Giving an idea of the scale of the challenges faced by Florida’s property insurance marketplace, U.S.property casualty insurer, Heritage Insurance Holdings, Inc.has said that it is halting writing homeowners business in some counties as it awaits “meaningful and necessary legislative changes.”Heritage has actually implied that the legislative reforms announced in the recent special session of the Florida Senate are not considered as likely to be sufficiently effective on their own, a view held by many across the insurance and reinsurance market.

While the Florida lawmakers did implement some much-needed legislative change, and far too late to make a meaningful difference in anything less than 12 months from their enactment.As a result and as we’ve been reporting, .Even the CEO of Florida Citizens said recently that the litigation related actions of the special session legislation will take 12 months to 18 months to really know how effective it has been.

With legal challenges now facing the special session legislative change, it’s not even certain it will be implemented.While Heritage has been expanding through its super-regional platform expansion, the insurer remains focused on Florida, given the insurer hails from the state.But Heritage’s confidence in Florida’s property insurance market has waned considerably and now it’s clear the insurer has next to no confidence in the recent reforms to make the differences that are clearly needed there.

Heritage said the other day that it has “proactively suspended the offering of new personal residential policies in various counties in Florida, effective June 3, 2022.” The insurer said one reason for this is so it can evaluate “the impact of recent legislation on the homeowner’s insurance marketplace.” But it’s also because Heritage “awaits other meaningful and necessary legislative changes in Florida.” Which suggests the insurer is anticipating more legislative action will come in due course, but with the next Senate session only due in May 2023, there could be a long time to wait and there are no guarantees any meaningful reforms are enacted then.There have been attempts to reform Florida’s property insurance market each year for the last four at least, with bills brought through the legislature, but often failing to gain the support or final hearing needed in the Senate.Having enacted some reforms this year, there is likely to be pressure from some lawmakers to hold off on enacting additional property insurance reform until it is seen whether the recent changes have the desired effect.

That could make pushing additional reforms through the legislature even more challenging in 2023.All of which suggests that if Heritage intends to sit it out of certain Florida counties until what it deems necessary and adequate reforms are enacted, the insurer could be waiting more than a year for that to be the case.Heritage said that it “anticipates that the suspension will be temporary”, insisting that it is “dedicated to the Florida market.” But also added that it will “continue to evaluate options and the overall strategy in Florida which could entail additional suspensions or openings.” For the broader insurance, reinsurance and of course insurance-linked securities (ILS) market, Heritage’s comments are worth highlighting, as they suggest a lack of confidence in the outcome of the recent special session and its reforms, as well as a nervousness over continuing litigation related issues in Florida’s property insurance market.

That should perhaps be taken as a caution for the rest of the reinsurance and ILS market, that loss amplification trends may persist this year and perhaps into the future, absent really meaningful reform being passed...

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