In May, Governor Ron DeSantis signed Senate Bill 2D, a piece of legislation that was designed to provide some relief from rising insurance costs and premiums for Florida residents. The bill created a $2 billion reinsurance fund, funded by taxpayers, which insurers could tap into in order to purchase “reinsurance” – the insurance that insurance companies purchase to pay out claims if there is a severe storm and they lack the cash on-hand to pay for those claims. Thus far, over fifty insurers have submitted applications to tap into the reinsurance fund.

The reinsurance fund was created in order to prevent rate hikes from insurers, as they ideally would not need to raise rates in order to purchase reinsurance. In reality, however, Floridians are seeing the opposite. As insurers seek to purchase reinsurance through the state’s reinsurance fund, they are simultaneously raising their rates. This means that many Floridians will see higher premiums, not lower ones. To make matters worse, thousands of Florida policyholders have had their coverage cancelled altogether in recent years, leaving them to contend with Citizens Property Insurance, the state-run insurer of last resort -which has become increasingly expensive, just as every other insurer.

Homeowners in Florida are already paying some of the highest insurance rates in the country. Florida households pay, on average, three times the nationwide average for insurance. For many families in the state, these costs are simply too much to bear. As such, many policymakers and citizens are understandably disappointed in the reinsurance bill’s failure to protect homeowners from being forced to pay even more for their coverage.

That said, there were a number of factors that led to the failure of the reinsurance bill to protect the state’s homeowners. The primary cause of Florida’s current insurance rates stems from the reinsurance companies. The vast majority of Florida insurers use reinsurers to cover the excess costs of payouts due to hurricanes and other natural disasters. In recent decades, reinsurers have demanded ever-increasing premiums in exchange for providing insurance coverage to Florida’s carriers. As a result, insurers have decided to pass along this increased cost to insured customers in the form of higher premiums. While the $2 billion reinsurance fund covered some of these costs for insurers, the legislation did not create any obligation for insurers to lower rates or limit increases in premium prices. As such, insurers are still raising rates – while receiving money from the fund to cover costs of reinsurance.We hope to see legislators and regulators work together to address the challenges facing the Florida insurance market. More and more homeowners are forced to turn to Citizens insurance, and the insurer of last resort is expected to reach 1.2 million policies before the end of the year. In the meantime, we will continue to work on behalf of our clients to hold insurance companies accountable and protect Florida families. Contact Honest Lion Adjusting today for an experienced team of adjusters that will help you get the most out of your policy.