A new report from AM Best highlights how the Florida personal property insurance market has hardened in recent years, with significant premium increases and limited capacity. Factors such as more frequent and severe weather-related losses, inflation, and rising reinsurance costs have prompted insurers to adjust rates and risk appetites.
The Florida legislature has focused on litigation issues that hinder insurance operations, attracting new participants and creating more capacity. While some carriers have reduced their participation or exited the state, new companies have entered the market.
AM Best identified 47 specialist insurers that primarily underwrite personal property in Florida. This group excludes companies tied to larger national carriers and Citizens Property Insurance Corporation but includes insurers that became financially impaired, merged, or shifted away from the segment in recent years.
Recent years have seen more frequent and severe weather-related losses, including Hurricane Ian in 2022 and non-named storms, leading to material volatility in operating results and surplus levels. To address these challenges, carriers implemented significant rate increases.
According to the Insurance Information Institute, the average Florida homeowner’s policy premium doubled, increasing 102% over the past three years. In 2024, a few companies nearing rate adequacy have filed for marginal rate reductions, offering a more positive signal to the market.
Florida insurers have faced a challenging reinsurance market in recent years. Reinsurers, dealing with considerable assumed losses due to hurricanes and rising claims severity from social and economic inflation, have increased rates, reduced capacity, and pushed for higher retentions and lower limits.
While reinsurers may be optimistic about recent tort reforms, the market appears to be at a wait-and-see stage, with capacity remaining steady for mid-year renewals.
The cost of reinsurance for active Florida personal property specialists, excluding Citizens, has more than doubled from $3.1 billion to $6.4 billion between 2019 and 2023. To keep pace with rising reinsurance costs, carriers have significantly increased rates, with direct premiums written nearly doubling from $5.9 billion to $11.4 billion, or 93.2%.
Despite this growth, direct premiums written did not match the growth in ceded premium, resulting in constrained margins. Unaffiliated ceded premium written grew from 52.3% of direct premiums written in 2019, to 56.3% in 2023.
Primary carriers may reduce the impact of rising reinsurance costs by adjusting coverage, such as reducing limits, increasing retentions, or implementing co-participations. However, these decisions must be made prudently as they also increase retained losses and net exposure.
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