Florida market ‘more difficult’ despite reforms, no near-term relief

The Florida market has yet to take any relief from the surge of legislator initiatives designed to and remains in need of “time and distance” to help the field of insurers past the years of losses, the chief of insurance broker  Brown & Brown has argued.

“These placements are becoming more difficult,” CEO J. Powell Brown (pictured) told his company’s second quarter earnings conference, citing a string of ongoing departures from the challenged US jurisdictions. Customers are seeing rate rise “significantly” and markets are watching business slip into the state residual carriers or the E&S market.

Customers are palpably “fatigued” on multiple years of heavy rate growth and increasingly show signs of having reached their limit on overall protection costs. Reduced limit, increased deductibles and co-insurance of select elements of their insurance towers are common stop-gap measures, he said.

Florida has “not materially improved” as of today, despite a 2022 and 2023 legislative agenda filled with insurer-friendly initiatives, chiefly designed to curb runaway tort growth. Regulators seem dedicated to improving the market. At the current juncture, further regulatory moves are not as needed as “time and distance,” CEO Brown said.

Florida insurers “have been really caught in terms of losses in the course of five or six years,” Brown reminded. “We need time and distance: let them catch a break.” Market cycles have previously had longer-term periods of reduced loss to enable recovery.

That has Brown hinging his outlook on the weather. “It depends if there’s a storm,” CEO Brown said. Asked for the mid-term outlook on property cat capacity, Brown fears sounding reductionist, but calls it as he sees it: “If we don't have a hurricane in Florida, that is a different answer than if we do have a hurricane hit Florida.”

From his talks with insurers, Brown suspects that an eventless season could render “a levelling or even a slight moderation” in property and property cat pricing in 2024, from what looks like “all-time high” in property today.

For the near-term, “we expect similar increases through the end of year,” Brown said.

The pressures may have been more visible in the second quarter than will be palpable in Q3, officials nonetheless suggested. Fatigue has been focused on cat-exposed property where Brown & Brown sees about 50% more business in Q2 than in Q3.

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