How Florida avoided California insurance fair and why it has to remain the course

A few years ago, the Florida insurance market was about to collapse. The homeowners stood up to the height of the premiums, the insurers went bankrupt or fled from the state, and the citizens, the state -supported insurer of the last resolutions, grew at a non -sustainable pace. The problem was not a hurrican or bad luck – it was a broken legal system that incorporated fraud and endless complaints, threatening home ownership and the broader economy.

In a rare moment of political clarity, the legislators acted in Florida. Between 2019 and 2022 you carried out comprehensive reforms to stabilize the market. They accepted the court hearings, reduced predatory complaints and eliminated disposable lawyers that Florida had transformed into the country's lawsuit. The result? The insurance market began to recover.

But now some want to roll back these reforms. That would be a mistake. If Florida needs a warning story, it shouldn't look more than California.

California has buried its insurance market for years under regulatory classes, which make it almost impossible for insurers to operate sustainably. The state prohibits insurers the use of the predictive displacement, which means that they are based on outdated historical data instead of increasing risks of forest fire. The process for interest permits can take years and force companies to either write guidelines with loss or to completely leave the market. Many have selected the latter.

The result? The insurers leave California and leave homeowners fewer opportunities and higher premiums. Hundreds of thousands of policyholder were forced to the California Fair Plan, the state insurer of the last decisions, which was never designed for this demand. When the private market shrinks, the load on the fair plan grows and increases even higher.

California is not just about regulation. The state faces rising forest fire risks and increasing renovation costs, which makes house insurance more expensive. Instead of adapting, California has doubled outdated guidelines that make it even more difficult for insurers to operate. That is why well -established insurers such as State Farm and All State have stopped writing new guidelines in the state.

This is not consumer protection. It is a course of the state's insurance system, which is due to guidelines that ignore economic reality.

In contrast, Florida spent years to dig out of an insurance crisis. In 2022, only 16,000 guidelines switched from the citizens back to the private market. This number had increased to 477,000 by 2024 – an increase of almost 3,000%. The submission of insurance laws have dropped by almost 70%, which reduces one of the largest cost drivers of higher premiums.

These reforms not only happened. They needed political courage and stood firm interests that benefited from the old system. But now the same interests want to handle these guidelines and claim that they have gone too far. If you are successful, Florida will be right where it started.

There is another piece of the puzzle that often remains unnoticed: reinsurance. Florida insurers rely on reinsurance – essentially the insurance company for insurance companies – in order to spread the risk of severe storms. Most of this reinsurance comes from global markets on which investors constantly evaluate the risk. These companies are not charity organizations; You will increase interest rates if you believe that Florida's legal and regulatory environment will be unstable again.

Since the reforms of Florida, the reinsurers have reacted positively and offered the basic insurers more affordable coverage. But if the political decision -makers reverse the course, this would send a clear signal to reinsurance that Florida would return to its old paths – and involve an excuse for increasing interest rates. These costs would be passed on directly to homeowners.

Either Florida remains captured on the guidelines that stabilize the market, or it follows the path of California into the crisis. The state must avoid over -regulation that releases the insurers and forces homeowners in state -supported reporting. A flourishing market requires competition, stability and predictability, no artificial price controls that distort incentives.

Legislators in Florida have taken brave measures to repair the insurance crisis. Now you have to have the discipline to keep the course. The reforms work. The system stabilizes. The swing is real. The worst thing that Florida could do is to throw everything away.

Jeff Brandes is a former senator of the state of Florida and founder and president of the Florida Policy Project.