Florida insurers bought 11% more reinsurance in 2023. Data suggests lawsuits slowing

Florida insurance carriers purchased 11% more in reinsurance over the course of 2023 than a year earlier and while market conditions were certainly hard, it was not as challenging as had been forecast for the domestic Floridian insurance market.

In addition, the latest data released on homeowners’ property insurance lawsuits shows a decline has continued up to the end of 2022, suggesting an improving market outlook and that there could be evidence emerging that the reforms enacted in the state of Florida are having a positive effect.

First, a note on uncertainty, the report from the Florida Office of Insurance Regulation (FLOIR) shows claims uncertainty does persist and insurers loss development still appears quite high in the state.

“To quantify, when carriers looked back one year later on their claims in 2022, claims were approximately $224 million more than estimated after one year, and $772 million at the two- year mark. These numbers reflect the degree of uncertainty which exists in the property insurance market, which in turn impacts reinsurance capacity and reinsurance rates for insurers,” the report explains.

But, more positively for the future, the report shows that the percentage of all nationwide homeowners’ insurance claims opened in Florida was high in 2022 at 14.93% (up on 2021’s 6.91%), perhaps a reflection of claims getting filed in advance or in the wake of the reforms, but the level of litigated claims did not rise in tandem.

In fact, the percentage of nationwide homeowners’ lawsuits opened in Florida dropped from 76% in 2021 (79% in 2020) to under 71% in 2022, which is the lowest level this metric has sat at since 2017 when it was 68%.

Which suggests that despite a significant wave in new homeowners’ insurance claims in 2022, it did not translate into more litigation, in fact resulting in a lower rate of claims being litigated, which is a positive signal for Florida.

On the reinsurance side, a further positive signal for the health of the Florida insurance market can be found.

Insurers bought 11% more in reinsurance in 2023, compared to 2022, the FLOIR data call shows.

But, the risk adjusted cost of that reinsurance only increased by 27% from the 2022 figures and the FLOIR states that the domestic insurance market had been anticipating capacity would not be as available and that it would be more costly.

But, in the end, despite the reinsurance market certainly being hard at the June 2023 renewals, it was not as challenging a marketplace as Florida’s insurance cohort had been anticipating.

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