How Florida's Property Insurance Crisis Began: From Hurricane Andrew to the 2022 Reforms
Florida's state-run insurer and state reinsurance fund were largely built in response to a single hurricane more than three decades ago.
Andrew shakes the market
Hurricane Andrew came ashore near Homestead as a Category 5 storm on Aug. 24, 1992, according to a Moody's retrospective. The storm killed 26 people, destroyed more than 25,000 homes and damaged at least 100,000 others, Insurance Journal reported, citing the Insurance Information Institute. A 1998 Florida Senate staff analysis put Andrew's property insurance losses in Florida at more than $15 billion, about $10 billion of it residential.
Insurance Journal says at least 16 insurers failed in 1992 and 1993; Moody's counts eight insolvencies.
Lawmakers step in
Insurers began reassessing their Florida exposure, raising fears of a mass exit, the Senate analysis says. The state responded with a 180-day moratorium, running from May 19 to Nov. 14, 1993, that barred insurers from dropping homeowners policies to shed hurricane risk. A three-year phase-out then capped nonrenewals at 5% of a company's statewide policies and 10% in any county per year.
In a 1993 special session, the Legislature also created the Florida Hurricane Catastrophe Fund, a state reinsurance program. Moody's says it filled a gap left when private reinsurance seized up.
Citizens is born
Florida already had two state-created insurers of last resort, according to a 2013 House staff analysis: the Florida Windstorm Underwriting Association, created in 1970 for wind-only coverage, and a joint underwriting association selling full policies statewide. The wind-only zone did not include Miami-Dade, Broward or Palm Beach when Andrew hit and was expanded afterward. In 2002, lawmakers merged the two into Citizens Property Insurance Corp.
The 2022 special sessions
Moody's reports five Florida insurers became insolvent in 2022, covering more than 340,000 policies. In a May special session, lawmakers passed SB 2-D, which created a $2 billion reinsurance program, changed roof coverage rules and expanded home-hardening grants, WQCS reported.
In December, legislators passed SB 2-A by votes of 27-13 in the Senate and 84-33 in the House, and Gov. Ron DeSantis signed it Dec. 16, according to NAMIC, an insurer trade group. WUSF reported the law:
Ended one-way attorney fees, which had required insurers to pay the legal bills of policyholders who won claim lawsuits.
Banned assignment of benefits for property claims.
Cut insurers' time to pay or deny claims from 90 days to 60 in most cases, and gave policyholders one year instead of two to file.
Created an extra reinsurance layer backed by $1 billion in state money.
Barred Citizens renewals for customers offered private coverage within 20% of their Citizens premium, and phased in a flood insurance requirement for Citizens customers.
How we reported this: This explainer was drafted with AI assistance from the sources linked above, and every fact was checked against those sources. See an error? Contact us and we'll correct it.
Share this story: Facebook · Threads · X · LinkedIn · WhatsApp · Email