Travelers still won’t touch Florida, sees further reform needs

Conditions on the Florida homeowners market have improved since the enactment of tort reforms, but the market is still “not in balance” enough for US carrier Travelers to consider reheating its approach to the jurisdiction, top company officials have said. 

“While we do see those signs of improvement, we haven’t seen enough change to cause us to change our perspective on wanting to reopen for new business and property in Florida,” Travelers chief of personal insurance Michael Klein told his company's Q1 earnings call. 

Improvement in Florida has chiefly meant a reduction in litigation following tort reforms passed in late 2022. The major lingering issue for Travelers appears to be state's cat-risk profile and the add-on costs Florida can put in place to cover major events. 

“One of the things, frankly, in Florida that remains a significant concern is the potential assigned risk obligation in the event of a significant catastrophe,” Klein said of what he calls “still a highly cat-exposed geography,” he said, a presumed reference to the assessment rights of state-backed players like the residual market carrier Citizens or the reinsurance pool FHCF.

Those costs could be tilting the market in favour of E&S players over the admitted market players, comments suggested. 

The upshot:  Florida remains “still a place where we think the risk-reward is not in balance,” the Traveler's  transcript to the Q1 call showed. 

Key legislation enacted in December 2022 eliminated assignment of benefits clauses for lawsuits as well as the one-way attorney fee provisions that protected plaintiffs from legal fees. 

Critics of Florida's more liberal prior regime had argued that contractors armed with AOB agreements and backed by an army of lawyers had too much leverage. That left  Florida with an overwhelming majority of the nation’s lawsuits, some 76% the state's insurance regulatory office had admitted, on a small 7% minority of the nation’s claims.

State insurance regulators have already begun to show faith. “There are emerging signals that the reforms signed into law are having a positive impact on Florida’s property insurance market,” authors of a report from the state's insurance regulatory office OIR had previously said of trends visible in 2023.

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