Florida’s property insurance market remains in a state of perpetual crisis. For those of us paying attention, this isn't new – it's a frustrating rerun. Back in 2009, then-CFO Alex Sink bravely called out the misleading "spin" surrounding the private insurance market. We saved that editorial because it’s still painfully relevant today.

Fast forward to May 2025, and the spin machine is running hotter than ever. Despite headlines touting "stability" and "reform," many of the same dangers are still lurking, and this time, they’re even harder to spot. With hurricane season starting June 1st, policyholders need to see past the noise and understand what's truly at stake.

House Bill 1549: A Dangerous Step Backward?

If Governor DeSantis signs House Bill 1549, a key consumer protection disappears. As of July 1^st, insurance agents will no longer be required to make a “diligent effort” to find coverage in Florida’s regulated (admitted) insurance market before turning policyholders to unregulated surplus lines carriers. Yes, surplus lines carriers exist and play an important role filling gaps for hard-to-place risks, but for consumers, they come with significant trade-offs.

Let’s ask the obvious questions this proposed reform raises:

• Why would we remove a "diligent effort" requirement if Florida's admitted insurance market is truly robust and healthy?
• If the market were genuinely stable, why make it easier for unregulated carriers to dominate?
• Why aren't lawmakers aggressively investigating why regulated carriers charge exorbitant premiums, while their unregulated counterparts offer seemingly "bargain" prices for high-hazard risks? This disparity is a glaring red flag. Allowing unregulated carriers to expand their footprint when regulated insurers are being fined for mismanagement makes no sense for consumer protection.

The Fine Print Just Got Riskier Than Ever

Akin to Citizens' “depopulation” program, House Bill 1549 introduces the “Eligibility for Export” rule. If you're buying coverage from a surplus lines carrier, get ready to sign away your rights. The bill demands you acknowledge a disclosure stating:

"You are agreeing to place coverage in the surplus lines market. Coverage may be available in the admitted market. Persons insured by surplus lines carriers are not protected under the Florida Insurance Guaranty Act with respect to any right of recovery for the obligation of an insolvent unlicensed insurer. Additionally, surplus lines insurers’ policy rates and forms are not approved by any Florida regulatory agency.”

Think about that: Instead of an agent actively making a "diligent effort" to secure admitted market coverage, the onus is now on you, the unsuspecting policyholder. You're being pushed away from healthy, highly regulated admitted market carriers towards some newer, unregulated surplus lines options. By signing this disclosure, you're presumed to be informed and to understand that doing so severely limits your protections under Florida's insurance laws. This is not consumer protection; it's a profound abandonment of it.

And here's another kicker: Despite this explicit disclosure, which is essentially a waiver of FIGA protection, you, the policyholder, are still being charged hundreds of dollars in various fees and assessments, including contributions to FIGA itself. Let that sink in: Florida policyholders will be forced to pay into a guaranty fund that offers them no protection whatsoever. What a racket.

The "Reciprocal" Rush: Too Good to Be True?

It's truly ironic. After all the legislative efforts to curb plaintiff attorneys, we're now seeing a surge of reciprocal insurance exchanges, often championed by capital groups, risk management firms, and the crucial element: an "attorney-in-fact." This attorney-in-fact is jointly owned by the financial sponsor and holds significant decision-making power over how funds flow into and out of the reciprocal's "pot."

While "reciprocals" as a concept are nothing new, their newer model policies are aggressively entering the market, dangling enticing premiums—promising savings of up to 60% compared to traditional carriers. Sounds like a win, doesn't it? Not so fast.

Many of these seemingly budget-friendly policies come with limitations that don't necessarily guarantee the coverage they promise. This is especially true for those offered on a non-admitted basis. Here are some critical aspects of these reciprocal policies to understand:

• Assessable Policies: Be warned that some reciprocals offer "assessable" policies. This means you, as the subscriber, could be charged additional premiums if the reciprocal's operating expenses are higher than expected or if losses exceed projections. Some thinly capitalized reciprocals may also demand a surplus contribution equal to 10% of your annual premium, on top of your regular payments.
• Bare-Bones Coverage and Tight Restrictions: Reciprocal exchanges often provide very limited coverage compared to traditional insurers. You might find significant caps on emergency expenses (e.g., $3,000 for services and tarping reimbursement), strict Actual Cash Value (ACV) clauses, co-insurance clauses, and pre-existing damage exclusions. Furthermore, reimbursement may be tied to work being performed and expenses incurred, or paid directly to a licensed contractor chosen by the reciprocal network or possibly you, as repairs are made after you've incurred the costs.
• Heightened Burden of Proof: These policies often place a heavier burden on the policyholder. You'll likely be required to comply with more stringent duties after a loss, post-loss conditions, and prove every aspect of the claim in strict accordance with the policy. This seems straightforward, but the policy is much more robust, and any deviation could jeopardize your claim.
• Fiduciary Responsibility (For Them, Not Necessarily You): Any affiliate handling funds on behalf of the reciprocal is mandated to hold those funds in a fiduciary capacity in trust accounts. This is designed to safeguard funds for claims and obligations of the reciprocal, but it doesn't necessarily extend the same level of financial protection or recourse to you as the policyholder subscriber.
• Mandatory Managed Repair Programs: Many reciprocals dictate who fixes your home after a storm, often steering you to their pre-approved contractors, potentially limiting your choices.
• Post-Storm Assessments & Shared Risk: Beyond standard premiums, you might face additional "post-storm assessments" to cover insurer shortfalls. This shared financial risk means you also share the financial liability of every other subscriber. If other members file a large number of claims in a given year, you could be on the hook for higher premiums or additional fees.
• Reliance on Reinsurance: Some thinly capitalized reciprocals may need to wait for reinsurance payouts before they have sufficient funds to pay your claim, potentially causing significant delays.
• Limited Recourse and Fees: The Attorney-in-fact reciprocal agreements can severely limit your recourse if your claim is unfairly denied. Unfortunately, there have already been formal complaints filed against several newer reciprocal companies that just entered Florida’s market.

With so much at stake, opting for a reciprocal insurance company with a proven, long-standing history is undoubtedly the safer path. Do not let low premiums blind you to the underlying risks. It is crucial to investigate each company's A.M. Best ratings to assess their financial stability and their track record of actually paying claims. Remember, these entities are fundamentally "playing with other people's money." Given all these hidden perils, does their promise of "savings" still seem like a good deal?

"Stabilized Market"—Or Just Clever Spin?

Florida’s "reimagined" insurance model might generate positive headlines, but on the ground, the reality for homeowners is a dramatic increase in risk. A lower initial premium might seem appealing, but it often comes at the severe cost of significantly eroded coverage, limited protection, vastly increased exclusions, and severely limited policyholder rights. With hurricane season literally just weeks away, the true, devastating cost of these seemingly "affordable" policies could be realized far too soon.

This grim reality is playing out right now, in the wake of historic reforms where policyholder rights have been stripped, yet complaints and unjust claim denials have soared to near-record levels. Look no further than the policyholders affected by recent events like Hurricane Milton, some facing surprise assessments while being forced to foot the bill for repairs they genuinely assumed were covered. What a "bargain!"  Let us know what you think!