Florida leaders offered $3 billion to property insurers. $2.2 billion wasn’t claimed. [Orlando Sentinel]

TALLAHASSEE — More than two-thirds of the $3 billion set aside by the Florida Legislature to shore up the state’s collapsing property insurance industry has gone untouched since it first became available in 2022.

Many insurance companies, which asked the Legislature for help, have mostly steered clear of that money. Industry analysts said it only covered a small part of their hurricane losses or was too expensive compared with the reinsurance they could get in the private market. Insurers had to reduce rates to get the money.

Legislative leaders and insurance industry insiders, meanwhile, are cheering modest signs that the Florida property insurance market is improving. It’s happening after years of skyrocketing rate increases and companies discontinuing writing policies, leaving the state or going under.

“We are seeing new insurers and new private capital enter Florida, while large companies recommit to our state, citing recent reforms,” Senate President Kathleen Passidomo, R-Naples, said in a memo to the state’s senators. “Unfortunately, we all know it is taking time for the positive momentum we are seeing across the market as a whole to reach kitchen tables around the state.”

One positive signal is that 10 of the 150 companies participating in the state’s Hurricane Catastrophe Fund are not asking state regulators for rate increases for next year and eight have filed for rate reductions, Passidomo said. She did not name the firms, and state insurance regulators did not respond to a request for them.

And the state has cut $500 million in taxes associated with flood and property insurance premiums, she said. The tax cut will save a typical homeowner about $60 this year.

“Every little bit helps,” she said, and helps “families trying to make ends meet as our insurance market strengthens.”

But most Floridians are sitting around their kitchen tables fretting about rising insurance costs, said state Rep. Anna Eskamani, D-Orlando.

“The changes made are not even noticeable to the average homeowner,” Eskamani said.

Homeowners are not likely to see significant changes in their rates any time soon, said Lisa Miller, a former deputy insurance commissioner and property insurance lobbyist.

“Rates are not going down, but they will stabilize,” Miller said.

Reductions aren’t happening because of inflation, the risk of future hurricanes and the continuing high cost of reinsurance, the “insurance for insurance companies” that protects insurers against high claims from catastrophic events, she said.

After a 10-year hiatus, Florida has been hit by hurricanes yearly since 2016, causing billions of dollars in damage that the private insurance companies didn’t have enough capital or reinsurance to cover.

Some 30 companies have stopped providing coverage, withdrew from the state or declared insolvency, according to the Insurance Information Institute. Since 2017, 15 companies have declared insolvency, according to the state Office of Insurance Regulation.

That includes United Property and Casualty, which went bankrupt last year after being the sole participant in the state’s temporary market stabilization program, a third program aimed at helping the insurance industry.

OIR reported Friday that eight new companies have been granted permission to sell homeowners’ insurance in Florida. Five are start-ups. Several were created by holding companies already operating multiple insurers in Florida, said Mark Friedlander of the Insurance Information Institute.

The insurance office also said that of the roughly 150 insurers participating in the state’s catastrophic insurance protection program, 10 filed no rate increase for this year, and eight filed rate decreases.

“When is the last time you heard that?’ Friedlander asked. “Overall, Florida is in the best position it’s been in many years going into hurricane season.”

This time last year, carriers were filing rate increases of 40% to 100%, he said.

At the height of the crisis, the Legislature created in 2022 a $2 billion fund to help insurance companies buy insurance to cover their exposure. Only 49 carriers – less than a third of the companies participating in the Florida Catastrophic Hurricane Fund – participated, offering rate reductions from 0.1% to 3.9%.

A year later, the Legislature gave the industry another $1 billion to help buy more insurance coverage, but only three companies signed up for it – First Protective Insurance Co., Cypress Property & Casualty Insurance and American Coastal Insurance.

State insurance regulators said they don’t anticipate a need to pay off losses to those companies.

Insurance officials reported that as of April, the state reimbursed 42 insurers $697 million and anticipate that 52 insurers will receive $800 million. That leaves $2.2 billion of the $3 billion on the table.

“Bailing out the insurance industry doesn’t address the heart of the crisis, it doesn’t work,” Eskamani said. “And it hasn’t helped consumers.”

The money could be used to help lower insurance rates for homeowners, who saw rates go up 102% between 2019 and 2022, Friedlander said. Floridians pay the most in the nation for property insurance, at an average of $10,996 in 2023, according to a report from Insurify.

Insurify, an insurance comparison shopping website, said also predicted that insurance in Florida will go up another 7% in 2024.

According to the Insurance Information Institute, 15% to 20% of Florida’s 7.45 million insured homeowners are foregoing insurance because of the rising cost.

“The running joke in Florida is that the fastest growing insurance company in the state is the self-insured,” said Jeff Brandes, a former state senator from the Tampa Bay area who remains a leading voice for insurance reform.

The state could divvy up that money among the state’s 7.45 million insured homeowners for a one-time payment of about $295 each.

“Could it be done? Yes,” Brandes said. “Would it be the most efficient use of that money? No.”

Lawmakers could also reinvest that $2.2 billion back into the reinsurance program to help insurance companies after the next major storm, Brandes said.

“It makes more sense in the long run to reauthorize and increase the buffer than to track down millions of homeowners and their insurance policies,” Brandes said. “It would have a bigger overall impact on the industry than giving each homeowner several hundred dollars.”

A better use would be for the state to lend money to companies and investors to lure them into the state, he said.

“A lot of insurance companies are tapped out,” Brandes said. “The state could invest in companies that can come up with a matching amount. Make it a loan program that companies would pay back over time.”

The property insurance industry is showing signs of stabilizing, Friedlander says.

But the big drivers of high insurance rates still exist, including replacement materials (up 55% since 2019) and reinsurance, he added.

“Those things will continue to drive rate increases,” he said. “But companies’ financial conditions are growing stronger … .along with the capacity to take on risks.”

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