Editor’s note: As some national news reports continue to claim that Florida’s property insurance crisis has endured and premiums keep rising, one Florida insurance e
xecutive offered a view from inside the industry, shaped by more than three decades in the property insurance business.
After years of steep increases, Florida property insurance premiums are finally moderating or declining. While Florida will never be a low-cost insurance market due to
its hurricane exposure, recent legal reforms, increased competition, and improving reinsurance conditions have begun translating into lower costs for many homeowners.
Why Rates Might Keep Falling:
Legal and Claims Reforms are not yet Fully Reflected in Premiums
Non-catastrophe loss and adjustment expenses, which insurers typically target at roughly 25
% to 30% of premium, continue to perform better than expected. Routine claim frequency remains favorable, while claim severity, though still affected by inflation i
n labor and materials, has become more predictable. That creates room for insurers to compete on price and seek rate reductions.
Reinsurance Capital is Abundant After a quiet 2025
No hurricanes struck Florida in 2025, even though history suggests that roughly six out of
every ten years bring at least one Florida landfall. As a result, reinsurers posted strong profits. Capital providers generally want their money fully deployed, w
hich increases competition and puts downward pressure on reinsurance prices.
According to the Guy Carpenter index, U.S. property catastrophe reinsurance rates peaked in 2023 at more than double their trough in 2017. While rates have
moderated, they remain w
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ell above historical lows – the market has retraced only a portion of the post-2017 increases. If losses remain manageable and capital continues to accumulate, a
dditional downward pressure on reinsurance prices is possible. That trend is evident in the average 15% to 25% reductions many Florida insurers achieved at June 1 renewals.
Meteorological Conditions Point to a Quieter Hurricane Season
Forecasters are predicting developing El Niño conditions, which historically tend to sup
press Atlantic hurricane activity. While no weather pattern guarantees fewer storms, a less active season would help preserve insurance and reinsurance capital.
Technology is Helping Insurers Operate More Efficiently
Advances in analytics, image processing, and artificial intelligence are helping insurers evaluate ri
sk more accurately and efficiently. Better underwriting decisions and lower operating costs improve insurer performance, ultimately benefiting consumers in a competitive, regulated marketplace.
Why They Might Not:
It Only Takes One Major Hurricane to Change the Cost Equation
Florida remains the most catastrophe-exposed insurance market in the world. Insurers closely m
onitor Probable Maximum Loss (PML), which models the impact of extreme events such as Hurrican
e Andrew in 1992 or multi-storm se
sons like 2004 and 2024. A 100-year storm scenario can generat
e losses equal to three or four times the premium collected in a year. Because regulated profit margins are relatively modest, decades of accumulated surplus can be consumed in a matter of hours. Following a major event, th
e industry must replenish billions of dollars of capital, driving reinsurance costs up and capacity down, which impacts insurance affordability and availability for consumers.
Global Catastrophes Affect Florida’s Insurance Costs
Reinsurance is a global business. Investors spread risk across earthquakes, hurricanes, wildfires, floods, and other disasters around the world. Major events o
utside Florida can reduce available capital and increase costs here. Following both the September 11 attacks and the 2011 Tohoku earthquake and tsunami in Japan, reinsurance costs rose worldwide.
Interest Rates Remain Elevated
When government bonds and other relatively safe investments offer attractive returns, investors have less incentive to deploy capital into catastrophe reinsurance. Historically, the lowest insurance costs have coincided with periods of low interest rates. If rates remain higher for longer, it may keep a “floor” under costs of capital and consumer rates.
