Florida Has The Worst Insurance Market In The U.S.— It's No Coincidence They Have GOP Governance

Alan Grayson & Ben Braver On What To Do About It

Insurance should be dull, but in Florida it’s a major issue this year because of sky-high premiums, limited availability of coverage and instability within the market— all three due to the worsening Climate Crisis that Florida Republicans are responding to… ostrich-like. Several insurance companies have exited the Florida market or become insolvent due to the challenging conditions, reducing competition and leaving even fewer options for consumers, which always means higher prices.

In other words, Florida homeowners and businesses are facing some of the highest insurance premiums in the country and plenty of then are struggling to afford the rising costs in the context of a screwed up state regulatory system. Floridians are very aware that when the next disaster hits, people with insufficient insurance coverage will face out-of-pocket expenses so financially overbearing that they could lead to financial ruin. On top that that, the market instability is affecting property values as savvy potential buyers factor in the high costs and the very real risk of being unable to secure adequate coverage. The reliance on reinsurance in Florida is higher compared to many other states because of the need to cover catastrophic risks. This reliance drives up costs significantly due to the high price of reinsurance.

Florida has a higher incidence of insurance fraud— and litigation— compared to normal states. Lawsuits and fraudulent claims, particularly involving the Assignment of Benefits (AOB) system, have driven up costs. While other states also face fraud and litigation, the extent and impact are less pronounced. This has helped turn the Citizens Property Insurance Corporation, the state-run insurer of last resort in Florida, into one of the largest insurers in the state. 

There’s no question that Republican governance— DeSantis and the GOP controlled state legislature— has been part of the problem. Their ideologically and bribe-driven deregulatory mania favoring the insurance industry is at the rapt of the problem. By not enforcing stricter regulations and oversight, they allowed practices that benefit insurers at the expense of consumers. That’s what happens when you vote for Republicans. Try to remember that. Also, a more aggressive crackdown on fraudulent practices would have mitigated some of the market issues, although Florida was too busy banning books, woke-ism, trans-kids, Climate Change discussions and Mickey Mouse to bother. 

DeSantis and his cronies’ Climate Crisis denial and lack of substantial action to address it, exacerbates the natural disaster risks that are central to the state’s insurance crisis. By not investing in climate resilience and mitigation, the Republicans have failed to address the root causes of increasing claims. Once again— and I can’t say it too often—the heavy influence of donations from the insurance industry to Republican politicians, especially DeSantis, has led to policies that prioritize corporate profits over consumer protection, including resisting regulations that would protect consumers and holding back on measures that could stabilize the market at the expense of industry profits.

The meagre reforms that have passed the legislature have not gone far enough to protect consumers from skyrocketing premiums and insufficient coverage. More robust regulation and enforcement are necessary to create a fairer and more stable market.

I asked two top candidates for state Senate, Alan Grayson (Osceola County) and Ben Braver (part of Hillsborough and Pasco counties) about what they plan to do about this problem that’s plaguing the state. Grayson offered 3 practical actions to reduce home insurance costs:

• Extend National Flood Insurance to wind and hurricane damage— as he tried doing in Congress— thereby lowering premiums by spreading risk more broadly and utilizing the federal government's capacity to manage large-scale risks.   Federalizing this risk, would mitigate the profit-driven motives of private insurers that lead to higher premiums and reduced coverage.

• Adopt Rep. Moskowitz’s proposals to require reinsurers to cover only 50-year threats, not 130-year threats, reducing reinsurance costs by limiting coverage to more frequent but less severe events, thereby lowering the overall risk profile and cost for primary insurers and, consequently, for consumers. As far as I understand, it’s a way to make the insurance market more efficient and responsive to actual risk patterns, rather than inflating costs based on extreme worst-case scenarios. However, it would be crucial to ensure that any savings are passed on to consumers and that adequate protections remain for those facing catastrophic losses.

• Reduce the cost of state home insurance (Citizens Property Insurance, in Florida), which would provide immediate relief to many Floridians who rely on this state-run insurer as a last resort. Obviously, it could make home insurance more affordable and accessible. Ensuring that the state-run insurer remains solvent while providing affordable coverage is crucial. This could involve increased state investment and stricter regulations to prevent market abuse and fraud, so it’s going to be tough to persuade enough Republicans to buy into the pan— but not impossible.

Grayson's ideas emphasize increased government intervention and oversight to protect consumers and ensure equitable access to essential services, a hallmark of his years in office and why voters in Osceola County sent him to Congress thtree times. 

Ben Braver wrote that “Florida's insurance market is in crisis for the same reason every financial market falls into crisis.

1. Greed & Mismanagement: 10 different insurance companies failed in Florida since 2019 in part due to overhead and improper investment. We can restore the Office of Insurance Regulation and actually fix the 18 companies currently in danger and under review. 

2. Speculatory Secondary Markets: Reinsurance companies insure the insurers, buying up the risk/liabilities insurance companies hold. This is similar to how larger banks would buy the debt smaller banks held leading up to 2008, except here the insurers are legally required to over extend their holdings into this system. We must lower the minimum holding requirements that reInsurance Lobbyists have placed on the insurance companies. 

3. Abandoning the Foundation: These companies are literally abandoning their foundations of what their wealth is built on, the foundations of the homes. In 2008 too many homes defaulted so their mortgages became losses. Now too many homes are collapsing so their insurance claims became losses. This is what causes speculative markets to fail, when investment only goes to the product's shadow, not to the product. We must upgrade our building codes to withstand the stronger, more frequent disasters so neither our homes nor our markets will collapse. 

4. Poor Planning: Our cities are unplanned and unable to withstand a crisis. With an extreme over-reliance on single family homes our state also has to build and rebuild ridiculously expensive sewer, water, electrical, and road infrastructure every crisis. Denser, more climate resilient cities will lower the liability insurers face and lower the premiums we pay. The problems we face are not new, they are just the new iteration of the elite using financial markets to prey on working people."

Basically, Braver is emphasizing a classic progressive approach: accountability for corporate mismanagement, reforms to financial practices, climate resilience, and sustainable urban planning. He’s aiming to address systemic issues in the insurance market while advocating for policies that prioritize public interest, environmental sustainability, and community resilience over corporate profits and speculative market practices. Implementing these proposals would require many more state legislators like him and Grayson— literally the only way to achieve a fairer and more stable insurance market in Florida. Grayson faces a tough primary against garden variety Democrats running on identyu politics and Braver faces a reactionary Republican incumbent who has no intention of doing anything to ever help anyone who isn’t writing his campaign checks. If you’d like to help Grayson and Braver, you can do it here on our state legislative page or here on a page dedicated to Florida races up and down the ballot. There are reasons the big insurance executives don’t contribute to their campaigns— and you just read those reasons.