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Relief in Sight for Florida Homeowners

The Florida Office of Insurance Regulation (OIR) reported a downward trend in requests for homeowners’ insurance rate increases, and Citizens policies are decreasing.

TALLAHASSEE, Fla. – Florida homeowners who've been struggling with the volatile insurance market may be seeing a light at the end of the tunnel. So far this year, nine homeowners insurance companies have filed for rate decreases in Florida, and 10 have filed to keep their rates unchanged in 2024, according to the Florida Office of Insurance Regulation (OIR).

In a May insurance market update, the OIR reported a downward trend in requests for rate increases, a return to profitability for many insurers, and a reduction in abusive litigation of homeowners insurance claims.

Companies requesting lower or flat rates

Florida requires insurance companies to file requests for rate changes with the OIR for approval before implementing them. Currently, the office is reviewing the 19 filings and has not yet issued approvals.

The Florida home insurance market

Severe weather conditions, climate change, and rampant litigation had the state's home insurance market on the verge of collapse in 2022.

In 2023, over a dozen insurers stopped writing policies, stopped renewing policies, or withdrew from the state's market, forcing many homeowners to get insurance through Florida's insurer of last resort, Citizens Property Insurance Corp. The average rate from Citizens is $22,165 per year, according to Insurify data.

Florida homeowners pay the highest home insurance rates in the country. In Florida, the average cost of homeowners insurance for $300,000 in dwelling coverage reached $10,996 in 2023, according to Insurify data. Insurify predicts an additional 7% increase in the average this year, putting Florida's average at $11,759 by the end of 2024.

Signs of improvement

Citizens is experiencing consistent policy decreases for the first time in several years, the OIR says. The office approved 13 companies to assume more than 350,000 policies from Citizens in the first quarter of 2024, reducing its financial exposure by billions.

Domestic insurer Security First announced in May a 5.9% rate reduction for 80,000–90,000 of its policyholders. And the OIR announced earlier this year that eight new companies are approved to enter Florida's home insurance market:

Ovation Home Insurance Exchange; Manatee Insurance Exchange; Condo Owners Reciprocal Exchange; Orange Insurance Exchange; Orion180 Select Insurance Company; Orion180 Insurance Company;  and Mainsail Insurance Company;Tailrow Insurance Companies.

 The impact of litigation

Rampant fraud and frivolous litigation contributed to Florida's steep rates and dire insurance landscape, the Insurance Information Institute (Triple-I) reported.

Florida led the U.S. in claims litigations, with nearly 80% of all home insurance lawsuits, yet had only 9% of all claims, Triple-I said. Insurers paid $2.9 billion in various legal costs in 2022, the OIR said, which directly translated into higher rates for homeowners.

In December 2022, the Florida legislature passed Senate Bill 2A. The bill made sweeping changes that include shorter claim, estimate, and payout deadlines, as well as one-way attorney fees, stricter bad-faith litigation, and prohibiting contractors from suing insurers on behalf of homeowners.

As a result, the OIR reports double-digit decreases in non-catastrophe claims.

What's next: The market moving forward

While the OIR is optimistic, Floridians may not immediately see rate reductions.

Florida is the most hurricane-prone state in the country, and residents should expect an upcoming "hurricane season from hell," according to a recent Insurify report. Insurers typically pass on the cost of claims to policyholders in the form of higher rates.

However, the new legislation should curb the amount of fraudulent claims and hopefully prevent rates from skyrocketing, the OIR says. Additionally, Bill 2A also established the Florida Optional Reinsurance Assistance program (FORA), which offers reinsurance at a discounted rate for qualified companies. With FORA, the OIR hopes insurers in the state will be more financially able to pay out claims rather than transferring most of the cost to homeowners.

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