Insurance is just one of several tools for managing risk, and its cost and availability vary widely across states. Florida, in particular, has long struggled with an unstable and expensive property insurance market.
The roots of Florida’s challenges trace back to Hurricane Andrew in 1992 and have since been compounded by repeated storms, litigation abuses, opportunistic actors, and soaring reinsurance costs. While recent reforms and market adjustments suggest a more positive outlook, new challenges are emerging nationwide. Across the country, property losses are climbing due to stronger storms and widespread wildfires, while repair and rebuilding costs continue to outpace general inflation.
One additional pressure on premiums is social inflation—the phenomenon where claim costs rise faster than expected because of societal and legal trends. Key drivers include:
- Normalization of large verdicts: Frequent headlines about massive settlements and jury awards have made high payouts seem routine, raising the amounts juries are willing to award.
- Public distrust of corporations: Many jurors assume companies prioritize profits over safety, expecting businesses to go above and beyond to protect customers, regardless of cost.
- Aggressive legal strategies and funding: Lawyers leverage heavy advertising, venue shopping, and third-party litigation funding, which encourages more lawsuits and higher claims.
Addressing social inflation is complex, as it requires balancing the interests of insurers, businesses, consumers, and the legal system. Progress is difficult, but there are signs of improvement. Recent tort reforms, such as curbing assignment of benefits abuse and discouraging excessive litigation, are beginning to reduce claim costs and ease pressure on insurance rates.
