Will Florida be able to reform its homeowners’ insurers’ market as natural disasters increase?

Abstract

This opinion piece explores the challenges facing Florida’s homeowners insurance market amidst increasing natural disasters. Florida’s geographic vulnerability to hurricanes, floods, and other climate-related events has led to soaring insurance premiums and the exit of multiple insurers from the state. The average homeowner’s insurance cost in Florida has risen significantly, with premiums in 2023 more than triple the national average.

Hurricane Andrew in 1992 marked a pivotal moment in the state’s insurance history, exposing the industry to massive losses and triggering a wave of insurer insolvencies. Since then, the market has struggled to recover, with recent years marked by high litigation costs and abuse of the legal system through Assignment of Benefits (AOB) and one-way attorney fees. These practices have fueled a surge in lawsuits, driving up insurance costs while benefiting lawyers more than policyholders.

To address these issues, Florida passed legislation in 2022 aimed at curbing AOB abuses and reducing litigation. Senate Bill 2-A eliminated AOB agreements for property insurance and curtailed attorney fee provisions. While these reforms offer a promising start, the market still faces legal pressures that threaten its stability. The document concludes that further reforms are needed to address these systemic challenges and restore confidence in Florida’s insurance market.