CLIMATE & DISASTER INSURANCECoughing Up Billions of Dollars to Save Florida’s Insurance Market

By Jake Bittle

Published 2 January 2023

In the three months since Hurricane Ian struck Florida, the state’s fragile property insurance market has been teetering on the brink of collapse. The historic storm caused over $50 billion in damage, and dealt a body blow to an industry that was already struggling to stay standing: Several insurance companies had already collapsed this year even before the hurricane, and major funders are now poised to abandon those that remain.

In the three months since Hurricane Ian struck Florida, the state’s fragile property insurance market has been teetering on the brink of collapse. The historic storm caused over $50 billion in damage, more than any disaster in U.S. history other than Hurricane Katrina. It also dealt a body blow to an industry that was already struggling to stay standing: Several insurance companies had already collapsed this year even before the hurricane, and major funders are now poised to abandon those that remain.

In recognition of this crisis, Florida Governor Ron DeSantis convened the state’s Republican-controlled legislature last week for a special session devoted to stabilizing the insurance market. In a matter of days, lawmakers passed a package of bills aimed at doing so. The package includes bills that will cut down on litigation and fraudulent claims that raise costs for insurers, but it also provides insurance companies with a $1 billion public subsidy to help them stay afloat next year. That’s on top of another $2 billion the legislature rolled out earlier this year.

One might think that this handout would be opposed by a legislature where Republicans enjoy supermajorities in both chambers — and by a governor who has styled himself a future leader of the Republican Party — but the state’s lawmakers don’t have many other options. DeSantis may trumpet Florida as a free-market success story, but the insurance market has all but abandoned it. 

The problem is that taxpayers will end up footing the bill for all this, even if they don’t own homes that are at significant risk — or don’t own homes at all. 

“If the state has to step in every year to help insurers stay in the market, that’s a problem, unless everyone in Florida is willing to keep paying more and more as these events occur,” said Patricia Born, an academic at Florida State University who studies risk management. DeSantis and his allies in the legislature can shift the cost burden from risky insurance customers to taxpayers or vice versa, but they can’t get rid of that burden altogether.