Florida's Insurance Crisis Might Not Be as Bad as Everyone Thinks

The cost of homeowner insurance has skyrocketed in Florida over the past few years as the state faces an ongoing crisis due to excessive litigation, widespread fraud and the risks posed by climate change. However, the burden on homeowners might be a little lighter than experts initially thought.

Last year, the Insurance Information Institute (Triple-I) estimated that Florida homeowners were paying an average annual premium of $6,000—the highest in the nation. Recently, Triple-I revised this number, saying that average premiums paid by Florida consumers last year were 80 percent less than initially estimated for an average statewide premium of $3,340.

According to Triple-I director Mark Friedlander, "the significant difference was due to the positive impacts of legislative reform that addressed rampant legal system abuse and claim fraud that led to the state's risk crisis."

More From Newsweek Vault: How Much Is My House Worth? How to Determine Your Home's Value

These reforms were not anticipated when Triple-I's premium estimate was made, Friedlander told Newsweek.

"It's important to note that all premium estimates are based on the best information available at the time, and actual results may differ due to changes in market conditions. It's also important to note that premium averages quoted by consumer comparison outlets are not based on actual premiums paid by policyholders," he said.

It's not only thanks to the legislative reforms that some pressure has been lifted off the Florida property insurance sector.

More From Newsweek Vault: How to Increase Your Home's Value

"Triple-I indicated that other market improvements this year include eight new carriers being approved to write property insurance in the state, nine insurers filing for rate decreases and 10 filing for no increase," Friedlander said.

"Year-to-date, rate filings are showing an average statewide increase of under 2 percent, the lowest average premium increase in the U.S."

Citizens Property Insurance Corporation, Florida's insurer of last resort currently holding the biggest share of homeowner policies in the state, has successfully depopulated nearly 400,000 customers to the private market since last October, according to Friedlander. The insurer now counts about 1.2 million customers.

"This is another indication of an improving market, as private insurers have capacity to take on more risk," Friedlander said. "The depopulation program will be put on hold during the peak of hurricane season but will resume in the fourth quarter."

While concerns have been raised over Citizens' ability to pay claims should a major hurricane hit Florida this season, experts told Newsweek that the insurer of last resort is in a solid position to take a hit this year.

Overall, Friedlander said, the Florida property insurance market is stabilizing and is in a better financial position than it has been in nearly a decade.

"In the first quarter of 2024, the industry posted a net income profit of nearly $266 million and a net underwriting gain of almost $160 million. The Florida industry has not generated a profitable underwriting result since 2015," he said.

"Florida residential insurers have adequate reinsurance coverage for the 2024 Atlantic hurricane season, which ensures they will not deplete their reserves to pay storm claims."

Despite what could be progress, Florida homeowners are still paying some of the highest insurance premiums in the country. According to Bankrate, the average cost of homeowners insurance in the Sunshine State is $5,533 per year for a $300,000 dwelling coverage policy—about 148 percent more than the national average premium of $2,230 per year for the same amount of coverage.