Florida's state-backed insurer of last resort has shed more than 1.2 million policies since September 2023, dropping from 1,407,805 policies to roughly 255,000 by late September 2026, according to a new report published by the James Madison Institute. The analysis examines how legislative reforms in 2022 and 2023 revived Florida's troubled property insurance market and argues that now is the time to complete structural changes ensuring Citizens Property Insurance Corporation functions solely as a residual safety net rather than a price competitor to private insurers.
Citizens' share of the admitted residential market, measured by insured value, fell to 1.8 percent by September 2026. By March 31, 2026, the voluntary market wrote 98.07 percent of homeowners policies, with Citizens accounting for just 1.93 percent. Citizens reported 293,465 policies in force as of June 5, 2026, the lowest level in 25 years. Florida's litigation environment improved dramatically: while the state accounted for 76 percent of nationwide homeowners lawsuits in 2021 despite representing less than seven percent of claims, preliminary 2025 data show that share dropping to 41.29 percent. The percentage of Citizens' personal residential non-catastrophe claims involving litigation declined from 18.6 percent in 2018 to 5.0 percent in 2025. Florida domestic property insurers collectively returned to positive net income in 2024, and in 2025 posted a pooled combined ratio of 83 percent, the lowest in more than a decade. Twenty-one new companies received approval to write residential property insurance in Florida following the reforms, and no property and casualty insurer has been referred for delinquency proceedings since March 1, 2023.
The report traces how Citizens evolved from its original 2002 design as an availability-based residual market into a price competitor. According to the analysis, Citizens was initially structured so that any offer of full coverage from an authorized insurer at its approved rate made an applicant ineligible, but legislative changes in 2007 replaced that availability test with a price comparison allowing applicants to choose Citizens if a private premium exceeded Citizens' rate by more than 25 percent, later reduced to 15 percent. The same 2007 legislation removed the statutory requirement that Citizens' rates be noncompetitive with the voluntary market and froze rates at December 2006 levels. The report notes that a 2008 legislative task force was created specifically to identify changes necessary to return Citizens to its "state-created, noncompetitive residual market mechanism" role, and in 2009 lawmakers adopted an incremental "glide path" with annual rate increases capped at 10 percent until actuarially sound rates were achieved.
The report argues that Citizens' extraordinary financing advantages—tax-exempt status, catastrophe assessment authority, and different capital requirements than private insurers—are appropriate for a residual insurer but create competitive distortions when Citizens competes for risks the voluntary market will cover. The authors explain that when eligibility depends on price, Citizens' own rate becomes the benchmark against which private-market eligibility is measured, meaning that if Citizens' rate is constrained while private insurers must price for expected losses, reinsurance, capital, and operating expenses, the statutory price comparison itself can increase Citizens eligibility. A private residential property insurer must maintain sufficient capital and catastrophe protection to satisfy regulators, rating agencies, reinsurers, lenders, and investors, while Citizens possesses extraordinary post-event financing authority permitting assessments that spread portions of deficit costs beyond its own policyholders. The report notes that Citizens' dramatic growth to 1,407,805 policies and approximately 23 percent of the market in 2011 resulted not only from hurricane losses and private insurer exposure reductions but also from "legislative and administrative changes" that significantly altered Citizens' rates and access.
The report recommends four structural reforms now that private market capacity has returned. Policymakers should consider reducing or eliminating the affordability component of Citizens eligibility so that availability of reasonable coverage from an authorized insurer plays a greater role in determining whether a risk qualifies for state-supported insurance. The glide path should be reevaluated or eliminated for lines of business not yet deemed actuarially sound, with clearer statutory guidance on when it has accomplished its intended purpose and should stop constraining rates. Citizens should be required to purchase, or price for when not purchased, catastrophe-risk transfer at a level more comparable to the protection regulators expect financially sound private insurers to maintain. And the statute should clarify how noncompetitive pricing should be measured, potentially by reinstating language from Citizens' original statute requiring that Citizens' average rates in each county, for each personal residential line, be no lower than the highest county-average rate charged by any of the 20 largest insurers statewide for that line. The report concludes that the time to reform Citizens is not when 1.4 million Floridians depend on it, but when the private market is healthy enough that they don't have to.