By: Dillon Marksbury, MBA – Commercial Producer, Atlas Insurance Agency
As we turn the page on another difficult year of catastrophic losses, many fear the repercussions will soon become unsustainable for community associations across Florida. Since 2017, property premiums have increased significantly, placing immense financial stress on unit owners and leading many to question the long-term viability of property ownership in the state.
This blog seeks shed light on the current state of the market, while offering hope to community associations that the future is, in fact, looking brighter. But first, we need to understand how we got here.
The Problem
The Florida property insurance market is heavily dependent on reinsurance – the insurance that insurers purchase to protect themselves from massive financial losses. With billions of dollars of insurable assets across Florida, insurance companies alone do not have the type of capital to withstand the onslaught of losses from hurricanes every year. Without it, insurance companies could not survive.
From 2017 to 2024, 6 out of 11 hurricanes hit the west coast of Florida at a category 3 or higher, causing billions of dollars in damage. Adding fuel to the fire, litigation costs soared. Over a 10 year period, Florida carriers paid out over $51 billion, with 71% of those funds going towards attorneys’ fees and public adjusters and only 8% directly benefiting claimants. Combine the billions of dollars in damage with the litigious nature of our state, and you get an unprecedented collapse of the Florida property insurance market.
The Consequences
After the destruction of Hurricane Ian, the market experienced:
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A mass exodus of insurance carriers, leading to a supply shortage.
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Property premium increased significantly.
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Weaker and/or stricter Terms and Conditions.
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Significantly higher wind deductibles.
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100% co-insurance clauses, even with updated appraisals.
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A surge in Citizens Property Insurance Corporation policies, rising from 437,000 in 2018 to over 1.4 million.
The Solution
The property market deterioration was so severe that Florida legislators were forced to take action to restore stability and attract insurers back to the state. What followed were significant legislative reforms which include but are not limited to:
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The repeal of Florida’s one-way attorney fee provisions (which had incentivized excess lawsuits).
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The prohibition of assignment of benefits (AOB), preventing third parties from taking over claims and inflating costs.
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Reaffirming Citizens as the insurer of last resort, encouraging more policies to transition to private insurers
Since these reforms, four additional hurricanes have hit Florida, three of them just last year. In the aftermath of hurricane Milton, many expected further market instability, but the opposite occurred. Due to the legislative changes, insurers were in a much stronger financial position than they were after Hurricane Ian. Additionally, new insurers have slowly re-entered the Florida market.
The Results
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Stabilized property insurance rates.
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Improved policy Terms and Conditions.
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Lower wind deductibles.
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Agreed value replacing co-insurance clauses.
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Citizens’ policy count declining to under 850,000 for the first time since March 2022, with expectations
of dropping further to 771,000 by the end of 2025.
Other Factors to Consider
Though we are seeing the Florida market showing positive signs of recovery, external factors beyond our control still impact property insurance. Reinsurance companies that support Florida insurers also underwrite policies nationwide. This means disasters in other states can indirectly affect us here in Florida. For example, the fires in California. As total losses from these events continue to be assessed, we anticipate some impact on reinsurance pricing moving forward.
Final Thoughts
Florida has seen unprecedented destruction and financial losses over the past eight years, leading many to question the sustainability of the property insurance market. However, the current legislative actions taken have begun to yield positive results – including stabilized rates and more favorable terms and conditions – offering relief to many community associations. By staying informed about the current market conditions, board members and property managers can better prepare their associations for what’s to come while managing expectations appropriately. At Atlas Insurance, we are committed to providing education and guidance to help communities make informed decisions about their insurance coverage. Contact us today to learn how we can help your community navigate the evolving insurance landscape with confidence.
