with only A-rated companies.

If they don’t qualify for an A rating, which is a financial strength or financial stability rating, depending on the rating agency, you might want to think twice about it. But as far as we know, all the new companies that have come on board here in 2024 have that A rating. Their balance sheets look strong.

They have the capacity to pay claims and that’s what it’s all about. If you pick an insured, do you just want to make sure claims are paid? Obviously. Yeah.

Very good. Very good. Yeah.

So in relation to citizens depopulating, is there any kind of anything that we would, you know, kind of warn consumers about in relation to that process? Cause I, I understand you get a letter, the process starts, and then there’s, there’s a series of highways that you put yourself on. Here’s the point about citizens depopulation. Number one is if you get a letter from citizens, don’t ignore it.

Make sure you open it, review it and respond to it. And there’s details in there, how to respond if you’re designated for a takeout through depopulation. The way it works, according to Florida regulations is if the offer is within 20% of what the citizen’s renewal rate will be, you must either accept it or find other coverage.

You have to leave citizens. If it’s over 20%, you could stay with citizens. But if you don’t respond, you will automatically be placed with the new company, regardless of what the rate is.

Citizens Insurance: Florida’s Largest Insurer, But at What Cost to the Market?

You don’t want to do that because it could be say 40%. You don’t want to accept 40%, obviously. So you’d need to be careful, make sure you review it and respond according to the instructions in the letter.

That is interesting. Yeah. And I read, I read another article that citizens is running at a pretty big discount to the private market.

Yeah. Citizens has always been on average 30 to 40% less. I’ll quote their CEO says we’re giving insurance at a discount.

Why? Because the state regulations forbid them from charging actuarily sound rates. That’s the term we use in insurance, actuarially sound rates. They’re not allowed to do that.

They’re currently seeking a 14% statewide average to be effective January 1st, waiting to hear back from the insurance commissioner on there. Most likely that’s not going to be approved. It’ll be lower, but they need as much rate as possible to compete with the private market.

Otherwise depopulation will not be totally successful because there’s too much of a gap. It’s getting closer. The gap’s getting closer and that’s why depopulation is moving forward now.

But if they’re still selling bargain basement insurance, that creates a problem for the market. And it’s, it’s not a healthy market if they’re not competing with the private market. That is fascinating.

So you said citizens can’t provide actuarially sound insurance? They’re not allowed to because the rates are restricted. And that’s always been the case that goes back several administrations in Florida. Don’t want to point fingers at any former governor, but it goes back many, many administrations, not a sound business practice because it sets you up for what we have now where citizens grew to become the largest insurer in Florida, 18.5% market share.

That’s almost one out of five consumers in Florida have citizens. No backstop insurer should ever be your largest insurer. That’s a really bad scenario for the marketplace.

They need to get to a healthy level. They say their healthy level is about 400,000 to 500,000 customers. According to everything we’re seeing, they’re heading in the right direction.

They will be well on their way by year end and they need to stay there because they’ve been at that 400,000, 500,000 level in the past. And then the market got bad and they boomed where they were over 1.4 million last year. That cannot happen again.

That’s a really unhealthy situation for all of us. Yeah. I remember when, I think it was in 2023, the shockwaves through the market, Ron DeSantis came out and said, if we have a major storm, citizens is not going to be solvent.

And everyone’s like, what? That was a little strong on the language. He got the message across. The point is citizens, good news for your customers and citizens, rather.

Citizens can never go and solve it. It has a backstop program in place. We always talk about the hurricane tax, which would be a surcharge or an assessment applied to consumers.

That’s not happening because citizens is healthier and they have not seen such a high level of losses that it would trigger that. We hope to never even talk about that again. That’s the worst case scenario.

But the bottom line is citizens can always pay its claims. Awesome. Thanks so much for your time, Mark.

Is there anything else that we’ve left unsaid that you want to share? Just want to share, if you’re looking for resources about insurance products, we have all types of information on our website, iii.org, to help consumers navigate the insurance process and to better understand the products they need to financially protect their assets, such as their homes and their vehicles. I learned a ton today, Mark. And as always, I definitely recommend a backup of what he says.

Check out III to make sure you’re up to speed on what’s happening. Anytime. Mark’s always on mainstream news outlets across Florida.

If you ever see him being presented as a guest, make sure you tune in because you’re going to learn a ton. Mark, thanks so much for your time and being on with us. We’re grateful.

Thanks so much for having me today. Awesome. If you’re in the central Florida area and you’re looking for a great church, I’d love for you to join me at the Grove Bible Chapel.

Just visit joinmeathegrove.com for full details. When the housing market feels complicated, you need an expert by your side to make it simple and easy. Make one call.

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