Florida Property Insurance Companies Experiencing Financial Trouble

In a recent Florida Senate Banking and Insurance Committee meeting, Barry Gilway, the CEO of Citizens Property Insurance Co. informed lawmakers that it is not just a few Florida property insurance companies that are experiencing financial trouble, but the majority of insurers in the state. According to Gilway, almost every insurance carrier in the state is losing money in 2021 and he expects that trend to continue in 2022. 

“It is an absolute sea of red ink across the industry,” Barry Gilway said at the meeting. “This is not one or two companies that are having problems in the marketplace,” he continued. “This is virtually every single company experiencing negative net income – and a direct hit to surplus.”

Gilway pointed out that roughly 52 insurance companies control about 79 percent of the homeowners insurance market in Florida. These companies write roughly $13.8 billion in premiums but only have $4 billion in surplus which can be a major issue if they end up paying out massive claims after a major storm. Gilway said that many insurers in the state are finding it difficult to obtain new capital due to all the red ink. 

When insurance companies cannot access capitol, it can force them out of business or result in a premium increase which often leads to customers fleeing to other insurers, including Citizens which is Florida’s insurer of last resort. As more homeowners move to Citizens, officials have warned that their policy level is reaching unsustainable levels. Citizen’s policy count is expected to top 1 million by the end of 2022.

The committee meeting in which Gilway spoke was held to help explore solutions to Florida’s homeowner insurance issues. According to Gilway, Citizens was set up to be an insurer of last resort and is limited by law on how much it can increase rates, currently, Citizen’s premiums are roughly half of what a private insurer would charge.

“We are in an insane position,” Gilway said at the hearing, “Here we are, supposed to be the insurer of last resort, but we’re not supposed to be there at 50 cents on the dollar of what private carriers charge.”

Industry data shows that over 90 percent of Citizen’s single-family homeowner policies are currently offered at less than what private market insurers charge. Gilway said that he is aware of no other state’s residual insurer that has rates so low and that competes with the private market.