MARKET UPDATE

Home - Special Session Market Update

January, 2023

The Florida Legislature convened and completed their 2022 special session in December. They did make some significant changes which will keep the industry from completely imploding.

Everyone that lives in a home in Florida needs to understand, what was done is not enough to cause rates to stabilize let alone decrease in the near term. It took us 8 years to get to the valley of this crisis... it wont be turned around overnight. It will take several years (2-3 at best) for rate decreases to be felt as a result of that legislation. Here’s why:

1. Insurance companies will need a little over a year to see if this all sticks. The concern is that either, 1) the attorneys / court system will reverse this legislation (like happened in mid-2022), or 2) The major reforms will be completely or largely reversed in the 2024 FL Regular Legislative Session. 

2. The Insurance companies will need to see what the actual expense savings are as a result of the changes. It takes time to have claims, then work through those claims, and then have the actuaries figure out what the actual rate adjustment should be. Not to mention then it takes time to submit filings to the Office of Insurance Regulation, time for them to review/amend/discuss and approve, and then time for rate changes to be programmed within the insurance company systems. 

3. It takes time for new insurance companies to raise capital, submit their filings, appoint agents to sell their products and write policies for them. If these changes stick (fingers crossed), new carriers will attempt to enter the Florida Homeowners market and compete by offering better policies or lower rates. That process is full of time consuming hurdles such as raising capital, hiring people, and working through the regulatory process. 

4. Reinsurance rates will take time to come back down. Reinsurance is the insurance that companies buy to protect against giant catastrophes that cost more than they can afford to pay for. Reinsurance companies have lost oodles of money over the past 8 years, so many have had a hard time convincing investors to give them money to operate. Those who have are requiring higher returns due to the increased risk of loss. We will need a year or two of stability before capital begins to flow back into the reinsurance market, bringing competition between reinsurers, and thus lower expenses to the home insurance companies and homeowners. 

This is a critical time. We have to stay the course, be patient, and allow the time needed for the insurance market to heal from the massive damage done over the past 7+ years. If we want quicker results, additional action is needed surrounding the roofing fraud and abuse. But that’s another post for another time.