Understanding Today’s Insurance Market
Insurance is one of several tools available for managing risk, and its cost and availability are influenced by many factors. While every state has its own insurance market, Florida has long faced unique challenges in property insurance.
Many of Florida’s current issues can be traced to Hurricane Andrew in 1992 and have since been shaped by repeated catastrophic storms, litigation abuse, fraudulent claims practices, and rising reinsurance costs. In recent years, legislative reforms have reduced litigation and encouraged additional insurers to enter or expand within the Florida market. While significant challenges remain, these changes have begun improving market stability and the availability of coverage.
Across the country, insurers are facing increasing losses from more frequent and severe weather events, including hurricanes, tornadoes, hailstorms, floods, and wildfires. At the same time, the cost to repair or rebuild damaged property continues to rise due to inflation, labor shortages, and higher material costs. Together, these trends place upward pressure on insurance premiums.
Another significant factor is social inflation, the tendency for insurance claim costs to increase faster than economic inflation because of changing legal and societal trends. Several factors contribute to social inflation:
- Nuclear verdicts: Highly publicized multi-million dollar jury awards have raised expectations for compensation, resulting in increasingly large settlements and verdicts.
- Public attitudes toward businesses: Some jurors expect businesses to anticipate and prevent virtually every possible risk, particularly when larger companies are involved.
- Aggressive litigation strategies: Extensive attorney advertising, venue selection, and third-party litigation funding have contributed to more lawsuits and higher claim costs.
While recent reforms have improved conditions in Florida, insurance markets will continue to be influenced by weather, rebuilding costs, legal trends, and global reinsurance markets. As a result, insurance premiums will continue to fluctuate over time.
Although these broader market forces are beyond any individual policyholder’s control, there are meaningful steps businesses and property owners can take to improve their insurability and better manage long-term insurance costs. Proper property maintenance, effective risk management, catastrophe mitigation measures, and regular reviews of insurance coverage can all help position an insured more favorably with insurance companies while reducing the likelihood and severity of future losses.
At Plapp Insurance Services, we believe insurance should be part of a broader risk management strategy, not simply a policy purchased at renewal. Our goal is to help clients understand their risks, identify practical ways to reduce them, and secure insurance protection that fits their individual needs.
