Signs of a broken market include:

Over the last two years the policies of over 400,000 Floridians were dropped or non-renewed.

Fourteen companies have stopped writing new policies in Florida.

Five companies have gone belly-up in 2022 alone.

The average cost of homeowner insurance has more than doubled since 2019, from $1,988 to $4,231, which is about triple the national average.

Florida accounts for only 9 percent of the country’s home insurance claims, but 79 percent of home insurance lawsuits, many of them fraudulent.

The latest crisis in the property insurance marketplace was a threat from the ratings agency Demotech to downgrade from 17 to 27 Florida insurers.

These downgrades would have had a devastating effect on homeowners and the real estate industry as customers of these companies with mortgage loans guaranteed by Fannie Mae or Freddy Mac would have had to scramble to replace their home insurance since these organizations require homeowners to have insurance from a company with an A rating.

The state stepped in to prevent this disaster by announcing that consumer-backed Citizens Insurance would guarantee these policies. This had the effect of preventing immediate disaster for insurers, but did little to fix the long term problem of large insurers deciding the Florida property insurance marketplace as too risky. This left state residents to depend primarily on smaller companies for homeowner policies.

But with Citizens Insurance taking on even more risk, every Floridian with property insurance is taking on additional risk, since any shortfall for Citizens Insurance due to a major storm would result in assessments to every property policyholder in the state.

Clearly, this situation indicates that despite the multiple patches and short-term fixes that have been applied to the property insurance marketplace, it remains broken.

The challenge to our legislators is to come up with a long-term plan that will stabilize the market and provide a framework that is fair to policyholders and at the same time offers insurers the opportunity to earn a fair return on their investment.

The Legislature can’t reduce the risk of storms affecting the state, but it can establish rules that allow insurance companies to evaluate risk without having to consider the externalities of excessive litigation and other factors unique to the Florida insurance marketplace.