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What Is Florida's New “RAP” Program and Are Savings Coming to Homeowners?

The Florida Legislature recently enacted a new program, the Reinsurance to Assist Policyholders ("RAP") program, in an effort to save the crashing Florida property insurance market and provide assistance to homeowners via rate decreases. However, experts and data seem to indicate the RAP program may not have gone far enough.

Reinsurance is essentially insurance for insurance, to cover losses they may not be able to in the event of a mass catastrophe. Due to Florida's heightened frequency of natural disasters, costs of reinsurance to insurance companies can be high, and has been cited by insurance companies as a reason for rate increases.

Florida's RAP program was created using taxpayer funds to provide financial assistance to insurance companies seeking reinsurance. The program became effective around July 1, 2022, and as a requirement to utilize the program, insurance companies had to provide rate decreases to policyholders.

However, rather than immense savings passed to homeowners, most insurance companies have filed for 1-2% rate decreases. Considering the average cost of property insurance is now around $3,600, and these same companies have recently hiked their rates by at least 30%, these decreases will likely fail to provide any relief to homeowners.

Without relief to homeowners in sight, it is likely the Florida Legislature will reconvene to determine additional methods to save the property insurance industry in Florida at the end of the year. Whether the Legislature will continue to provide assistance to insurance companies, rather than homeowners, is yet to be seen.

This article is not intended to be legal advice nor create an attorney-client relationship.

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