5 Signs Proving We’re Not in an Insurance Affordability Crisis

Critics point to rising insurance premiums, growing rates of insurance cancellations, and increasing reliance on insurers of last resort.

Despite these warning signs, there’s also reason for optimism. In fact, some say we’ve already been through an insurance crisis and come out the other side.

Here’s a counterargument: we’re not in an insurance crisis, and here’s the proof.

1) Fewer Floridians Are Relying on the Insurer of Last Resort

Citizens Property Insurance Corporation is the insurer of last resort in Florida. If you’re a Florida resident who is unable to obtain homeowners insurance through the open market, then you can buy insurance from Citizens.

Citizens has greater exposure to risk than any other state: according to Harvard’s Joint Center for Housing Studies, Citizens is exposed to around $1 trillion of liability across Florida (California, the next-leading state, is exposed to around $313 billion of liability).

That may sound like an insurance crisis, but there are signs of a turnaround:

• In February 2025, Citizens reported a 19.5% decrease in insurance customers compared to 2024. In other words, roughly 1 in 5 Floridians dropped Citizens’ coverage, suggesting they found better options on the private marketplace.
• Citizens attributed the drop to the success of its Citizens Depopulation Program. Launched in 2024, the program transferred 428,000 Citizens policyholders to private insurance companies.
• Ultimately, Citizens reported it was covering fewer than one million homeowners in Florida, the lowest number in two years.
• Around the same time, Citizens announced plans to lower rates by 5.6%, on average, across the state in 2025. In many other states, insurance premiums – even with insurers of last resort – are rising sharply.

These numbers suggest that Florida already reached an insurance crisis in 2022 and 2023 and successfully navigated that crisis.

2) Insurers Are Reporting Profits Again

As further proof we’re past an insurance crisis, insurers are once again reporting profits.

According to the National Association of Insurance Commissioners and data from AM Best, the US insurance industry showed improved profitability in 2024:

Premium increases and lower claim costs helped the US Property & Casualty (P&C) insurance industry recover from two years of underwriting losses. Investment gains…resulted in a significant increase in net income which drove policyholders’ surplus to an all-time high at June 30, 2024.

Insurers attributed the profitability to:

• Rate adjustments (i.e. increases in premiums)
• Reduced catastrophe losses
• Stronger investment income

Travelers, for example, recently reported “exceptional” Q4 results for 2024, including a 28% increase in net income per diluted share, a 30.0% return on equity, and a net investment income increase of 23% pre-tax year-over-year, among other impressive figures.

In other words, it appears rising insurance premiums may have caught up to actuarial risk. After years of mixed profits, insurers appear to be rebounding.

3) Catastrophic Weather Events May Have Stabilized

Catastrophic weather events have been on an upward trend over the last 30 years. Over the last five years, however, catastrophic events appear to have stabilized.

In 2017, the insurance industry suffered its worst year ever with $183.02 billion worth of weather-related losses. That number fell to $124.73 billion in 2021 and has remained in that range ever since, according to Swiss Re Institute:

Insurance Losses Caused by Weather Events:

• 2020: $102.59 billion
• 2021: $124.73 billion
• 2022: $134.56 billion
• 2023: $107.88 billion
• 2024: $134.63 billion

As of mid-2025, analysts predict a modest increase for 2025 with around $145 billion in weather-related insurance losses.

4) Insurance Premium Increases Are Slowing to Historic Norms

Insurance premiums continue to go up, but they’re rising at closer to their historic rate.

Since 2020, some states have observed increases of around 20% per year in insurance premiums. In other words, some homeowners and drivers are paying twice as much for insurance in 2025 as they did in 2020.

The good news? Premium increases appear to be slowing down. According to S&P Global, for example, auto insurance rates rose around 16.4% in 2023 and 12% in 2022 but are projected to increase by only 4 to 6% in 2025. That’s closer to historic norms – and the first time the increase has been in single digits since 2021.

We’re seeing similar action in the homeowners insurance market. As reported by Matic, homeowners insurance experienced a sharp increase from 2021 to 2022 due to rising costs of building materials and labor shortages. Those rates continued to rise sharply in 2023 (17.26% rise year over year) and 2024 (25.71% rise) before finally starting to slow in 2025 due to factors like:

• Combined ratios, an indicator of profitability, dropped to 98.5% for both 2024 and 2025, which is an improvement from the 102% ratio reported in 2023. This suggests insurers are becoming more profitable.
• Inflation began stabilizing in 2024.
• Construction costs show signs of moderating (the price of lumber has dropped 18.9% over the last year).
• Coverage A premiums increased only 1.5% in the first half of 2024, a sharp decrease from the 5.5% to 10% increases reported in the previous two years.
• Government interventions like the INSURE Act and the introduction of alternative insurers (like non-admitted insurers and Managing General Agents or MGAs) into the marketplace could continue to cool markets moving forward.

5) Government Efforts Are Working

States like California and Florida were facing an insurance crisis in 2022 and 2023. That crisis appears to be past its peak because of both governmental actions and free market adaptations.

Some of the actions taken include:

• Congress is preparing to pass the Incorporating National Support for Unprecedented Risks and Emergencies (INSURE) Act to stabilize insurance markets, encourage private insurers to re-enter high-risk areas, and reduce the burden on insurers of last resort.
• The INSURE Act would create a federal reinsurance program, helping private insurers manage catastrophic losses from natural disasters, like wildfires, floods, and hurricanes. It would also help the federal government step in after a major disaster to reduce insurance losses, support state insurers of last resort (like Florida’s Citizens and California’s FAIR Plan), and enable data sharing to reduce costs.
• California’s Department of Insurance recently allowed insurers to use catastrophe models instead of traditional risk assessments, making it easier for insurers to re-enter markets they may have left, like wildfire-prone areas. This change allows insurers to charge premiums that more accurately reflect actuarial risk.
• Florida passed multiple reforms to reduce insurance fraud and litigation costs – two factors that cause Florida insurance premiums to be among the highest in the nation. Specific reforms include Senate Bill 2D (2022D) and Senate Bill 7052 (CS/SB 7052), which passed in 2022 and 2023.
• Texas lawmakers have proposed various strategies to tackle rising rates – like Senate Bill 1643, which would require the Texas Department of Insurance to manually approve any rate increases over 10%.

Some say we’re in an insurance crisis. Others say we’re on the other side. By the end of the year, we should know more about where the property and casualty insurance market is heading nationwide.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.