In what Governor Ron DeSantis is calling a "turning point" for millions of Florida homeowners, the state's property insurance market is finally showing signs of recovery after years of crisis-level premium increases. Meanwhile, California's insurance woes continue to deepen, creating a stark divergence between America's two largest coastal insurance markets.

Florida: From Crisis to Recovery

On Monday, January 12, 2026, Governor DeSantis delivered news that many Floridians had been waiting years to hear: property insurance premiums are falling significantly across the state. Speaking from Broward College in Davie—a location symbolically chosen as one of the hardest-hit areas during the insurance crisis—DeSantis announced that Florida insurers have filed 83 requests for rate decreases and 100 filings for no increase.

"The property insurance market is the healthiest it's been in five years," insurance industry analysts are now declaring, pointing to structural reforms finally bearing fruit.

Policyholders with Citizens Property Insurance Corporation, the state-backed insurer of last resort, will see average rate decreases of 8.7% beginning this spring. More than 150,000 Citizens policyholders will receive reductions of 10% or more. Perhaps more significantly, Citizens now manages fewer than 400,000 policies, down dramatically from over 1.4 million in 2023.

"This reduction signals that more insurers are returning to the Florida market, which should encourage healthier competition and lower rates going forward."

— Florida Office of Insurance Regulation spokesperson

The 2022 Reforms Finally Pay Off

Insurance professionals attribute the turnaround to Florida's 2022 insurance reforms, which took aim at the rampant litigation that had been driving insurers out of the state. The reforms included eliminating one-way attorney fees in property insurance lawsuits and restricting assignment of benefits agreements that had fueled frivolous claims.

The results speak for themselves:

  • Litigation costs have dropped substantially since the reforms took effect
  • Private insurers are re-entering the Florida market
  • Citizens is shrinking as intended, with policies moving to private carriers
  • Rate stabilization is allowing carriers to offer competitive pricing

California: Crisis Mode Intensifies

While Florida celebrates its insurance market recovery, California's property insurance crisis continues to worsen. The state's temporary moratorium on insurance cancellations for homeowners in wildfire disaster areas expired in January, raising fears that more residents will lose coverage entirely.

"It's very likely that more insurance companies will pull out of some areas in California, and this insurability crisis is only going to get worse in 2026," warned Patrick Blandford, founder and CEO of Green Shield Risk Solutions.

The FAIR Plan Strain

California's FAIR Plan—the state's public insurer of last resort—has seen its exposure double in less than two years as private insurers have withdrawn from high-risk areas. The program recently requested a 35.8% rate hike to remain solvent, a move that would further burden homeowners already struggling to find affordable coverage.

The real estate market is feeling the effects directly. Last year, 13% of California Realtors reported that at least one sale fell through because buyers could not secure homeowners insurance—nearly double the rate from the previous year.

National Implications

The divergence between Florida and California offers a potential roadmap for states grappling with insurance market dysfunction. Florida's emphasis on litigation reform and reducing fraud appears to be working, while California's regulatory approach has struggled to keep private insurers in the market.

According to industry analysts, homeowners insurance premiums nationally are projected to jump a staggering 16% over the next two years—8% in 2026 and another 8% in 2027. However, markets like Florida that have addressed structural issues may see more modest increases or even decreases.

The E&S Market Explosion

One notable trend across both states is the explosion of excess and surplus (E&S) insurance products, which provide coverage for properties that might otherwise remain uninsured. E&S products accounted for roughly 16% of policies in California, Florida, and Texas by December 2025, up from under 2% in 2023.

In 2026, insurers are increasingly moving away from state-wide risk assessments and toward hyper-local ZIP code modeling. This granular approach means that even within a single city, homeowners on one block might face dramatically different insurance options than those a few streets away.

What This Means for Homeowners

For prospective homebuyers, insurance availability is becoming as important as mortgage rates in determining affordability. In California's high-risk areas, some properties are effectively becoming uninsurable through traditional channels, creating a new factor in home valuations.

Florida homeowners, meanwhile, should see relief in 2026, though rates remain substantially higher than they were a decade ago. The key for Florida will be maintaining the reform momentum and continuing to attract private capital back into the market.

The tale of these two markets underscores a broader truth about insurance: while climate risk is a growing factor everywhere, state-level policy choices can dramatically affect how well insurance markets function—and whether homeowners can afford to protect their largest investment.