Florida Lawmakers Propose Multi-State Risk Pool to Address Home Insurance Crisis
Florida lawmakers have introduced legislation aimed at addressing the escalating costs and availability challenges in the state's home insurance market.
Senators Mack Bernard and Kelly Skidmore have filed bills to establish a multi-state risk pool for property insurance that would share catastrophe risks across states. This framework aims to enhance bargaining power with global reinsurers, stabilize home insurance markets, and create a collective safety net for disaster-related losses. The proposed legislation requires Florida's Office of Insurance Regulation to develop the compact by the end of 2027, with implementation starting mid-2027.
Insurance premiums in Florida have surged significantly in recent years, with average annual home insurance costs reaching $3,330, and some analyses reporting figures as high as $8,770 for comprehensive coverage. High policy nonrenewal rates indicate insurers are retreating from high-risk areas within the state. Existing reforms targeting litigation limits, reinsurance incentives, and depopulating the state-run insurer Citizens Property Insurance have yet to reverse these trends.
The rising catastrophe losses nationwide, including hurricanes, wildfires, tornadoes, and floods, have increased insured disaster losses from $4.6 billion in 2000 to nearly $100 billion annually today. The compact proposed by Bernard and Skidmore is designed to function similarly to the National Flood Insurance Program but would be managed by states to collectively manage risk and reduce premium volatility. This initiative reflects an effort to build a sustainable, market-driven response to climate-related insurance challenges.
Despite potential benefits, the proposal faces challenges in Florida's Republican-controlled legislature, where recent insurance policy efforts have focused more on deregulation and tort reform rather than systemic, multi-state approaches. The upcoming 2026 legislative session beginning in January will be critical for progress on this concept. Overall, the proposal highlights growing recognition of the need for collaborative, large-scale strategies to confront affordability and availability in property insurance amid increasing natural disaster risks.