A number of Florida’s home insurance carriers have reduced or ceased offering new homeowners insurance policies in Florida recently. Key examples include Farmers Insurance, Bankers Insurance, and Lexington Insurance, a subsidiary of AIG, who have all voluntarily withdrawn from the state. Additionally, AAA has reduced the number of policies it renews. Other companies, like State Farm and Allstate, have also scaled back their operations in the state.
This dramatic transformation of major insurance companies from the Florida market is leaving millions of homeowners scrambling for coverage. However, this crisis has created an unexpected opportunity for smaller, regional insurers to step into the breach, fundamentally reshaping how Americans protect their most valuable asset.
The Great Exodus: Major Insurers Abandon Storm-Prone Markets
The numbers tell a stark story. In Florida alone, more than 30 home insurance companies have exited the state since May 2024, with the trend accelerating after Hurricane Ian devastated the region. Major players like State Farm and Travelers have either ceased writing new policies or dramatically scaled back their operations in hurricane-prone areas. California faces similar challenges as wildfires and floods drive insurers away from the Golden State.
This exodus isn’t merely about weather risk. Insurance companies face a perfect storm of factors including skyrocketing reinsurance costs, litigation expenses, and the mounting frequency of billion-dollar natural disasters. For many large insurers, the mathematics simply no longer work in states where a single hurricane can generate tens of billions in claims.
The impact of recent storms has been particularly devastating. Hurricane Helene caused an estimated $56 billion in total losses with $16 billion insured, while Hurricane Milton generated $38 billion in losses with $25 billion covered by insurance. When catastrophic events strike in rapid succession, even the largest insurers struggle to maintain profitability while keeping premiums affordable for consumers.
Small Players, Big Opportunities
Yet where large insurers see insurmountable risk, smaller companies see opportunity. Florida has welcomed over 17 new insurance companies since late 2023, with 11 additional insurers approved just in early 2025. These new entrants include companies like ASI Select Insurance Corp., Trident Reciprocal Exchange, Ovation Home Insurance Exchange, and Manatee Insurance Exchange.
These smaller insurers often operate with different business models than their larger counterparts. Many focus exclusively on specific regions, allowing them to develop deeper expertise in local risk factors and building practices. Some utilize more sophisticated risk modeling technology, enabling them to price policies more accurately than traditional insurers. Others target specific market segments, such as mobile homes or condominiums, that larger companies have abandoned.
The entry of these smaller companies represents more than just market consolidation. Florida Insurance Commissioner Mike Yaworsky noted that domestic companies reported more than $389 million in net income as of September 2024, suggesting that well-capitalized regional insurers can still find profitability in challenging markets.
The Cost Equation: Premium Pain Continues
Despite the influx of new insurers, homeowners shouldn’t expect immediate relief from soaring premiums. Florida homeowners already pay some of the highest insurance rates in the nation, with average annual premiums exceeding $4,000 compared to the national average of roughly $1,400. The addition of new companies provides more options but doesn’t necessarily translate to lower costs.
Several factors continue to drive premium increases. Reinsurance costs, which represent insurance for insurance companies, have skyrocketed as global reinsurers reassess their exposure to U.S. coastal properties. Construction costs have also surged, meaning that rebuilding after a disaster costs significantly more than in previous decades. Additionally, Florida’s litigation environment has historically driven up costs, though recent tort reforms may help moderate this factor.
The new smaller insurers often charge premium rates comparable to or even higher than the companies they’re replacing. However, they provide something equally valuable: availability. For many homeowners who faced non-renewal notices or couldn’t find any company willing to write them a policy, having coverage at any price represents an improvement over their previous situation.