Kevin McCarty: Florida’s property insurance market is stabilizing — stay the course

Just a few years ago, Florida’s property insurance market was in serious distress. A combination of excessive litigation, escalating reinsurance costs, and the steady withdrawal of private carriers left homeowners with surging premiums and diminishing options. In response, Gov. Ron DeSantis and the Florida Legislature enacted a comprehensive package of reforms in 2022 designed to restore market stability, rein in abuse, and rebuild confidence among insurers and investors.

Today, those reforms are delivering results.

Private capital is reentering the market. Citizens Property Insurance Corporation is reducing its policy count. Rate trends are beginning to reverse. But this recovery is still in its early stages — and it hinges on the Legislature’s continued resolve to protect the framework that enabled it.

Any move to undo the reforms that curtailed excessive litigation would send an immediate and damaging signal to capital markets and global reinsurers. Reintroducing incentives to litigate inflates claims costs, disrupts pricing predictability, and injects legal uncertainty into a market that is only beginning to regain equilibrium. These dynamics directly impact the cost and availability of catastrophe reinsurance — the risk transfer mechanism upon which insurers expand capacity to underwrite risk in Florida.

Systemic reform, measurable results

Since the 2022 reforms took effect, the market has shown tangible signs of recovery. Eleven new private insurers entered Florida’s market in the past year, fostering increased competition and consumer choice. Even more encouraging, since January 2024, 17 insurers have filed for rate reductions this year, while 34 more are maintaining existing rates.  Finally, private insurers’ assumption of Citizens policies has reduced Florida taxpayers’ exposure by $170 billion.

Investor confidence depends on regulatory stability

Global capital is highly sensitive to regulatory risk. Reinsurance markets — particularly in the catastrophe space — are even more so. They evaluate not only a region’s actuarial and environmental risks but also the predictability and durability of its legal and regulatory framework.

If Florida signals that it is willing to revisit or weaken the legal reforms of 2022, reinsurers and private capital providers will reassess their exposure to the state — and they may choose to reprice or withdraw. That means higher reinsurance costs, reduced insurer capacity, and ultimately higher premiums and fewer options for Florida homeowners.

Reform requires time — and political resolve

The 2022 reforms were never intended to be an instant fix. Market correction takes time. But the early data shows progress, and the trend line is finally moving in the right direction. Private insurers are returning. Consumers are beginning to feel some relief. Reinsurance capacity, while still constrained, is stabilizing.

Undoing that momentum now would come at a steep cost — and not just in dollars. It would undermine the credibility of Florida’s policymaking environment and signal to investors that long-term commitments in this state are subject to short-term political pressure.

Stay the course

As the legislative session continues, lawmakers should exercise caution and discipline. Reopening the 2022 reform package — especially provisions related to litigation reform — would jeopardize the foundation of the recovery and reintroduce uncertainty at the very moment stability is taking hold.

Florida’s insurance market is stabilizing because the state sent a clear and consistent message to the global financial community. That message must not change. Because in insurance — as in all capital-dependent industries — confidence is everything.

Let the reforms work. Stay the course.

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Kevin M. McCarty is a former Florida Insurance Commissioner who served from 2003 to 2016. With decades of experience in insurance regulation and policy, he played a key role in shaping Florida’s insurance landscape. McCarty is a nationally recognized expert on insurance market stability and risk management, advising industry leaders and policymakers on best practices for maintaining a competitive and consumer-friendly market.