Florida regulator let 6 more firms enter state insurance market in ’23


Since the Florida Legislature approved reforms to the state’s insurance industry this year, the state Office of Insurance Regulation has given approval for six additional property and casualty insurers to enter the market, Commissioner Michael Yaworsky said Friday.

The OIR has responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets.

Yaworsky touted the accomplishments he said his office made in 2023 to promote a stable and competitive insurance market.

A pool outside a destroyed home in Fort Myers Beach Florida in August, almost a year after Hurricane Ian.

Bloomberg News

Homeowners insurance is a hot-button issue in Florida where premiums are triple the national average, according to the Insurance Information Institute, an insurance industry organization.

“This year, Gov. Ron DeSantis signed historic legislation to strengthen Florida’s property insurance market,” Yaworksy said, citing three bills in May said to strengthen consumer protections and expand the state’s home hardening and hazard mitigation programs.

He said that Condo Owners Reciprocal Exchange along with Orange Insurance ExchangeOrion180 Select Insurance Company, Orion180 Insurance Company, Mainsail Insurance Company and Tailrow Insurance Companies were approved by the OIR to function as property and casualty insurers in the state.

OIR also approved the approval of the acquisition of an existing company to expand its business.  

Yaworsky noted there was growing participation in Citizens Property Insurance Corp.’s “depopulation” program. In 2023, OIR approved requests by insurance firms to assume 650,399 policies from Citizens, an 800% increase from 2022.

Citizens is the state-created insurer of last resort, providing property insurance to customers that the private insurance market won’t cover because the high likelihood of losses makes such business uneconomical.

The depopulation program was created by the Legislature to cut the number of Citizens-insured properties by letting companies assume and transfer policies to the private market.

Ben Watkins, the state’s bond finance director, recently noted there have been three special sessions of the Legislature over the past two years that were focused on the property insurance market.

Tort reform — I can’t overstate the significance of that. It’s a huge deal,” Watkins told The Bond Buyer in December. “Because the losses were primarily because of insurance fraud. It was institutionalized litigation. And then there were the attorney fees — where lawyers were incentivized to litigate and insurers were discouraged from settling illegitimate claims.”

He noted that while reforms were taking a while to work through the system, it was starting to have an effect.

“We have state support for incentivizing companies to come in and take policies out of Citizens Property Insurance Corp., which is happening,” he said. “So we have new private capital coming into the state in the firm of new insurance companies to take policies out of Citizens because they see a more favorable litigation landscape going forward.”

On Dec. 7, Tim Cerio, Citizens president and chief executive officer, told the corporation’s Board of Governors that the insurer can pay claims as it reduced the risk of assessments on all state consumers.

Cerio said Citizens has enough reserves and the ability to acquire reinsurance to cover a 1-in-100-year storm without having to levy assessments on non-Citizens policyholders.

Hurricane Andrew was classified as a 1-in-43-year storm while Hurricane Ian was a 1-in-20- to 25-year storm.

“Citizens will always have a mechanism to pay claims,” Cerio said. “And because of recent legislative reforms, the risk of these assessments and surcharges continues to decrease.”

In 2023, Citizens depopulation program moved 223,307 policyholders over to private insurance companies that were approved by the OIR.

Since last year’s insurance reforms were signed into law, more policies have been removed through depopulation than the 176,682 removed from 2016 to 2022 combined.

Citizens revised its 2023 year-end policy count and exposure projections from 1.7 million policies with $675 billion in total exposure to 1.22 million with $551 billion in exposure. Reduced exposure lowers the risk of assessments. 

“Citizens’ mission is to provide excellent customer service to Citizens policyholders while they are with us while taking steps to return Citizens policyholders to the private market when comparable coverage is available,” Cerio said. “This will greatly reduce the threat of assessments on all Florida policyholders.”

In July, the Florida Insurance Guaranty Association tapped the municipal bond market, selling $590 million of tax-exempt fixed-rate and variable-rate bonds through the Florida Insurance Assistance Interlocal Agency to help fund claims from insolvent insurance companies in the state.

The bonds were secured by pledged emergency assessments of 1% levied on insurers by the OIR.

FIGA was last in the market more than 30 years ago to help insurance policyholders deal with the devastation left by Hurricane Andrew in 1992.

Andrew, which hit South Florida, ranked in the top five most powerful hurricanes to hit the United States. The category 5 storm caused widespread death and destruction as it passed through Homestead and Cutler Bay in Miami-Dade County.

The storm also hit Louisiana and the Bahamas. In total, Andrew destroyed 63,500 houses, damaged 124,000 and caused $27.3 billion in damage — about $57 billion in 2022 dollars — and left 65 people dead.

The next year, FIGA sold Series 1993 special insurance assessment revenue bonds through the city of Homestead under the Hurricane Andrew Covered Call Claims Assistance Program to help insurance firms pay off some of the property damage claims.

In June, S&P Global Ratings raised the issuer credit rating on the Interlocal Agency to A from A-minus.

“The upgrade reflects our view of moderate volatility in the pledged assessments, based on stability in the premium base as well as ample flexibility to raise the assessment levy, should the need arise,” said S&P credit analyst Oscar Padilla.

S&P said its stable outlook was based on the agency’s view that the assessment base, which ultimately secures the bonds, will provide ample capacity to cover debt service.

“We do not expect to raise the rating within the outlook horizon, due to the potential for significant debt and assessments from FIGA, as well as Citizens Property Insurance Corp. and Florida Hurricane Fund Corp., if multiple or severe hurricanes were to hit Florida,” S&P said.

S&P said its stable outlook was based on the agency’s view that the assessment base, which ultimately secures the bonds, will provide ample capacity to cover debt service.

“We do not expect to raise the rating within the outlook horizon, due to the potential for significant debt and assessments from FIGA, as well as Citizens Property Insurance Corp. and Florida Hurricane Fund Corp., if multiple or severe hurricanes were to hit Florida,” S&P said.

David Kotok, co-founder and chief investment officer Sarasota, Florida-headquartered Cumberland Advisors, said DeSantis’ budget proposals didn’t go far enough in addressing the state’s property insurance problems, and the risks that are driving premiums skyward.

In a December blog post, Kotok cited a letter from Senate Budget Committee chair Sheldon Whitehouse, D-R.I., noting that the Florida insurance situation appears “to have grown particularly dire.”

“The Committee is increasingly concerned about the potential economic consequences of an eventual widescale decline in property values caused by increasing exposure to climate risks and the attendant increase in insurance premiums and decrease in insurance availability,” Whitehouse’s letter said.


“Gov. DeSantis has unveiled his 2024 Florida budget proposal, which includes $431 million in property insurance relief for citizens,” Kotok wrote. “$430 million for a trillion-dollar risk? Readers: you decide. Florida homeowners and businesses: you decide, too.”

Florida is rated triple-A by Moody’s Investors Service, S&P and Fitch Ratings; all three assign stable outlooks to the state.

In 2023, Florida ranked fifth in the nation in state and local issuers who sold debt. The state and its municipalities sold $13.4 billion of bonds last year, down from 16% from $16 billion in 2022 when it ranked fourth.

Since 2019, the state has paid down almost one-quarter of its outstanding debt. The fiscal 2024-2025 budget recommends adding $455 million to the debt reduction program established by the governor last year.

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