Florida's private home insurers turned a profit for the first time in seven years in 2023, according to an analysis by S&P Global Market Intelligence, despite the insurance crisis still unfolding in the state.
The experts' report, issued this week, shows that the group of about 50 insurers operating in Florida made $147.3 million in net income last year, thanks to "a significant swing in investment income and much improved underwriting results." In 2021 and 2022, the group reported net losses of more than $1 billion each year.
The group analyzed does not include Florida's insurer of last resort, Citizens Property Insurance Corp., which has drastically increased its number of policyholders in the past couple of years as many private insurers left the state or limited their offerings.
The Sunshine State is experiencing a crisis within its home insurance market. According to the Insurance Information Institute (Triple-I), the average Florida homeowner's insurance premium is $6,000—the highest rates in the country and a 42 percent increase compared to 2022.
The hike in premiums is due to several factors, including excessive litigation, widespread fraud and the increased risk of more severe and more frequent devastating weather events due to climate change. The increased risk of hurricanes and other natural disasters in Florida has led many private insurance companies to withdraw or limit their policies in the state, as they expect to pay more claims than they can make profits.
This has left Florida homeowners with limited options, with many forced to find coverage with state-owned Citizens—a less-than-ideal solution for the state, which would have to cover a massive number of damage claims should a catastrophe strike.
Amid the crisis, Florida's home insurers turning a profit in 2023 is surprising, but, according to the analysis by S&P Global Market Intelligence, it was essentially sheer luck.
"Florida property insurers benefited from a mild hurricane season and a meaningful increase in investment income in 2023," the experts wrote. "While the industry still recorded an underwriting loss, it was much narrower than in recent years, and there are early signs that recent legislative reforms will benefit the troubled market."
Jason Woleben of S&P Global Market Intelligence told Newsweek that Florida property insurers' yearly underwriting results are greatly impacted by the size and location of where hurricanes make landfall in the state. "A relatively mild hurricane season and a meaningful increase in investment income aided the insurers' 2023 net income results; however, underwriting results remained in the red for the eighth year in a row," he said.
In 2023, the Florida insurance industry reported collective underwriting losses of $190.8 million—faring slightly better than in 2022 and 2021, when they reported losses of almost $1.80 billion and $1.52 billion, respectively.
But Woleben believes that the results obtained by insurers in 2023 are "early signs that the regulatory reforms that went into effect in the early part of 2023 will benefit the industry in the long-term," he said.
"The state's insurer of last resort and largest underwriter, Citizens Property Insurance Corp., reported that it was served with approximately 20 percent fewer lawsuits in 2023 than in 2022 and private companies are assuming the insurer's policyholders (depopulation efforts) in larger numbers," Woleben said. "Insurers entering the market, a sign of additional capital moving in, is also a good sign for the industry."
Regulators in the state recently approved six new property insurers that are expected to start writing policies in the first quarter of the year, potentially alleviating the growing load on Citizens.
Though Woleben warned: "While there were bright spots with the 2023 results, it is still too early to say the industry has completely moved past some the structural issues the legislation was passed to address."
Are you a Florida homeowner struggling with your property coverage? Have you noticed a positive change in recent months? Tell us your experience by contacting g.carbonaro@newsweek.com.
Update 03/27/24, 5:30 a.m. ET: This article was updated to include comment from Jason Woleben of S&P Global Market Intelligence.
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Giulia Carbonaro is a Newsweek Reporter based in London, U.K. Her focus is on U.S. and European politics, global affairs ... Read more
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