NU Online News Service, May 23, 2:56 p.m. EDT

The property-insurance reform bill recently signed in Florida will help improve insurers' bottom lines, but large homeowners insurers are unlikely to expand their presence in the state due to continued competition from the insurer of last resort, according to Moody's.

The bill, SB 408, is credit-positive for insurers, says Moody's, adding that provisions addressing hurricane and sinkhole claims and allowing insurers to increase rates by 15 percent a year instead of 10 percent will help insurers' profitability in a state known for a "difficult regulatory environment."

Moody's says 10 of the top 20 Florida homeowners insurers have 84-100 percent concentrations in the homeowners line "and therefore will benefit from the law's implementation, which is effective immediately."

Still, Moody's says, "we think [Citizens Property Insurance Corp., the state's last-resort insurer,] will continue to compete with the private-insurance market to such an extent that large homeowners-insurance carriers are unlikely to expand their presence in the state."

According to a chart accompanying Moody's analysis in its Weekly Credit Outlook, Citizens held a 28.9 percent share of the homeowners market as of 2010, leading all insurers in the state.

"Profitability for Florida homeowners insurers has been under pressure over the past several years," says Moody's. "The state is a peak U.S. catastrophe zone, and many large insurers have reduced their market share or exited the Florida property-insurance market over the past six years, with [Citizens] and smaller, private insurers assuming the risk."

Special Reports /

Fla. Property Bill Helps, But Citizens Competition Will Keep Large Insurers Away

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