As California faces insurer pullbacks and rising costs in wildfire-prone areas, policy changes in Florida and Texas are reshaping property insurance markets in those states, offering contrasting approaches to managing risk, regulation and insurer participation.
Florida lawmakers enacted a series of reforms in 2022 and 2023 aimed at reducing litigation and stabilizing the state’s insurance market. The measures included eliminating one-way attorney fees and restricting assignment of benefits practices, which insurers had cited as drivers of increased claims costs.
Following these changes, the Florida Office of Insurance Regulation reported increased policy movement from Citizens Property Insurance Corp., the state-backed insurer of last resort. In 2024, regulators approved 13 companies to assume more than 354,000 Citizens policies. In 2023, more than 275,000 policies were also transferred out of Citizens, reducing its exposure by more than $113 billion, according to the office.
Texas generally uses a file-and-use system for property and casualty insurance rates, meaning insurers file rates with regulators rather than waiting for prior approval in most lines. A Texas Department of Insurance policy report said the system applies to “virtually all property and casualty coverage in Texas, other than title.”
Industry analysts say regulatory structure can influence insurer participation, particularly in states facing elevated catastrophe risk.
In California, insurers must obtain approval before implementing rate changes under the prior-approval system established by Proposition 103, a framework that differs from the systems used in Florida and Texas.
These differing frameworks operate against a backdrop of heightened risk in parts of California’s insurance market. A Southern California property cited in a Wall Street Journal report on rising insurance costs is located in Agoura Hills within a Very High Fire Hazard Severity Zone and inside the burn perimeter of the 2018 Woolsey Fire, according to state mapping data. A report from Sacramento Business Daily estimated the home’s rebuild cost at approximately $3.2 million, with annual insurance premiums of about $44,000, or roughly 1.4% of replacement value.
The comparison highlights differing approaches to balancing affordability, risk and insurer participation as disaster-related losses continue to shape insurance markets nationwide.
