The Florida property insurance crisis: Why home insurers are leaving Florida

The Florida home insurance market is in crisis, and Hurricane Ian only made things worse.

Since early 2022, many insurers and the reinsurers who back their policies have announced they are either scaling back their business or discontinuing their coverage in Florida entirely. An increasing number of Florida insurers have also fallen into insolvency.

The result has been a sharp escalation in insurance policy rates for many Florida homeowners and uncertainty over the future solvency of more of the state’s providers.

“This is a widespread problem; it’s affecting tens of thousands of homeowners in Florida,” says Danny Sands, owner of Brightway Insurance, an insurance agency based in Jacksonville, Florida.

“We’ve never seen this number of insurance companies go out of business in such a short period of time,” adds Sands. “And when one of the insurance providers goes insolvent, we only have 30 days to rewrite all the policies. Agents end up working around the clock to try to get it done.”

A number of insurers still offer homeowners insurance in the state, including State Farm, Travelers, First Florida, and Nationwide. But news that your homeowners insurance company has pulled out, or said it’s planning to exit, is unsettling.

And with the devastation of Ian, there's good reason for worry; In July of 2023, Farmers announced it will pull out of the state as well. Not long after AAA announced it was non-renewing some Florida policies due to increased risk.

Read on for analysis of the the reasons why insurance companies are leaving Florida and steps you can take if your insurer leaves the state.

What should you do if your home insurance company pulls out of Florida?

Here are some helpful steps to help you take action if you get a notice that your insurance policy is being canceled.

1. Call your insurance company. Speak to a representative or agent and find out the reason for the cancelation. Find out how long you have to get new coverage. A company going out of business vs. one pulling out of the state may have different timelines.
2. Start getting quotes. It’s important to start gathering new quotes right away. Many other Florida homeowners are in the same situation, all trying to get new coverage at once. To make sure you have time to choose the best policy, start looking immediately.
3. Complete any repairs. Finding new coverage will be easier if your house is in good condition. Florida home insurance companies will also look at any weather-proofing work you have done.
4. Consider getting help. If you think you’re being treated unfairly or are struggling to get new coverage, contact the Florida Department of Insurance Regulation (FLOIR). They can also be of assistance in helping you find new coverage.

Florida's insurer of last resort, Citizens, is an option if insurance is hard to find or not affordable. The company has reported record policy growth in the wake of Hurricane Ian and expects even more according to it's 2023 operating budget released at the end of 2022. That's not a good sign for the insurance market in the state.

For more information on the steps you can take, see Insurance.com’s guide to what happens if your homeowners insurance gets canceled.

Why are home insurance companies leaving Florida?

In June of 2022, Southern Fidelity was ordered into liquidation, causing some 80,000 Florida homeowners to scramble for new home insurance coverage. In early August, Weston Property & Casualty Insurance of Coral Cables was placed into receivership, forcing the company to cancel all policies effective Sept. 7, 2022, and in late August, United Insurance Holdings Corp. (UPC) announced it had filed plans to pull out of the Florida, Louisiana and Texas markets.

UPC had just over 200,000 policies in force in Florida according to its last Annual Report. 

On September 23, 2022, FedNat followed other companies into insolvency just ahead of the onslaught of Hurricane Ian, a few months after reducing it's business in the state due to financial trouble.

July 2023 saw an announcement from Farmers Insurance that it was pulling Farmers-branded policies from the state; Farmers subsidiaries like Bristol West and Foremost will continue to write policies, but the move leaves 100,000 homeowners in search of new coverage.

The reasons behind the home insurance crisis in Florida are complicated, but several key factors have a big impact.

No. 1 is the impact of soaring litigation costs. The Insurance Information Institute (III) published a brief on the Florida insurance crisis in August. It noted that a 2017 State Supreme Court decision allows courts to award a plaintiff's attorneys 2-2.5 times their hourly billing rate when courts rule in favor of policyholders. The result is more lawsuits; Florida is on pace to have more than 130,000 property policy suits filed this year.

In fact, III says Florida accounts for 79% of insurance lawsuits filed, with only 21% in the rest of the country.

A second but related factor is the increasing number of reinsurers who have chosen to retreat from the state in the face of rising litigation. UPC CEO Dan Sneed says this was the key factor in his company’s decision to leave the market.

“Due to significant uncertainty around the future of reinsurance for our personal lines business, I believe placing United P&C into an orderly run-off is prudent and necessary to protect the Company and its policyholders,” he says.

Further contributing factors include the fact that the Florida market is home to several smaller insurers who rely heavily on reinsurers and the booming housing market along coastal counties, which are more prone to flooding and hurricanes. Although the past three hurricane seasons have not been a significant factor, hurricanes in the past have been costly. III has said the insurance payout for Hurricane Andrew, which hit Florida in August 1992, was $15.5 billion at the time

The bottom line? Florida homeowners are projected to pay an average of more than $4,000 in the near future, nearly three times the U.S. average, according to III.

What is the Florida government doing about home insurance rates?

In December of 2022, the Florida state legislature approved changes to Florida home insurance laws that are designed to keep insurance companies operating in the state. The changes include a requirement for many homeowners to buy flood insurance and a push to move home policies from state-run Citizens to private insurers.

Back in May, Florida Governor Ron DeSantis convened a special session of the state legislature to bring forward measures to address the crisis. Among the provisions approved were a $2 billion injection into a Reinsurance Assistance Program (RAP), a crackdown on skyrocketing attorney fees to discourage frivolous claims, and a new program to help Florida homeowners make their homes safer and more resistant to hurricane damage.

At the end of 2022 and in the wake of Hurricane Ian, the Florida government passed new laws that include requirements for flood insurance and shore up reinsurance to prevent insolvency. The results of the new law have yet to be seen.

The My Safe Florida Home program has also been expanded to provide matching grants of up to $10,000 for Floridians to make hurricane readiness upgrades to their homes and earn discounts on their insurance rates.

Which homeowners insurance companies are leaving Florida?

Each month seems to bring news of another insurer choosing to exit or significantly scale down business in the Sunshine State.

The tally includes Bankers Insurance, Lighthouse Property Insurance, FedNat Insurance, Avatar Property and Casualty, Lexington Insurance, and St. Johns Insurance, in addition to the previously mentioned Southern Fidelity, Weston, UPC and Farmers.

One of the nation’s largest insurers, Progressive, announced in 2021 that it planned to non-renew about 60,000 Florida policies. In a financial statement, it said it had begun this action starting in the second quarter of 2022.

Shortly following the Farmers announcement, AAA stated it was non-renewing some policies in Florida; the company isn't leaving the state and the non-renewals are not widespread.

Which home insurance companies are still available in Florida?

While the situation in Florida is alarming for homeowners, fortunately, many insurers still provide coverage in the state. They include recognizable names like State Farm, Travelers, First Florida, and Nationwide.

To help Florida homeowners find insurance, Insurance.com provides a comprehensive look at the Florida home insurance market along with an analysis of insurance rates and top providers.

Charles Nyce, a professor at the Florida State University College of Business specializing in catastrophic-risk financing and corporate-risk management, says that the measures introduced by State legislators in May could begin to ease the Florida insurance crisis. But it’s pretty likely to get worse before it gets better.

“The difficulty is, there are no easy fixes,” says Nyce. “The measures (that the state introduced) are going to help, but it’s tough to turn the market around quickly.

In a prophetic comment, Nyce expressed concern that a bad hurricane season, if it were to happen, could overwhelm a fragile market. “I honestly think we’re one bad hurricane away from an entire market collapse,” 

Unfortunately, a bad hurricane season did follow that interview, and the Florida insurance market is still trying to recover.