Florida ‘Claws’ Its Way To ‘Respectable’ Insurance Regulatory Environment Grade, R-Street Says

The downsizing of Citizens Property Insurance Corporation (“Citizens”) was credited as having greatly contributed to the State of Florida’s dramatically improved insurance regulatory environment rating by the R Street Institute in its “2017 Insurance Regulation Report Card” published yesterday, January 16, 2018.

For the fourth straight year and the fifth time in six years, Vermont was judged to have the best insurance regulatory environment in the United States, according to R Street.

Driven largely by changes made in its regulatory environment through the H.B. 80 legislative package, Delaware for the first time had the worst score in the country, just narrowly edging out North Carolina, which had placed last the previous two years.

Study author R.J. Lehmann–R Street’s director of finance, insurance and trade policy–noted among the positive trends the study has tracked is the continued contraction of the nation’s residual property insurance plans, which fell from 3.32 percent of the market in 2011 to 1.72 percent in 2016.  Most notably, Florida’s state-run Citizens saw its market share drop from 14.28 percent of the market to just 4.28 percent of the market over that span.

“The steps Florida lawmakers and regulators took to shrink Citizens allowed it to absorb an estimated 62,000 claims and $1.2 billion in insured losses from the strike of Hurricane Irma this past year without any notable impairment,” Lehmann said.  “It is in recognition of these improvements that Florida, which was the bottom-ranked state in our first report card in 2012, has clawed its way to a very respectable ‘B’ grade for 2017.”

Vermont earned the only “A+” in this year’s report card.  Other states receiving either an “A” or “A-” were Arizona, Idaho, Utah, Nevada and Wisconsin.  Delaware received an “F,” as did North Carolina, Louisiana and Massachusetts.  The biggest improvements in this year’s report card were seen in Florida, Michigan, Pennsylvania and Tennessee, while the biggest declines were seen in Delaware and New Hampshire.

“Last year saw a significant effort to liberalize rate controls for commercial insurance lines in Missouri and a successful effort to do so in Oregon,” Lehmann said.  “On the other side of the ledger is Delaware, which imposed significant new restrictions on underwriting freedom. Illinois-long among the most free-market insurance environments in the nation-was spared from the introduction of stringent controls on its workers’ compensation market only by the Legislature’s failure to overturn Governor Bruce Rauner’s veto.”

The full Report, including an explanation of the methodology behind the ratings, is available HERE.

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