Property insurance in Florida has always been challenging, but never more so than in recent years. Since the last hurricane hit Florida in 2018 seven property insurers have gone out of business. A few others are on shaky ground. Many major carriers do not write any business in Florida and those who do often shy away from the most populated areas of the state.

Florida has always been a difficult insurance environment, prone to frequent hurricanes and an epicenter of fraud and litigation. When 79% of all property related lawsuits nationwide are filed in just one single state, Florida, that is definitely the sign of a problem.

The Sunshine State is a unique beast when it comes to insurance, with some of the highest property insurance rates in the nation. Auto, as well, but that is a topic for another day, yet many of the causes of the high rates are the same.

There are several drivers of the high rates that we will cover today: Fraud, litigation, weather, inflation, and insurers.

It is estimated that 10% of all claims are outright fraud. Another 20-30% are legitimate claims that contain elements of fraud. These are costs that consumers are forced to pay through higher premiums.  It is probably fair to say that more people than not have had a contractor knock on their door offering them a new roof for nothing more than an assignment of benefits.

Herein lie’s the gray area of fraud and trial lawyers.   Not every claim involving an AOB is fraud. Arguably most are not and the AOB process, when properly followed, can be beneficial to the insured.    Same with trial lawyers. Most are representing people who have legitimate claims that were potentially wrongfully denied by insurers. But given the fact that the overwhelming majority of litigation in the nation is driven by one state, this is most certainly not always the case.

Getting to an equitable solution that roots out fraud while preserving policyholder rights is going to be difficult. What this legislation does is put some guardrails on the process. It also reigns in multipliers on attorney fees, which in some instances, have been very high. These are all costs that policy holders ultimately pay in the form of higher premiums.

Will the latest round of changes work? That remains to be seen. There have been attempts at reform before. In 2019 lawmakers passed AOB legislation which, in part, established requirements for the process. In 2021 lawyers passed additional legislation limiting attorney fees in hopes of deterring frivolous lawsuits.

According to Insurance Journal, while overall litigation decreased, AOB litigation rose. Ten insurers reported that more than 30% of their newly litigated cases involve AOB.

Weather is another wildcard. Give us another summer like we had in 2004 with four hurricanes in six weeks and there will be problems. With the price of construction materials at record or near record levels and the supply chain in complete disarray there is no telling what would happen or how many insurers would survive, even with the new reinsurance component to the reform.

The good news is that lumber futures are down 52% since March. There are other indications that certain aspects of record inflation may be starting to subside. That said, costs are high and if the pricing of policies was not accurate some carriers will be upside down.

The stated intent in Florida’s bipartisan legislation was to stabilize the industry which is critical to its long-term survival. If Florida can get through hurricane season with limited issues, if construction prices begin to recede towards pre-pandemic levels, and if the supply chain can get back on track, this will benefit consumers. While there is no guarantee that premiums will decrease, these could factor into price stabilization.

A big part of stabilizing the industry is understanding how it got to where it is. How did so many insurers fail. Certainly, fraud played a role, as did excessive litigation. Weather always plays a role. Hopefully, inflation and supply chain issues are receding and will begin to improve within coming months.

But there have been issues with insurers in the state, as well. According to Insurance News Net, Jacksonville based Sunshine State Insurance Company failed to show how their CEO received a $200,000 dollar bonus just months before liquidation. Sunshine State’s parent company also took millions of dollars through various agreements prior to liquidation that were neither disclosed nor approved by the Office of Financial Regulation.

There needs to be a deeper understanding of why companies, in particular Florida based, property focused, have failed. As companies fail, policyholders pay when the Florida Insurance Guaranty Association pays off claims and a fee hits every policy sold in Florida, from homeowners to flood to malpractice.

It remains to be seen how this new legislation will impact the market and consumers. Hopefully, it will achieve its stated goal of market stabilization. If that occurs the same should happen for policyholders, many of whom have become accustomed to cancellations or double digit increases in premiums.

Some of this is controllable and some is not. If common sense, long overdue, economic policies are implemented to address inflation and supply chain issues that will have a meaningful impact on the costs of goods which would positively impact rates. More challenging is the reigning in of fraud and litigation in the most fraud prone and litigious state in the nation. Given Florida’s history of addressing both of these issues I wouldn’t hold my breath on seeing anything meaningful.    As for hurricane’s, they are beyond our control but with this being a La Nina year and the Loop Current pushing warm water further north in the Gulf earlier than usual, it could very well be an active year with the first named storm potentially hitting the southern part of the state as early as this weekend.

It’s hard to say what will happen in the long run, but the legislature did a decent job of addressing some critical issues that needed to be addressed.   Did they hit it out of the park? No, but that wasn’t expected.   But action was taken and hopefully it turns out to be meaningful.

Chris Tidball is an Executive Claims Consultant with SecondLook, a leading provider of subrogation and consultative services. He spent more than twenty years as an adjuster, manager, and executive with multiple Top 10 carriers. Chris is the author of Re-Adjusted: Taking Your Claims Organization from Ordinary to Extraordinary! He is the creator of The Adjuster television series and can be reached at