Recent improvement in Florida’s insurance market – fostered by legislation targeting legal system abuse – is threatened by several bills proposed in the state’s 2025 legislative session.
Florida’s property insurance market has stabilized thanks to reforms introduced in 2022 and 2023 aimed at reducing excessive litigation and inflated claims. As a result of these reforms, the number of insurers writing business in the state has rebounded after a multi-year exodus. This competition has allowed policyholders to leave Citizens Property Insurance Corp. – the state-run insurer of last resort – to obtain coverage at rates that were previously unavailable.
According to the Florida Chamber of Commerce, key bills threatening policyholders’ savings include:
H.B. 451/SB 554, which would reintroduce litigation incentives;
H.B. 947/SB 1520, which would eliminate transparency requirements for medical costs in court;
H.B. 1437/SB 1840, which would reinstate attorney fee awards in auto insurance cases; and
H.B. 1551/SB 426, which would bring back attorney fees for property insurance lawsuits that were eliminated in 2022.
Before recent reforms, Florida homeowners paid premiums up to three times the national average. Since the reforms, 60 percent of the top 10 national insurers writing homeowners insurance in Florida have expanded their business over the past year, and 40 percent of all insurers operating in the state filed for rate decreases in 2024, according to Florida Insurance Commissioner Michael Yaworksy.
As Triple-I CEO Sean Kevelighan recently put it, “Citizens of the Sunshine State are now clearly seeing the benefits of a more stable and affordable insurance marketplace.”
The new legislation would reduce or even reverse that progress.
Florida’s legislative reforms to address claim fraud and legal system abuse are stabilizing the state’s property/casualty insurance market, according to the latest Triple-I Issues Brief.
Claims-related litigation has significantly declined over the past two years, and premium averages are nearly flat, with several insurers requesting rate decreases from the state’s insurance regulator. In addition, the brief says, the number of insurers writing business in the state has rebounded after a multi-year exodus. This competition from the private market has allowed policyholders to leave Citizens Property Insurance Corp. – the state-run insurer of last resort – to obtain coverage at previously unavailable rates from a much healthier private market.
According to the state’s Office of Insurance Regulation (OIR), Florida in 2022 accounted for nearly 71 percent of the nation’s homeowners claim-related litigation, despite representing only 15 percent of homeowners insurance claims. The same year – before Hurricane Ian made landfall in Florida – six insurers in the state declared insolvency, primarily due to economic pressures from legal system abuse. Based on insured losses, Ian became the second-most costly U.S. hurricane on record, due in large part to extraordinary litigation costs for disputed claims.
The Legislature responded to the growing crisis by passing several pieces of insurance reform that, among other things, eliminated one-way attorney fees and assignment of benefits (AOB) for property insurance claims and prohibited misleading legal service ads and the misuse of consumer health information for legal services.
Premium rate growth slowing
The impact of the 2022 and 2023 reforms can be seen in premium rate changes, particularly with respect to homeowners insurance. Homeowners rates in Florida grew at a much slower rate in 2024, even as rate growth remained strong nationally. Growth in personal auto insurance premium rates in Florida has slowed since the repeal of AOB and one-way attorney fees, but the trend also is consistent with nationwide experience.
“There are a lot of factors involved in insurance rates, and Florida’s property and auto markets are challenging,” Florida Governor Ron DeSantis said in February, “but…data suggests that, in 2024, Florida had the lowest average homeowners’ premium increases in the nation, and the overall market has stabilized, with 11 new companies having entered the market over the past two years.”
Among the top 10 national insurers writing homeowners insurance in Florida, 60 percent have expanded their business over the past year, and 40 percent of all insurers operating in the state filed for rate decreases in 2024, according to Florida Insurance Commissioner Michael Yaworksy.
The cost of reinsurance also continues to decrease for Florida carriers.
“In 2024, most companies paid less for reinsurance than they did in 2023,” according to the OIR website. “The average risk-adjusted cost for 2024 was -0.7 percent, a large reduction from last year’s change of 27 percent increase from the prior year.”
Reinsurance costs are factored into premium rates, so this is another reason Florida now has the lowest average rate filings in the United States in 2024, according to S&P Global Marketplace.
The Georgia Senate recently approved legislation aimed at curbing the state’s soaring litigation. Backed by Georgia Gov. Brian Kemp, Senate Bill 68 is designed to facilitate more equitable courtroom outcomes and stabilize insurance rates.
Among other provisions, the bill includes a cap on pain and suffering evidence that would reduce premises liability lawsuits, or those against owners for injuries and/or criminal conduct that occurred on their property. It also would restrict “phantom damages,” meaning plaintiffs could seek damages only in the amount actually paid for medical bills, rather than an inflated amount determined by a healthcare provider’s list prices.
Both practices have generated nuclear verdicts (awards of $10 million or more) in Georgia, contributing to the fourth-most nuclear verdicts in personal injury litigation per capita of any state from 2013 to 2022.
Another bill – SB 69 – targets third-party litigation funding, in which investors anonymously finance litigation and often delay prompt settlement in exchange for a share of larger damage awards, thereby driving up claims costs. If enacted, the bill would limit their influence over legal decisions and require third parties to register with the Department of Banking and Finance, effectively banning foreign adversaries from funding litigation.
Much of the legislation is based on a report from the office of Georgia Insurance and Safety Fire Commissioner John F. King, which revealed a steady increase in liability claims frequency and identified growing legal involvement in claims as a key driver of insurance rates.
“Georgia’s legal climate amounts to a hidden tax on families and small businesses, driving up costs and threatening our long-term future,” King said in a recent press conference, explaining that tort reform can “level the playing field in our courtrooms and help ensure Georgia’s long-term prosperity and security.”
Economic impact on Georgia
Georgia loses over 137,000 jobs annually due to excessive litigation, which further imposes an estimated $1,415 “tort tax” on each resident per year, earning the state a recurring spot on the American Tort Reform Foundation’s annual list of “judicial hellholes.” With litigation for personal auto claims at a rate more than twice that of the median state, Georgia also ranks among the least affordable states for personal auto insurance, according to research by the Insurance Research Council (IRC) – an affiliate of The Institutes, like Triple-I.
To bolster stakeholder education on the economic impacts of legal system abuse, Triple-I recently expanded its comprehensive awareness campaign in Georgia. The campaign now encompasses multiple brick-and-mortar interstate billboards in Downtown Atlanta, along with digital bus shelter billboards across the Metro Atlanta area. All billboards promote Triple-I’s microsite encouraging consumer support for reform in the state.
Though hundreds – including doctors and business owners – have galvanized behind the reforms, neither bill is without controversy. Opponents argue such legislation may not improve insurance rates and could overcorrect to favor insurance companies at the expense of policyholders.
Following reforms in 2022 and 2023, however, Florida welcomed flat or decreased insurance rates last year, as the state’s insurance market began to recover from its former status as the “poster child” for legal system abuse. Substantial rate reductions have continued into 2025, particularly for three major auto insurance carriers, according to Florida Gov. Ron Desantis’ announcement earlier this month.
While the specific policy levers may differ, Florida’s success models the potential benefits of similar legislation in other areas. Certainly, understanding and mitigating these trends is crucial to restoring Georgia’s economy.
Garnering millions of weekly users and over a billion user messages every day, the generative AI chatbot ChatGPT became one of the fastest-growing consumer applications of all time, helping to lead the charge in AI’s transformation of business operations across various industries worldwide. With generative AI’s rise, however, came a host of accuracy, security, and ethical concerns, presenting new risks that many organizations may be ill-equipped to address.
Enter Insure AI, a joint collaboration between Munich Re and Hartford Steam Boiler (HSB) that structured its first insurance product for AI performance errors in 2018. Initially covering only model developers, coverage expanded to include the potential losses from using AI models, as – though organizations might have substantial oversight in place – mistakes are inevitable.
“Even the best AI governance process cannot avoid AI risk,” said Michael Berger, head of Insure AI, in a recent Executive Exchange interview with Triple-I CEO Sean Kevelighan. “Insurance is really needed to cover this residual risk, which…can further the adoption of trustworthy, powerful, and reliable AI models.”
Speaking about his team’s experiences, Berger explained that most claims stem not from “negligence,” but from “data science-related risks, statistical risks, and random fluctuation risks, which led to an AI model making more errors than expected” – particularly in situations where “the AI model sees more difficult transactions compared to what it saw in its training and testing data.”
Such errors can underlie every AI model and are thereby the most fundamental to insure, but Insure AI is currently working with clients to develop coverage for discrimination and copyright infringement risks as well, Berger said.
Berger also discussed the insurance industry’s extensive history of disseminating technological advancements, from helping to usher in the Industrial Revolution with steam-engine insurance to insuring renewable energy projects to facilitate sustainability today. Like other tech innovations, AI is creating risks that insurers are uniquely positioned to assess and mitigate.
“This is an industry that’s been based on using data and modeling data for a very long time,” Kevelighan agreed. “At the same time, this industry is extraordinarily regulated, and the regulatory community may not be as up to speed with how insurers are using AI as they need to be.”
Though they do not currently exist in the United States on a federal level, AI regulations have already been introduced in some states, following a comprehensive AI Act enacted last year in Europe. With more legislation on the horizon, insurers must help guide these conversations to ensure that AI regulations suit the complex needs of insurance – a position Triple-I advocated for in a report with SAS, a global leader in data and AI.
“We need to make sure that we’re cultivating more literacy around [AI] for our companies and our professionals and educating our workers in terms of what benefits AI can bring,” Kevelighan said, noting that more transparent discussion around AI is crucial to “getting the regulatory and the customer communities more comfortable with how we’re using it.”
By William Nibbelin, Senior Research Actuary, Triple-I
The workers compensation insurance industry experienced its second-best underwriting result in the past 20 years in 2023, with a net combined ratio of 87, according to Triple-I’s latest Issues Brief. It was the ninth year in a row of net underwriting profit following eight years of net underwriting losses.
Combined ratio – the most common measure of insurer underwriting profitability – is calculated by dividing the sum of claim-related losses and expenses by premium. A combined ratio under 100 indicates a profit. A ratio above 100 indicates a loss. Net combined ratio and net written premium growth rates for Workers Comp are analyzed, forecasted, and reported in Triple-I quarterly members-only webinars. Workers comp has outperformed the combined property and casualty insurance industry in net combined ratio each year since 2015.
Triple-I’s brief provides research results on trends contributing to recent success in workers comp, including employment, wages, claim frequency and severity, and market competition.
Workers comp premiums declined drastically in 2020 as the onset of the COVID-19 pandemic resulted in a reduction of employment across the U.S. The 2020 annual change in employment measured by total non-farm payroll of -5.8 percent was the only negative change since 2010. Despite this decrease, the annual compound increase in total non-farm payroll from 2010 to 2023 has been a steady 1.3 percent.
Using total non-farm payroll as the basis for exposure and reported claims at 12 months from S&P Global Market Intelligence by year, workers comp frequency has been declining steadily from 2014 to 2023 at an annual compound rate of negative 5.1 percent.
Using net ultimate loss and defense and cost containment at 12 months divided by reported claims, workers comp severity has been increasing at an annual compound rate of 4.4 percent from 2014 to 2023. However, using nominal GDP as the basis of severity similar to frequency, severity has been decreasing at the opposite rate of negative 4.4 percent. This is indicative of a severity pattern influenced more by increasing inflation than underlying historical cost trends.
Heading into 2025, countless communities are still grappling with the $27 billion natural disasters that impacted the United States last year – a total driven by costly storms and severe inland flooding. Many affected residents lacked flood coverage and will rely almost exclusively on federal relief funding to recover, underscoring a widespread protection gap.
Aiming to expedite disaster recovery for riverine communities in the Mississippi River Basin, the Mississippi River Cities and Towns Initiative (MRCTI) recently announced a flood insurance pilot currently in development with Munich Re that will use parametric insurance.
Unlike traditional indemnity insurance, parametric structures cover risks without sending adjusters to evaluate post-catastrophe damages. Rather than paying for specific damages incurred, parametric policies issue agreed-upon payouts if certain conditions are met – for example, if wind speeds or rainfall measurements meet an established threshold. Speed of payment and reduced administration costs can ease the burden on both insurers and policyholders, especially as weather and climate risks become more severe and unpredictable.
Several insurers demonstrated this efficiency in the wake of last year’s hurricanes – among them climate risk-management firm Arbol, which paid out $20 million in parametric reinsurance claims within 30 days after Milton made landfall.
Coast-to-coast trends
Though the MRCTI pilot presents a novel approach to inland flooding, similar pilots are already underway along the coast. New York City developed its own parametric flood program following Superstorm Sandy to bolster the resilience of low- and moderate-income neighborhoods struggling to recover. The program received enough funding last year not only for renewal but expansion, bringing needed protection to even more vulnerable communities.
For flood-prone Isleton, Calif. – a small Sacramento County town that lacks the resources to support a police department – risk mitigation has long taken a backseat to more immediate concerns. But the city’s location in a floodplain made it the perfect candidate for California’s parametric flood pilot, backed by a two-year, $200,000 grant going into effect this year.
The emergence of these community flood solutions reflects a growing interest in parametric insurance throughout the U.S., which propelled the $18 billion value of the global parametric insurance market in 2023. From Lloyd’s first dedicated parametric syndicate to Amwins’ parametric program for golf courses, more parametric coverage options are available than ever before, particularly after numerous private carriers – emboldened by improved data analytics and modeling – expanded their parametric flood insurance business in the U.S. last year.
Take FloodFlash, a leading parametric flood insurance provider based in London. Initially limited to five states, FloodFlash became known for offering coverage beyond the National Flood Insurance Program’s (NFIP) limits and in areas traditionally unsupported by private markets. Increased broker demand motivated the company, in partnership with Munich Re, to gradually roll out coverage to all mainland states last year, ahead of active hurricane season forecasts.
New insurance startups like Ric are also lowering the cost of entry into innovative parametric-based resilience. A winner of the RISE Flood Insurance of the Future Challenge, Ric will launch later this year on the coasts with micro-policies ranging from $14 to $50 per month. The company plans to collaborate with employers to extend their policies as employee benefits, which could help raise awareness of and reduce coverage gaps.
Regulatory momentum
As parametric risk transfer continues to gain traction, regulatory uncertainty in the absence of corresponding insurance laws persists. Given that many jurisdictions have structured their legal insurance framework around traditional indemnity principles, it’s unclear how restrained insurers in some areas are to issuing payouts only for actual losses.
Determining appropriate thresholds for coverage poses another challenge. For example, following extensive devastation from Hurricane Beryl last year, a $150 million parametric catastrophe bond did not yield a payout because air pressure levels narrowly missed the predefined minimum. The ensuing backlash included an intergovernmental “examination” into insurance-linked securities broadly and sparked industry-wide debate surrounding the equity of parametric structures.
To date, only a handful of states have enacted parametric insurance legislation, though substantial movement last year suggests more regulations are on the horizon. Notably, Vermont updated its previous 2022 law permitting captive insurance companies to enter parametric contracts. Based on evidence of their utility as insurance contracts, parametric contracts are now less restricted.
New York also unanimously passed its first parametric insurance law, recognizing parametric coverage as an authorized form of personal line insurance within the state. The law further stipulates mandatory disclosures on all parametric applications that distinguish parametric insurance as less comprehensive, and therefore not a substitute for, traditional property and flood insurance.
Such regulations are a promising step forward towards refining parametric coverage and facilitating its adoption across the country, but tensions between parametric and indemnity risk structures remain largely unresolved. Navigating how parametric insurance functions alone or as part of a package including indemnity coverage will require more collective input from all industry stakeholders.
One thing is for certain: traditional risk-transfer mechanisms are no longer sufficient to address the risk crisis presented by our evolving climate. Tools like parametric insurance – paired with hazard mitigation and community resilience planning – are guiding the way forward.
Road safety efforts in Europe offer numerous examples and success stories from which U.S. jurisdictions are learning. In the latest Triple-I Executive Exchange, MAPFRE USA President and CEO Jaime Tamayo sat down with Triple-I CEO Sean Kevelighan to discuss these learnings from an insurance perspective.
“In Europe, road-related fatalities are significantly lower than in the U.S., and we wanted to get a better understanding as to why,” Tamayo said. “We brought together leading experts and policymakers from Europe and the U.S. in transportation, urban planning, public health, and technology to discuss ways in which we can improve policies, innovation, enforcement, and education around safe driving.”
Through its charitable foundation, Fundación MAPFRE, the Spain-based reinsurer is dedicated to “Vision Zero” – a movement begun in Sweden in 1997 with a goal of eliminating traffic fatalities and injury-sustaining crashes. In connection with exporting this effort to the United States, Mapfre for more than 20 years has sponsored a program for the Massachusetts Department of Transportation that consists of a fleet of vehicles that patrol main highways and thoroughfares in the state, helping stranded motorists get back on the road.
“The program has been a great success,” Tamayo said, “covering over 30 million miles of road since its inception.”
In addition to Massachusetts, Vision Zero has been taking hold in communities across the United States, including metropolitan areas such as New York City, Los Angeles, and Portland, Ore.
In Portland, several data points are helping government officials better understand how to reduce traffic fatalities and injuries, including a high percentage of pedestrian crashes occurring because of long distances between marked crossings. Portland has taken the initiative, building “a system to protect pedestrians includes frequent safe crossings, street lighting, a cultural acceptance of slower speeds and people educated about how to interact safely on the streets.”
Triple-I expects the pace of increase in average property/casualty insurance replacement costs to exceed increases in the consumer price index in 2025 and beyond as auto replacement costs rise for the first time since 2022 and CPI continues to decline.
Triple-I’s replacement cost index for personal and commercial auto tracks changes in the price of vehicles, parts, and equipment that make up the replacement costs facing insurance carriers providing collision insurance for both personal and commercial motor vehicles. These costs – which have increased by as much as 30 percent over the past five years – are expected to increase by 2.8 percent in 2025.
The index combines replacement costs data for motor vehicles by age and for parts and equipment from the CPI for All Urban Consumers. These cost drivers were chosen from a wider selection of U.S. government sources, including the Bureau of Labor Statistics, Bureau of Economic Analysis, Federal Reserve, Census Bureau, and the Departments of Labor, Transportation, and Energy.
“While we expect the economic drivers of P/C insurance performance to continue improving 2025, performance will be constrained by replacement cost increases, rising natural catastrophe losses, and geopolitical uncertainty,” said Triple-I Chief Economist Dr. Michel Léonard.
For insurers, “customer” is one word that encompasses individual policyholders, business owners, risk managers, agents and brokers, and others, all with different (often divergent) priorities. For reinsurers – whose primary customers are insurers themselves – “understanding the customer” is particularly challenging.
This was part of the motivation behind RiskScan 2024 – a collaborative survey carried out by Munich Re US and Triple-I. The survey provides a cross-market overview of top risk concerns among individuals across five key market segments: P&C insurance carriers, P&C agents and brokers, middle-market business decision makers, small business owners, and consumers. It explores not only P&C risks, but also how economic, political, and legal pressures shape risk perceptions.
“I get very excited when we have a chance to be in our customers’ shoes,” said Kerri Hamm, EVP and head of cyber underwriting, client solutions, and business development at Munich Re US, in a recent Executive Exhange interview with Triple-I CEO Sean Kevelighan. “To really understand how they feel about a broad range of issues from what are their most important risks to how they feel about the cost of insurance and the economic environment.”
Hamm discussed how more than one-third of respondents ranked economic inflation, cyber risk, and climate change as top concerns, identifying them as “increasing or resulting in rises of the cost of insurance.”
“When we really understand what our customers want, we can design a better product and think about whether the coverages we’re providing are meaningful to them,” Hamm said. “That can help us match pricing better to their expectations.”
One result that Hamm found “surprising” was that “legal system abuse” didn’t appear to be as widely accepted by respondents – apart from the insurance professionals – as driving up insurance costs. Kevelighan cited other research – including by Triple-I’s sister organization, the Insurance Research Council – that has found consumers to be aware of the growing influence of “billboard attorneys”.
Unfortunately, he said, “They don’t seem to be making the connection with how that’s affecting them. What we’re trying to do at Triple-I is to help them make that connection.”
Kevelighan talked about Triple-I’s education campaign around “the billboard effect” in Georgia. That campaign includes an actual billboard (“Trying to fight fire with fire,” he said), as well as a microsite called Stop Legal System Abuse. The campaign focuses on Georgia because the state tops the most recent list of places that the American Tort Reform Foundation calls“judicial hellholes”.
“We’re trying to help citizens in Georgia see that this is costing you,” Kevelighan said, adding that Triple-I has seen high engagement through the program with people in the state.
Reforms put in place in 2024 are a positive move toward repairing Louisiana’s insurance market, which has long suffered from excessive claims litigation and attorney involvement that drive up costs and, ultimately, premium rates.
But more work is needed, Triple-I says in its latest Issues Brief.
Research by the Insurance Research Council (IRC) – like Triple-I, an affiliate of The Institutes – shows Louisiana to be among the least affordable states for both personal auto and homeowners insurance.
In 2022, the average annual personal auto premium expenditure per vehicle in Louisiana was $1,588, which is nearly 40 percent above the national average and nearly double that of the lowest-cost Southern state of North Carolina ($840), IRC said. Louisianans also pay significantly more for homeowners coverage than the rest of the nation, with an average annual expenditure of $2,178, representing 3.81 percent of the median household income in the state – 54 percent above the national average.
Louisiana’s low average personal income relative to the rest of the nation contributes to its personal auto insurance affordability challenges, which are exacerbated by its litigation environment.
Louisiana Insurance Commissioner Tim Temple has championed a series of legislative changes that he has said will encourage insurers to return to Louisiana, especially in hurricane-prone areas.
“There are fewer companies willing to write property insurance in Louisiana, and that’s a lot of what our legislation is designed to do,” Temple said. “To help promote Louisiana and change the marketplace so that companies feel like they are going to be treated fairly.”
In June 2024, Gov. Landry signed into law S.B. 355, which puts limitations on third-party litigation funding – a practice in which investors, with no stake in claims apart from potentially lucrative settlements, fund lawsuits aimed at entities perceived as having deep pockets. Third-party litigation funding drives up claims costs and delays settlements, which end up being passed along to consumers in the form of higher premiums.
This progress was undermined when Landry vetoed H.B. 423, which would have reformed the state’s “collateral source doctrine” that allows civil juries to have access to the “sticker price” of medical bills and the amount actually paid by the insurance company.
“In addition to creating more transparency and helping lower insurance rates, this bill would have brought more fairness and balance to our civil justice system,” said Lana Venable, director of Louisiana Lawsuit Abuse Watch in a statement regarding the veto. “Lawsuit abuse does not discriminate – everyone pays the price when the resulting costs are passed down to all of us.”
Continued reforms in 2025 will be necessary to help prevent legal system abuse and promote a more competitive insurance market that leads to greater affordability for consumers, Triple-I says in its brief.
