Navigating Florida’s Insurance Challenges
Florida’s property insurance market is facing unprecedented pressures due to growing hurricane risks, escalating costs, and market instability. This report explores the evolution of Florida’s public-private insurance model and highlights critical policy considerations for a sustainable future.
Key Takeaways
Florida’s Unique Risk Profile
- High Vulnerability: Florida faces 50% of the U.S. insured hurricane risk, with $65 billion in damages from Hurricane Ian in 2022 alone.
- Rising Costs: Property insurance premiums are among the highest in the country, growing 45% between 2017 and 2022.
Public-Private Insurance Programs
- Citizens Property Insurance Corporation: A government-backed insurer of last resort, now covering nearly 19% of homeowners due to private market shrinkage.
- Florida Hurricane Catastrophe Fund (FHCF): A state-run reinsurance program essential for stabilizing insurer costs but facing funding pressures.
- Florida Insurance Guaranty Association (FIGA): Covers claims from insolvent insurers, with $1.6 billion in claims paid since 2019.
Challenges and Opportunities
- Climate Risks: Intensifying storms and sea-level rise are driving up losses and insurance costs.
- Market Instability: Insolvencies and insurer exits have increased reliance on state programs.
- Policy Decisions: Florida must balance affordability with risk-based pricing, invest in resilient infrastructure, and reform its insurance frameworks to attract private capital.
A Path Forward
The report recommends:
- Investing in Resilience: Strengthen building codes and support storm-hardening measures.
- Reforming State Programs: Ensure fiscal sustainability for Citizens, FHCF, and FIGA while addressing interdependencies.
- Encouraging Private Market Stability: Attract private insurer participation through targeted reforms and risk reduction.