The conventional Florida insurance story is that the market is “stressed” or “in crisis” and that reforms are coming. The accurate version is that the private market has effectively collapsed, the state-run insurer is now the largest in Florida, and the only thing holding the system together is a willingness to keep pretending otherwise. Florida hasn’t admitted its insurance market is dead because admitting it would cascade into the housing market, which would cascade into the property tax base, which would cascade into the state budget.
The insurers haven’t just raised rates — they’ve left
Between 2017 and 2024, more than a dozen private homeowners insurers either went insolvent or stopped writing new policies in Florida. Major national carriers — Farmers, Bankers, AAA — withdrew from significant portions of the state. The remaining private market is a thin layer of small carriers, many capitalized just enough to clear regulatory minimums, that are effectively one bad hurricane season from following.
The replacement of choice for displaced homeowners is Citizens Property Insurance, the state-created insurer of last resort. Citizens now insures over a million policies and is the largest property insurer in the state. By design, it was supposed to be a backstop. By function, it’s the market.
Premiums have stopped reflecting risk
When a market is functioning, premiums move with risk. Insurers price each home based on flood zone, construction, roof age, and wind exposure. Florida’s premiums move with politics. Citizens’ rates are capped by statute. Private rates have spiked but remain below what catastrophe modeling suggests they should be in the highest-risk coastal counties. Reinsurance — the layer of capital that pays claims after a major event — has become so expensive that some primary insurers can’t get it at any price.
The result is a system in which a homeowner in Marco Island pays a premium that doesn’t reflect the actual probability of losing the home, supported by reinsurance that may not be there when needed, backed ultimately by a state assessment mechanism that would impose costs on every Floridian after a major loss.
The day the bill comes due
The structural test for Florida’s system is a major hurricane that produces $80 billion or more in insured losses — a category of event that climate models suggest is increasingly likely. Citizens’ surplus would be wiped out. Private insurers would default. The state would impose post-event assessments on policyholders to fund claims, a mechanism that has been used after past storms but never at the scale a true mega-catastrophe would require.
At that point the political pretense ends. Either federal money flows in, or claims go unpaid, or the state restructures the insurance system under emergency authority. None of those outcomes resemble a functioning market.
The bottom line
Florida’s housing market is built on insurance that already doesn’t work, supported by a state entity that wasn’t designed to be the primary insurer, reinsured by capital that’s getting more expensive every year. The market is not stressed. It’s already gone. The only question is when the state stops pretending and what comes next.
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