State pulls back $2.1b in reinsurance money

Tallahassee — As Florida lawmakers in 2022 tried to bolster the troubled property-insurance system, they drew attention for setting aside $3 billion in state money to help insurers with critical backup coverage.

By Jim Saunders

But last week, Gov. Ron DeSantis signed a bill that pulled back $2.1 billion of that money, which was expected to go unused. The bill (HB 5013) essentially put the money back in the state's coffers, where it can be used for other things or saved.

The bill, which was unanimously passed by the House and Senate during this year's legislative session, drew relatively little attention as lawmakers battled for weeks about a new budget.

But it came after lawmakers during 2022 special sessions created two programs — seeded with $3 billion — to try to make sure property insurers would have access to reinsurance to help pay hurricane claims.

Reinsurance is a vital part of Florida's insurance system that affects how much homeowners and businesses pay in premiums. Each year, property insurers go into a global market to buy reinsurance, while also purchasing coverage through the Florida Hurricane Catastrophe Fund, a state reinsurance program.

During a special session in June 2022, amid widespread financial problems in the insurance industry, lawmakers created what was known as the Reinsurance to Assist Policyholders, or RAP, program. The program, using state general revenue, provided $2 billion for reinsurance that insurers could tap at no cost after they paid certain amounts of losses.

The RAP program was available for storms that occurred over a two-year period. But the amount of money needed for the program is now projected to be about $900 million, clearing the way for lawmakers to pull back $1.1 billion.

Hurricane Ian, which made landfall in September 2022 in Southwest Florida, accounts for almost all of the money projected to be used in the program. As of the end of 2024, insurers had received $740.6 million from the program for Ian losses. A House staff analysis said the ultimate Ian costs for the program are not expected to exceed $860 million.

Insurers also have sought money from the program for losses from 2023's Hurricane Idalia.

During a December 2022 special session, lawmakers created another program known as the Florida Optional Reinsurance Assistance program with $1 billion. The program offered reinsurance that carriers could buy for the 2023 hurricane season.

Five insurers took part in the program, but Hurricane Idalia did not generate the extent of losses that would lead to the carriers receiving payments. All five insurers ended their contracts with the program, freeing up the $1 billion to be returned to state general revenue, according to the House staff analysis.