Florida’s $3 Billion Insurance Bailout Largely Untouched, Industry Shows Signs of Recovery

In 2022, the Florida Legislature allocated $3 billion to support the struggling property insurance industry. However, over two-thirds of this fund remains unused. Many insurers found the aid insufficient to cover hurricane losses or too costly compared to private reinsurance options, which required them to reduce rates to access the funds. Legislative leaders and industry analysts note modest improvements in the market, with some new insurers entering Florida and existing ones showing renewed commitment due to recent reforms.

Senate President Kathleen Passidomo highlighted the positive impact of reforms, including ten insurers not seeking rate increases and eight filing for rate reductions. Additionally, a $500 million tax cut on insurance premiums is expected to save homeowners around $60 annually. Despite these improvements, significant rate reductions are unlikely soon due to inflation, high reinsurance costs, and hurricane risks. Since 2016, frequent hurricanes have strained insurers’ resources, causing many to withdraw from the state or declare insolvency.

The Legislature’s fund aimed to help insurers cover hurricane exposure, but participation was low. In 2023, only three companies used the additional $1 billion fund. Suggestions for better use of the funds include reallocating them to bolster reinsurance programs or providing loans to attract new insurers. While the market shows signs of stabilization, fundamental challenges like rising costs of replacement materials and reinsurance persist, continuing to impact insurance rates.