High-Impact Legislative Recommendations for Florida Insurance Reform
Florida’s recently passed tort reform measures are under attack. Bold, comprehensive tort reform measures passed between 2021 and 2023 targeted legal practices that made Florida the poster child for out-of-control homeowners’ insurance litigation. Prior to passage of the recent reforms, Florida held the unenviable title of second-worst judicial hellhole in the United States (behind California). Reforms introduced during this three-year period have begun to bear fruit. But rather than take tort reform measures in stride, the plaintiff bar is fighting back with a legislative measure of its own, designed to unravel the progress made to date. Pertinent reforms include:
- SB 76 (2021) changed litigation rules surrounding disputed insurance claims.
- SB 2-A (2022) limited the assignment of attorney fees to third parties (assignment of benefits, or AOB), and disincentivized frivolous claims.
- HB 837 (2023) was a “kitchen sink” bill that introduced numerous reforms in one fell swoop. Among these were the elimination of phantom damages, reduction in the statute of limitations for negligence actions, provision of standards for bad-faith actions, and requiring the lodestar fee (“normal” attorney hourly fee) to be sufficient and reasonable.
Just as evidence of tort reform’s stabilizing influence on Florida’s insurance market was emerging, the Florida House Judiciary Committee advanced HB 947, designed to upend Florida’s tort reforms. The bill passed in committee 16-4.
The 2021-2023 reforms were exactly what was needed to enhance insurance availability and the affordability of homeowners’ insurance in Florida. Tangible evidence of their success includes reductions in insurance rates and the number of lawsuits brought against insurers. It is therefore important that these reforms remain in force. Proof of their effectiveness includes the following:
- The percentage of nationwide homeowners’ insurance suits opened in Florida fell from 79.9 percent in 2018 to 71.5 percent in 2023.
- For the second straight year, the number of lawsuits filed against insurers during the first three quarters of 2024 declined by 23.8 percent—from 36,639 to 27,923—compared to the same period in 2023.
- A decline in legal service of process filings. The number of litigated claims was 64,351, compared to 541,211 non-litigated claims.
- A deceleration in rate increase from 16.1 percent in 2021-2022 to 6.9 percent in 2023-2024.
- The entry of 11 new insurers into Florida who took over policies previously insured with Citizens Property Insurance Company, the state’s insurer of last resort. As a result, the number of Citizens policies declined sharply from 1.4 million in 2023 to 851,000 in March 2025.
Are We Backtracking?
Following passage of the reforms, the plaintiff bar has actively attempted to undo tort reform legislation with proposed legislation like HB 947. This would reopen the door to AOB. HB 947 would also allow phantom damages, as well as treble damages under some circumstances.
Homeowners’ insurance rates and premiums vary significantly by county. Sumter County, Florida, has the state’s lowest average premium ($2,064), while Monroe County has the highest ($9,058). Monroe County also has the highest average premium for condominium policies ($4,758), while Suwannee County has the lowest ($623).
What Drives Rate Change?
Insurance rates and premiums follow risk magnitude. If one seeks to reduce the premium charged by insurers, the risk must be reduced. Monroe County’s average premiums are elevated due to offshore islands in the county, such as Key West and Key Largo, which are notorious for powerful storms. Sumter County’s inland location keeps its premiums low.
Inflation in building materials used for repairs has driven claim costs up significantly. Roof repair, which accounts for half of loss costs, is up 30 percent from 2022.
Reinsurance cost is another significant driver of insurance rates. Florida insurers rely heavily on reinsurance coverage purchased from the global reinsurance market. The smaller the insurer, the more reinsurance it buys. For example, Universal Insurance Holdings, which has relationships with 59 reinsurers, bought reinsurance from 37 of them in 2024, including a mandatory cession to the Florida Hurricane Catastrophe Fund (FHCF). It ceded $650 million of the $2 billion in premium it wrote. HCI Group has an even greater reliance on reinsurance. It ceded most of its 2025 gross premium to reinsurers, retaining only 37 percent of its gross premium written (GPW). A yet smaller Florida insurer, the recently launched Manatee Insurance, retained only 28 percent of its gross premium—$71 million out of its $255 GPW.
For the first time in years, property catastrophe reinsurance rates were down by approximately 10 percent at the Jan. 1, 2025 renewals. Reinsurance treaties are renewed annually. The Florida Office of Insurance Regulation (FLOIR) reported that Florida reinsurance costs decreased by an average of 1.7 percent in 2024, compared to 2023. In the prior year (2022-2023), reinsurance costs rose by 27 percent. Rates for FHCF decreased for participating insurers by a statewide average of 8.3 percent.
In an important shift from the past, FLOIR’s January 2025 property insurance report revealed that many 2024 rate change filings were for rate reductions, not increases. This is evidence of stabilization in Florida’s property insurance market. In a welcome development for Floridians, 17 insurers filed for a decrease in 2024, while 32 companies filed no rate changes.
Another sign of a stabilizing market is the Florida insurance industry’s bottom line, which reported a profit in 2024 with an industry aggregate net income of $825 million. The underwriting gain was $465 million. (Data excludes Citizens.)
What Are the Concerns Regarding Insurance Affordability and Availability?
A study by the Federal Insurance Office (FIO) found that policyholders in parts of the state with the most risk had higher nonrenewal rates, causing policyholders to switch carriers. The FIO analyzed insurance availability using nonrenewal rate as a proxy for availability. While non-renewal rates were 80 percent higher in the highest risk areas than in the lowest risk areas, they remained low. For example, Universal Insurance Holdings, the largest Florida-focused insurer, reported a 92 percent renewal rate.
The Florida homeowners’ insurance market is competitive, with 24 insurance companies administering at least 100,000 policies each. The entry of close to a dozen new insurers in the state more than offsets the 11 insurers that failed between 2019 and 2022. These data suggest that the Florida insurance market is achieving stability.
How Much Does Insurance Cost Figure into Home-Buying Decisions?
A rule of thumb shedding light on insurance cost impacting home-buying decisions is for insurance to be on the order of 0.5 percent of home value. With the national median home price of $400,000, premiums should be approximately $2,000. The average homeowners’ insurance premium is above $2,000 in 26 states and below $2,000 in the remaining 24.
What Legislative Measures Could Contribute Toward Stability in the Homeowners’ Insurance Market?
For Florida to have a healthy homeowners’ insurance market, it is critical that the state’s legislature and governor’s office exercise resolve to maintain the tort reforms passed in 2021-2023. Just prior to the passage of these reforms, 76 percent of the country’s homeowners’ insurance lawsuits originated in Florida—home to just 9 percent of U.S. homeowners.
Other measures for consideration involve transparency surrounding home flooding. Currently, sellers are not required to disclose their homes’ flooding history. This missing information can be expensive, especially for homes that flooded many times.
Another related measure is greater transparency surrounding insurance rate calculation. Via SB 888, the Florida Senate Banking and Insurance Committee proposed that FLOIR enhance its rate comparison website to inform consumers about insurance company products available throughout the state, along with their costs. This could give policyholders more confidence that the market is competitive and fair while improving public perception of the insurance industry.
Floridians cannot afford a return to the past. Instead, consumer-friendly policies, such as continuation of Florida-style tort reform and greater transparency, should be upheld as a win-win for insurance buyers, insurance providers, and economies in Florida and other states struggling with legal system abuse.