Why Florida Home Insurance Rates Are Soaring: Litigation or Insurer Excuse?

The Central Question

Florida homeowners pay the highest average property insurance premiums in the country, more than 50 percent above the national average. For years, the insurance industry, state regulators, and the legislature pointed to one primary cause: excessive litigation and abuse of the legal system.

Florida passed sweeping reforms in 2022 and 2023, stripping policyholder rights and attorney fee protections in response to that narrative. Then, in early 2025, a suppressed government report surfaced, revealing that Florida insurers claimed massive losses on paper while their affiliated companies pocketed billions.

The question this article examines is the one Florida homeowners deserve an answer to: Were the soaring rates driven by real market forces, or did the industry exploit a narrative to enrich itself at policyholders’ expense?

Williams Law Association, P.A. has represented Florida property owners in insurance disputes for more than 30 years. The firm’s attorneys have watched the Florida property insurance market transform from a functioning, competitive market into a system in which insurers exit, raise premiums, deny claims in record numbers, and, now,  as documented by their own regulators, divert billions to affiliated companies while claiming financial hardship.

This article presents the full picture of what is actually driving Florida’s insurance crisis, why the litigation narrative is incomplete and in important respects false, and what the 2025 affiliate profit scandal means for the policyholders who bore the cost of the reforms it produced.

The 2022 OIR Report: What the Industry Did Not Want Known

In early 2025, investigative reporting by the Tampa Bay Times and Miami Herald produced one of the most significant disclosures in the history of Florida’s insurance regulation. A 2022 report commissioned by the Florida Office of Insurance Regulation, costing $150,000 in taxpayer funds, was completed in March of that year and never shared with the legislature or the public. It was obtained through a public records request that the OIR initially denied, claiming the report did not exist.

The report, conducted by Risk and Regulatory Consulting, LLC, examined financial relationships between Florida-based insurance companies and their corporate affiliate companies that insurers own, control, or are commonly owned with. Its findings were extraordinary.

The structural mechanism is straightforward: a Florida-licensed insurance company collects premiums from policyholders. It then pays affiliated companies with which it owns or shares ownership for management services, claims handling, information technology, reinsurance brokering, and similar functions. These fees are not subject to the same regulatory profit caps that apply to the insurer itself. Money flows from the regulated entity, where it is subject to oversight, to the unregulated affiliate, where it is not subject to oversight.

The insurer shows losses or thin margins. The affiliate shows substantial profits. From the regulator’s perspective, the insurer appears financially stressed. From an economic perspective, the corporate enterprise is doing quite well.

Doug Quinn, executive director of the American Policyholder Association, described the findings as a “smoking gun”. Birny Birnbaum, executive director of the Center for Economic Justice, called the affiliate profit figures eye-popping and questioned why regulators failed to alert lawmakers before the 2022 legislative session that produced the most significant rollback of policyholder rights in Florida history.

Florida House Speaker Daniel Perez, a Republican from Miami, ordered committee hearings in March 2025 and described the situation as a potential shell game, noting that insurers had told lawmakers they would close their doors and leave the state without reforms that, in light of the report, appear to have been extracted under false or at least misleading financial pretenses.

The Honest Answer: Multiple Causes, One Convenient Scapegoat

The litigation narrative was not fabricated out of thin air. Florida’s property insurance litigation volume was genuinely and measurably elevated before the 2022 reforms. Some AOB abuse was real and documentable. Roofing contractor solicitation schemes in which contractors approached homeowners after storms to sign over insurance benefits and then filed inflated or fabricated claims were a genuine problem that state agencies prosecuted. To deny any role for litigation abuse in the premium crisis would be as misleading as the industry’s one-sided presentation.

What the suppressed report establishes, however, is that litigation was presented as the primary cause of an insurance crisis, with additional industry-internal causes that regulators knew about but declined to share with lawmakers.

The affiliate profit-shifting arrangement did not merely supplement insurer revenue; it left regulated insurers financially weakened, reduced their reserves, contributed to insolvencies that left policyholders without coverage, and provided the financial predicate for premium-increase justifications that were materially incomplete.

Reinsurance: A Cost Insurers Cannot Fully Control

One factor that cuts genuinely in the industry’s favor is the global reinsurance market. Reinsurance costs, the price that Florida insurers pay to transfer catastrophic risk to global capital markets, are set by forces entirely outside Florida’s legislative control. Following a series of major hurricanes globally, reinsurance capacity tightened, and pricing rose significantly.

Many Florida carriers faced reinsurance cost increases of 50% or more between 2021 and 2023. Because reinsurance typically consumes a substantial portion of every premium dollar, some estimates put it at up to half, and increases of that magnitude necessarily flow through to policyholders.

This is a genuine structural cost that the affiliate narrative does not negate. A company simultaneously paying affiliate management fees at rates that raise regulatory concerns and facing 50% increases in reinsurance costs is experiencing both problems at once. The appropriate policy response distinguishes between costs that reflect legitimate market dynamics and costs that reflect the extraction of unregulated profits through related-party transactions.

Construction Costs: Real and Measurable

The cost to rebuild or repair a home after a covered loss has risen substantially since 2020, driven by pandemic-era supply chain disruptions, material price inflation, and persistent skilled labor shortages in Florida’s construction market. Material costs continued to rise into 2025, with some estimates projecting annual increases of 5 to 7 percent. Insurers must maintain premium levels sufficient to fund the actual cost of restoring damaged properties, and rising construction costs are a legitimate driver of higher premiums that affect every property insurer in every state, not just Florida.

What the Market Data Now Shows

Following the 2022 and 2023 reforms, Florida’s property insurance market has shown improvement in several measurable areas. Data from the Florida Office of Insurance Regulation indicates that personal lines insurance litigation declined by roughly 25 percent in the first half of 2025 compared to the prior year. At the same time, Citizens Property Insurance Corporation reported a 34 percent drop in new claim-related lawsuits and a 17 percent reduction in legal expenses.

There are also signs of increased market participation. Seventeen new insurers have entered Florida, suggesting renewed interest in writing policies in the state. On the financial side, reinsurance brokerage analyses indicate that 2024 marked the first year since 2016 that Florida-based property insurers, as a group, returned to profitability, despite significant losses from major storm activity.

These trends point to improved underwriting performance and reduced litigation pressure. However, whether these gains translate into sustained premium relief and improved outcomes for policyholders remains an open question.

What the Affiliate Profit Scandal Means for Florida Policyholders

For millions of Florida homeowners who faced sharp premium increases between 2020 and 2024, the key question is whether those increases were fully explained. The evidence suggests the answer is no. While storms, reinsurance costs, and construction inflation are real drivers, regulators also identified affiliate profit-shifting practices within the insurance industry that were not clearly disclosed during the legislative reform process.

These practices involved insurers transferring revenue to affiliated companies through fees and internal arrangements, raising questions about how financial losses were presented to regulators and lawmakers. As a result, reforms passed in 2022 and 2023 were not based on a complete picture of the market.

How This Affects Florida Policyholders

The impact on homeowners has been significant. Before these reforms, policyholders had a stronger path to challenge denied or underpaid claims through contingency-fee representation, supported by one-way attorney fee recovery. That framework allowed many homeowners to pursue valid claims without paying out of pocket.

With those protections largely eliminated, the economics have shifted. Fewer attorneys can take smaller or moderately sized claims, and many policyholders must now weigh the cost of litigation against the value of their loss. This has made it harder for some homeowners to challenge improper claim decisions.

At the same time, insurers have benefited from reduced litigation exposure and improved financial positioning, while policyholders face higher premiums and fewer procedural advantages.