Developments in Florida’s property insurance market deserve careful scrutiny based on verifiable facts. Two separate issues require attention: The narrative presented in a recent Tampa Bay Times article and the implications of proposed new laws working their way through the Legislature.

The recent Tampa Bay Times article, titled “Florida insurance companies steered money to investors while claiming losses, study says,” cites a state report that contradicts the fundamental financial realities of Florida’s insurance market.

Just a few years ago, five of Florida’s top 20 insurance carriers were publicly traded companies with transparent financial reporting. Today, only three remain after two carriers — FedNat and United Insurance — went bankrupt. This reduction alone raises questions about claims of hidden profits. These weren’t private companies with opaque finances but public corporations filing audited financial statements with the Securities and Exchange Commission under penalty of federal securities fraud.

While these are just five examples among approximately 30 homeowners insurance carriers operating in Florida, all five showed similar financial losses from 2018 to 2022, suggesting they represent the broader marketplace health. To further support this view, Demotech, the primary financial ratings agency in Florida, planned to downgrade approximately 17 carriers in 2022. Additionally, the Florida Office of Insurance Regulation issued a watch list for 27 carriers that same year. These indicators demonstrate that there is no evidence of excess profits occurring in the industry during this period.

The consolidated audited financial statements of Florida’s publicly traded insurance holding companies — for the insurance carrier and its affiliates, often called Managing General Agents — tell a clear story of financial peril:

FedNat:

• 2014: Stock price over $32, net income of $37.2 million
• 2021: Net loss of $103.1 million
• 2022: Filed for bankruptcy after losing more than $180 million

United Insurance:

• 2015: Stock price over $27, net income of $27.4 million
• 2019-2021: Accumulated losses of $182 million
• 2022: Filed for bankruptcy

Heritage Insurance:

• 2015: Stock price over $27, net income of $92.5 million
• 2021-2022: Lost more than $225 million
• 2022: Stock price collapsed to $1.36 per share
• 2024: Recovery to $12.10, net income of $61.5 million, 8.02% profit margin

Universal Insurance:

• 2018: Stock price $45
• 2022: Net loss of $22.3 million, stock price dropped to $8.57
• 2024: Recovery to $21.06, net income of $58.9 million, 4.23% profit margin

HCI Group:

• 2018: Loss of $6.9 million
• 2022: Loss of $54.6 million
• 2024: Recovery to $116.53, net income of $127 million, 18.62% profit margin

The premise that insurers were generating “billions in profits” while claiming losses is difficult to reconcile with these verified financial results. These companies collectively lost hundreds of millions of dollars during the period in question. Two went bankrupt. For the narrative to be accurate, these companies would have had to commit securities fraud on a massive scale.

The right path

The 2024 financial results indicate that Florida’s insurance market is on the right path to recovery, although it is not yet there. The journey toward market stability has begun but remains incomplete. Two of the three surviving publicly traded insurers haven’t reached profit margins considered optimal for long-term sustainability:

• Heritage’s 8.02% profit margin remains below the 10%-15% that rating agencies consider necessary for insurers in high-risk regions.
• Universal’s 4.23% profit margin is below the target range for long-term stability.
• Only HCI has achieved the profitability (18.62%) needed to weather future storms and attract capital.

After accumulating hundreds of millions in losses from 2018-2022, these companies need time to rebuild reserves. To justify risking their money in hurricane-prone Florida, investors require returns that exceed the 4.25% they can currently get from risk-free treasuries. Typically, insurance company investors need 15%-20% profits in good years to offset catastrophic losses in bad years. Even with 2024’s improvement, the five-year average return remains negative, showing our market recovery requires patience and ongoing reforms.

Real rate decreases

My agency is witnessing significant rate decreases across Florida that contradict the narrative that reforms aren’t benefiting consumers. Here are actual examples from our clients who live in different ZIP codes:

Homeowners policies:

• New Port Richey: 4.3% decrease, from $5,198 to $4,974
• St. Petersburg: 45.9% decrease, from $4,654 to $2,520
• Largo: 28.7% decrease, from $20,566 to $14,660

Condo unit policies:

• St. Petersburg: 25.2% decrease, from $1,279 to $957
• Sarasota: 52.9% decrease, from $1,754 to $825

These represent real Florida homeowners seeing substantial savings. We’re observing flat to double-digit decreases across our book of business, spanning multiple carriers and regions throughout Florida — tangible evidence that the 2022 reforms are working as intended.

Understanding two key factors provides essential context:

First, many homeowners saw premiums double since 2020 not just from rate increases but because construction costs in Florida spiked since 2019. When rebuilding costs rise so dramatically, coverage limits must increase proportionally, driving premium increases even if rates remain stable. This critical context was missing from the reporting.

Second, regarding Managing General Agents, while some companies have misused this structure, the Florida Office of Insurance Regulation approves each MGA contract and fee. With or without MGAs, carriers must spend 25-40% of premiums on operational expenses. During the crisis, affiliated companies actually returned almost $700 million to struggling insurers — hardly consistent with the narrative of systematic profit extraction.

With Florida’s insurance market finally showing signs of healing, what could potentially drive rates back up and threaten this progress? Currently, Senate Bill 426 and House Bill 1551 present a significant risk by proposing to reintroduce one-way attorney fees into property insurance litigation. This was one of the key factors that contributed to the market collapse of 2022, and its restoration could quickly undermine the stability we’re beginning to see.

The question surrounding these bills is straightforward: Who benefits? It’s noteworthy that both bills are sponsored by legislators who could personally profit from their passage. Both sponsors are associated with law firms that handle property damage cases and insurance litigation, creating a potential conflict of interest between their professional work and legislative activities.

The House staff analysis explicitly states these bills would cause insurance rates to increase, harming consumers, while benefiting law firms specializing in insurance litigation. Instead of continuing the rate decreases we’re currently witnessing, these proposals could reverse our progress and return us to the spiral of escalating premiums and market instability.

As an insurance agent paid on commission (a percentage of premiums), I’m advocating for reforms that would effectively reduce my income through lower premiums. This contrast highlights who is putting consumers first in this debate.

A misconception promoted by supporters of these bills is that more claims are being denied since the 2022 reforms. The experience at my agency, as well as feedback from other agents about the 2024 hurricane season, has been very positive from a claims perspective. There are always opportunities for improvement, but the vast majority of policyholders, including myself, were paid fairly and in a timely manner.

With Hurricane Helene, the challenge was that outside Perry, it was primarily a flood event. Homeowners’ policies exclude flood coverage. Many insureds contacted us asking to submit claims they knew would be denied specifically to qualify for Small Business Administration disaster relief loans, which require insurance denials. These context-specific “denials” were strategically sought by policyholders, not evidence of insurers becoming more restrictive.

Economics of Litigation

Since the 2022 reforms, litigation has decreased by approximately 70%, representing a significant reduction in trial lawyer revenue. Yet their advertising remains highly visible across Florida. The economic incentives are transparent: litigation-friendly policies benefit attorneys financially regardless of consumer impact.

These bills would reverse many reforms that have begun healing Florida’s insurance market, threatening benefits we’re currently seeing:

• New insurers entering Florida
• Citizens Insurance shedding hundreds of thousands of policies
• Rate decreases for many policyholders
• Financial recovery of surviving companies

If the bills pass, we can expect reinsurers to raise rates, private insurers to reduce Florida exposure and Citizens to become overloaded again — consequences borne by Florida homeowners through higher premiums, fewer options and increased financial risk.

Florida’s insurance market is finally showing signs of recovery after years of instability. The 2022 reforms have begun delivering tangible benefits to consumers through increased competition, rate decreases and a healthier overall marketplace. The House staff analysis of HB 1551 and SB 426 indicates it would increase insurance rates, potentially reversing this positive momentum. As policymakers evaluate this legislation, the primary consideration should be its impact on Florida homeowners who have weathered years of insurance challenges. Our state deserves a stable, competitive insurance market that serves the long-term interests of property owners across Florida.

Jake Holehouse is president of HH Insurance based in St. Petersburg.