Much has been publicized in recent months about the troubles in the Florida insurance marketplace, but very few of those stories address the reasons for the turmoil. 

To properly assess the current situation, we must first look at the past. We here in Southwest Florida are quite familiar with Hurricane Irma, which made landfall on September 10, 2017, but prior to that, the last major hurricane (defined as breaching landfall with Category 3 winds or higher) was Hurricane Dennis on July 10, 2005. That is a 12-year and 3-month gap between major storms. 

So, what happened during those 12 years? Simply put, growth. Florida’s population has grown and with that the number of homes, condominiums, commercial buildings, and developments. Growth can be good, but with growth comes increased exposure and financial commitments on the part of the insurance industry. Growth requires changes.

However, many of the Florida laws that allow contractors and attorneys to solicit claims did not change. The prevalence of assignment of benefits (AOB) related claims increased dramatically. An AOB is an agreement that transfers the insurance claims rights or benefits to a third party.

Florida also has a state law known as “one-way attorney’s fees.” The intention of this law is noble, to shield homeowners from legal fees if they want to file a lawsuit against their insurance company.

Simply put, this combination has been abused and has been a disaster for insurance companies. 

According to the National Association of Insurance Commissioners (NAIC), 76% of all claims litigated countrywide in 2019 were Florida insurance claims. This is astounding when you consider Florida accounts for only 8% of the claim activity in the country.

Unfortunately, 2019 is not an anomaly. Below is a chart from the NAIC showing just how bad the problem has been in Florida:

Year % of nationwide claims opened in Florida % of nationwide lawsuits opened in Florida
2016 7.75% 64.43%
2017 16.46% 68.07%
2018 11.85% 79.91%
2019 8.16% 76.45%


Undoubtedly, Florida’s population grows daily. But the result of this type of claims activity has led to less viable property insurance companies. Several companies have been ordered into receivership, while others have reduced their exposures by cancelling or non-renewing policies. This has created a supply and demand issue, basic economic principles at play. There is a high demand from Florida residents looking for insurance from strong, financially stable companies. In return, the remaining companies must limit the increased exposures they take on. 

Because of this, Citizen’s Property Insurance Corporation, the state-backed and tax-payer-funded insurer of last resort, recently surpassed 1 Million policies in force. As Citizen’s spokesperson recently put it, “When the market is healthy, Citizen’s gets smaller as private companies take advantage of good market conditions. When the market is challenging, we grow.” If a hurricane hits Florida, we may all feel the brunt of the hurricane tax.

At The Roe Agency, we focus on protecting tomorrow so you can live today. For more information about Insurance, contact The Roe Agency at (239)593-7333 or visit Follow The Roe Agency on Instagram, Facebook, and Linkedin for the latest tips and community resources.