AM Best: New carriers instilling ‘renewed confidence’ in Florida market stability

By Michael Loney

May 29 - (The Insurer) - The emergence of 13 new Florida insurers since reforms “will instill renewed confidence in market stability”, said AM Best, which also said the balance of power is shifting toward primary carriers ahead of the mid-year reinsurance renewals.

In a new report, AM Best said the Florida personal property insurance market “has entered a notable transition phase”.

“Signs of a softening property/casualty landscape are beginning to emerge, driven by an increase in competition, new participants, stabilising premiums and improving profitability,” the report said. “Most significantly, the segment reported an underwriting profit in 2024, a milestone following eight years of underwriting losses.”

Florida’s challenging market dynamics had led to nine carrier insolvencies since 2021, while several carriers also greatly reduced their exposure to Florida or ceased writing new business in the state altogether.

This had fuelled the rapid growth of state-run insurer of last resort Citizens Property Insurance Corporation.

By September 2023, Citizens’ policy count had grown over 150% since January 2021, surpassing 1.4 million policies in force.

However, the influx of capital and carrier participation since then is accelerating the depopulation of Citizens.

As of March 31, 2025, Citizens had approximately 841,470 policies in force, a 40% reduction in the 18 months since September 2023.

AM Best said that new insurers and capital entering Florida are expanding capacity and options. Several of the new entrants are participating in Citizens’ depopulation program, de-risking its exposures.

The sweeping legislative changes approved in December 2022 targeted fraud reduction and lawsuit abuse. AM Best said that these have improved the legal climate, creating a more attractive market conducive to steady improvement.

“Not only have the reforms acted as a material tailwind for longstanding participants but (they have) also improved the environment to attract new entrants, effectively increasing capacity. Additionally, the retreat of certain carriers, whether through reduced market participation or the suspension of new business, has created space for new companies to establish a foothold, further reshaping the competitive landscape,” the report said.

Nine new property casualty carriers were approved in 2023, one in 2024 and so far this year an additional three have been approved.

“While not all new carriers who received their Certificate of Authority in Florida will participate in the Citizens depopulation, the arrival and creation of new carriers show a shift in the Florida market and the positive impact that legislation has made,” the report said.

“Notably, national carriers like Progressive and State Farm have reaffirmed their commitment to Florida, further signaling renewed confidence in the market’s stability,” it added.

AM Best said that an emerging trend in the newly approved carriers is the prevalence of reciprocal exchanges, with one approved in 2023 and four in 2024.

“Regardless of the organisational structure, the emergence of 13 new insurers in the state, post-legislative reforms, and participation in the Citizens depopulation will instill renewed confidence in market stability,” the report said.

Balance of power shifting ahead of mid-year renewals

In addition, AM Best highlighted that the Florida insurance market continues to rely on reinsurance for balance sheet protection.

“While the reinsurance market has stabilised, any abrupt changes in reinsurance conditions could have an outsized effect on the market,” the report said.

AM Best compiled premium data based on active companies currently doing business in Florida property lines, excluding Citizens.

The unaffiliated ceded premiums increased for the currently active companies from $3.1 billion in 2020 to $8.7 billion in 2024, a 162% increase. AM Best said that a predominant factor in unaffiliated ceded premium is the cost of catastrophe reinsurance.

Insurers have looked to pass on significant rate increases to consumers in response to the rising reinsurance costs.

Insurance Information Institute figures show that the average Florida homeowner’s policy premium rose 102% between 2021-2023.

AM Best said this increase contributed to a 128% rise in total direct premiums written for the group, which grew from $5.8 billion to $13.3 billion over the past five years.

The report also highlighted the top 10 Florida composite companies by ceded reinsurance leverage.

The active Florida composite companies exhibit a far higher reinsurance dependency, at 519.4%, than the US personal property composite average, at 62.2%, reflecting Florida’s unique exposure to catastrophic weather events and its heightened reliance on reinsurance.

“Looking ahead to mid-year renewals, the balance of power appears to be shifting toward primary carriers,” the report said.

“Given that loss activity has been more moderate in recent years and profitability has stabilized, Florida composite companies are now in a better position to manage risk accumulation and potentially negotiate more favorable terms with reinsurers,” it continued.

First profit in almost a decade

AM Best said that the Florida personal property segment achieved collective underwriting profit for the first time in nearly a decade in 2024.

AM Best identified 45 Florida specialist insurers that predominantly underwrite personal property within the state, which does not include those that have ties to larger national carriers, as well as Citizens Property Insurance Corporation.

These Florida composite companies collectively reported an underwriting profit of $206.7 million in 2024, compared with a $174.4 million loss in 2023. They also reported a pre-tax profit of $492.3 million last year.

“While signs of market stabilisation are evident, key areas of focus moving forward will include maintaining disciplined underwriting, ensuring adequate risk-adjusted capitalization and rate adequacy, and the ability to adapt to evolving climate risk dynamics and regulatory expectations,” the report concluded.