Florida seeing first downward trend in property insurance rate filings for years

According to Florida’s insurance market regulator, the first downward trend in property insurance rate filings for years is now being seen, as companies look to provide better prices to their consumers and at least some of the benefits of recent insurance reforms appear to be flowing to policyholders.

The Florida Office of Insurance Regulation (OIR) issued an update on what it sees as the “continued strengthening of Florida’s property and casualty insurance market.”

Notably, the FLOIR updated states that “property insurance rate filings for 2024 show a downward trend for the first time in years,” which the regulator says shows “the continued stabilization of the property insurance market.”

The FLOIR says this is as a result of “the continued prioritization of meaningful reforms to Florida’s property insurance market.”

Florida’s OIR says it “continues to see overall market stabilization” after the reforms.

The reforms enhanced protections for consumers, strengthened the insurer of last resort Citizens Property Insurance Corporation and encouraged more investment in Florida by re/insurers, the OIR noted.

“Rate filings for 2024 show a slight trend downward for the first time in years, indicating stabilization of the property insurance market. Ten companies have filed a zero percent increase and at least eight companies have filed a rate decrease to take effect in 2024,” the regulator explained.

In addition noting that, “The 2023 reinsurance market responded positively to these reforms. Early signs from the 2024 reinsurance purchasing season show further positive indications. Reinsurance is a direct and significant cost to consumers and relief in this area is a significant sign that the reforms are working.”

Interestingly, on reinsurance, while it had been rumoured that Florida’s property insurers faced 50-60% increases at the beginning of 2023, companies reported in OIR’s Annual Reinsurance Data Call that the 2023 risk-adjusted change in reinsurance cost from 2022 was on average less than that, at +27%.

Meanwhile, insurers performance has been more stable, with some reporting profits for the first time in years.

At the end of Q4 2023, there were approximately 7.45 million residential insurance policies in force in the Florida property market.

Around 81% of those policies have been underwritten by admitted insurers, as opposed to Surplus Lines companies or Citizens Property Insurance Corporation and Florida Citizens itself has now shed roughly 389k policies over the period of January 2023 to March 2024, the FLOIR stated.

While Citizens policy count has dropped significantly from its recent historical high of over 1.4 million last September, the policy count has crept up since January, reaching 1.196 million as of May 10th 2024.

That’s likely a function of timing of depopulation and takeouts, so we should expect a pick-up in the decrease later this year after hurricane season, depending on its outcome.

Notable in the last week, we’ve learned that Security First has implemented what it calls “significant rate decreases” for some of its products in Florida.

This includes its first HO3 homeowners insurance rate decrease in almost a decade, we understand.

Rates for Security First’s HO3 homeowners products are coming down by 5.2% statewide from August 31st, the company told its agents. While the insurers renters product is coming down by 5.9%.

Other insurers have filed rate decreases, as Florida’s OIR explained, all of which is showing growing confidence in the property insurance market and in insurers perception of how future claims may prove less of a challenge with the reforms enforced.

Given the forecasts for a very active Atlantic hurricane season, these could be considered notable moves, showing insurer confidence.

But, it is also important to remember that Florida’s property insurers have in some cases had one of their most profitable years in a decade or more, to which the regulatory response is naturally to push for them to reduce their rates, rather than increase them.

We’re told that most carriers are saying that the reforms are working for their non-catastrophe claims so far.

We may get a chance to see how the reforms work for catastrophe driven property insurance claims this year, should the hurricane season throw any storms in the direction of the Florida peninsula.

All of this is indicative of the improving market environment, which is reading across into easier reinsurance renewal conditions for Floridian companies this year, as well as to burgeoning appetite for Florida wind risk in catastrophe bond and other ILS forms.

We reported back in April that of the annual catastrophe bond issuance at that stage in 2024, the majority was exposed to Atlantic named storms and hurricanes, with a significant share of that exposed to Florida.

Read all of our news and analysis on the Florida insurance and reinsurance market.