Florida Insurance Reforms Drive Market Stability Amid Litigation and AI Oversight

Florida’s property insurance market continues to show signs of stabilization following comprehensive reforms enacted over the past three years. The Florida Office of Insurance Regulation (OIR) reports about a 30% reduction in litigation since the late 2022 Special Session and the extensive tort reform passed in the 2023 Regular Session. However, despite these improvements, litigation rates in Florida remain significantly higher than in other states, which continues to fuel insurance costs. Regulators intend to allow current reforms to fully integrate before considering further statutory adjustments, emphasizing that regulatory changes can create market uncertainty which drives costs. The market has observed new insurer entries and a general trend toward premium decreases, signifying increased competition. For instance, Heritage Property & Casualty recently received approval for an average premium decrease of 3.3% statewide, with some counties experiencing reductions close to 10%. Nonetheless, such decreases are not uniform, and many policyholders may still encounter higher premiums based on location, risk profile, and insurer underwriting practices. Regulatory enforcement has intensified alongside legislative reforms, with fines and penalties against insurers rising approximately 700% this year. This enforcement surge targets insurer accountability, including actions against carriers related to Hurricane Ian and Idalia claims, addressing issues like use of unappointed adjusters and payment delays. OIR underscores the necessity for insurers to maintain operational standards worthy of market participation. Looking ahead, OIR is preparing to regulate artificial intelligence (AI) applications in underwriting and claims processing, advocating for a "human-in-the-loop" approach to safeguard against improper denials and maintain transparency. This approach ensures that critical decisions are not determined solely by automated systems. Concerns about the financial robustness of smaller domestic insurers and credit rating reliability in Florida persist. OIR relies primarily on its own comprehensive financial analyses conducted by a team of over 100 analysts, downplaying dependence on third-party rating agencies. The agency’s evaluations focus on insurer solvency and compliance, independent of ratings primarily used for mortgage-related requirements. Market competition is gradually improving, with several carriers filing for rate decreases and national insurers expanding their presence. Consumers increasingly have multiple options for homeowners insurance quotes compared to the limited choices prevalent two years ago. OIR encourages consumers to actively shop for coverage and work with agents who regularly review market options. Furthermore, mitigation efforts such as storm-hardening improvements significantly impact insurance costs. The My Safe Florida Home grant program supports homeowners in enhancing property resilience, which can reduce insurance premiums and limit loss severity during catastrophic events. OIR’s Commissioner Michael Yaworsky highlights that while regulatory reforms have made progress, continued focus on litigation reduction and insurer accountability remains critical to advancing market stability. Enforcement and emerging oversight challenges, including AI regulation, will play important roles in shaping the Florida property insurance landscape going forward.