USA – FLORIDA Trends and Developments Contributed by: John David Dickenson, Tiffany Bustamante and Alexandra Schultz, Cozen O’Connor
Reinsurance market developments Florida’s property insurance market is unique because it is largely composed of small-to-medium-sized domestic insurers that rely heavily on reinsurance to manage their exposure to catastrophic events like hur- ricanes. Reinsurance costs have historically made up a large portion of premiums. To use the homeowner’s example, reinsurance comprises up to 40% of the cost of a homeowners policy (see Florida Reinsurance Costs Dropped After Legislative Reforms (6 October 2025)). Florida also has a Hurricane Catastrophe Fund, or “Cat Fund”. The Cat Fund provides the initial layer of reinsurance for Florida property insurers. The remain- der of reinsurance is obtained from the private global reinsurance market. Thus, the size of the Cat Fund dictates the size of the property reinsurance market in Florida. In October 2025, the Cat Fund’s Advisory Council met and approved a plan for the 2026 hurricane season. The Fund is presently required by law to provide up to USD17 billion in claims but typically falls short of that requirement. The Fund makes up the difference by issuing bonds, which it pays for with assessments or surcharges, passed on to Florida property insurance policyholders via their carriers (see Citizens Property Insurance Corporation, Claims-Paying Capacity Esti- mates: October 23, 2025 (Florida Hurricane Catastro- phe Fund “Bonding Capacity” Report)). Recently, Florida legislative and industry players were beginning to urge the Florida Legislature to lower the Cat Fund’s retention point back to its 2010 level of USD4.5 billion (see Jeff Brandes & John Rollins, The Insurance Stability Lever the Florida Legislature For- got, Florida Politics (16 October 2025)). This, in turn, would allow insurance companies to access more, and ideally less expensive, traditional market reinsur- ance, helping further reduce property insurance rates on Floridians. Early judicial interpretation of Florida’s insurance reforms The substantive changes in the laws are still making their way through the courts. However, even at this early stage, the reforms are impacting cases, even
those involving claims and policies that incepted before the reforms. One of the most significant amendments to Florida’s bad faith laws was the addition of Section 624.155 (4) (a), which added a 90-day “safe harbour” investigation period for liability insurers. Pursuant to this section, “[a]n action for bad faith involving a liability insurance claim, including any such action brought under the common law, shall not lie if the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim which is accompanied by sufficient evidence to support the amount of the claim”. The applicability of this provision was at issue in Direct Gen. Ins. Co. v Creamer , No 3:23-CV-380-TJC-PDB, 2025 WL 2780245 (M.D. Fla. Sept. 30, 2025). There, the insured, Sean Creamer, was involved in a motor vehicle accident with Delvis Eason on 28 April 2019. Creamer was insured by an auto policy issued by Direct General Insurance Company (DGIC) with bod- ily injury liability coverage of USD10,000.00 per per- son. Eason’s fiancé reported the accident to DGIC but without any supporting documentation, and the adjuster began investigating and attempting to locate Creamer. On 20 May 2019, DGIC received the police report and tendered the USD10,000 policy limit to Eason, but Eason returned the check to DGIC. After additional back and forth, on 16 September DGIC reissued the policy limits check. Eason advised that the offer was being considered but acceptance would be conditioned on Creamer’s completion of a financial affidavit indicating that Eason had no other collectible assets. Because of difficulties reaching Creamer, the affidavit was not completed, and on 15 November Eason filed suit against Creamer. The suit proceeded to trial, and on 29 March 2023, five days after the 24 March 2023 reforms went into effect, a jury returned an excess verdict in favour of Eason for USD1,250,000. Judg- ment was entered on 17 August 2023. On 3 April 2023, DGIC filed a declaratory judgment action in federal court, seeking a declaration that DGIC properly and fully discharged its obligations of good faith in the handling of the claim, and a declara-
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