- Rising Property and Casualty Insurance Premiums: As climate change and extreme weather events continue to intensify, areas like California, Florida, the Gulf Coast, and Atlantic states will most likely continue to see increasing insurance premiums, especially in wildfire-prone regions like Los Angeles. Insurers will likely adjust their pricing models to reflect growing exposure, which may lead to rate adjustments to offset the rising cost of claims and the greater frequency of catastrophic events.
- Florida’s Evolving Insurance Market: The Florida property insurance market has seen some changes due to recent tort reforms. These reforms have helped reduce the frequency and severity of lawsuits, especially in the property insurance space, and are expected to stabilize the market over the coming years. In fact, the reforms have led to a decrease in claims litigation, which has in some cases contributed to improved underwriting conditions for carriers.
One notable outcome of the reforms enacted in Florida is the increased participation of insurers in the state’s “take-out” program. Through these programs, private insurers have been able to take policies out of Citizens Property Insurance Corporation, which experienced significant growth in policy count due to market instability. But that trend turned around in 2024 as Citizens’ policy count decreased by 19.5%, a clear indicator of the market’s improvement and the return of confidence in private-sector participation.
- Reinsurance Demand: While there have been improvements in Florida’s underwriting environment, the broader market continues to feel pressure from reinsurance costs, particularly in states more prone to extreme weather events like hurricanes. Going forward, reinsurers may demand higher premiums as they adjust to the long-term financial impacts of natural catastrophes, although the effect in Florida may be somewhat mitigated by the improved litigation environment and the state’s evolving market dynamics.
- Increased Use of Technology for Risk Assessment and Claims Management: Insurers will continue to invest in technology such as artificial intelligence, machine learning, Internet of Things (IoT), and big data to improve their risk models, predict weather-related events, and streamline the claims process. Remote sensing technologies, drones, and satellite imagery could be utilized more frequently to assess property damage in real time, especially in disaster-prone areas.
Additionally, more insurers may adopt telematics and IoT devices to track property conditions, helping to price premiums based on actual risk factors. This will be particularly prominent in auto insurance and certain commercial policies.
- Adaptation of Coverage Models to Address Climate-Related Risks: We expect that flood insurance and wildfire-specific coverage will become more prevalent as climate-related risks have the potential to grow. Insurers will likely look for ways to provide more affordable and accessible coverage, especially in areas where federal programs like FEMA’s flood insurance may not provide sufficient protection.
Businesses may also see more demand for environmental liability insurance, specifically in industries that contribute to or are affected by extreme weather and environmental damage.
About the Authors:
Fred E. Karlinsky, who is chair of Greenberg Traurig’s Insurance Regulatory and Transactions Practice Group, has over 30 years of experience representing insurance companies, reinsurers, and a wide array of related entities on regulatory, transactional, corporate, and governmental affairs matters. He is a recognized authority on national insurance regulatory and compliance issues. Fred is also an adjunct professor at the Florida State University College of Law, where he chairs the board of visitors.
Timothy F. Stanfield, a shareholder with the Florida Government Law & Policy Practice, represents a wide number of private and public-sector clients before the Florida legislature, cabinet, and state agencies. Tim’s practice is largely focused on regulated industries, including insurance, land use, and alcoholic beverages, including addressing ‘tied house evil’ issues. He also represents local governments, trade associations, and clients participating in Florida’s procurement process.
Christian Brito is an of counsel who focuses his practice on national insurance regulatory and compliance matters. He represents a wide variety of entities in the insurance industry, including insurers, reinsurers, managing general agencies, producers, third-party administrators, and claims companies, with regulatory, transactional, corporate, and governmental affairs matters.