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With Florida homeowners facing some of the highest insurance premiums in the nation, Republican Byron Donalds and Democrat David Jolly offer starkly different approaches to lowering costs for consumers. ## How did we get here? Understanding Florida's insurance dilemma To understand why Florida home insurance premiums surged in recent years, policymakers point to the rising cost of reinsurance—the insurance that private insurance companies purchase to protect themselves against catastrophic storm losses. When global catastrophe losses soared, reinsurance prices spiked, forcing Florida insurers to pass those higher costs directly to policyholders. To help manage this risk, Florida relies on a long-standing state entity: the Florida Hurricane Catastrophe Fund ("Cat Fund"). Financed primarily through premiums paid by insurance companies and investment returns, the Cat Fund is projected to hold more than $11 billion by the end of this year. What to do with that multi-billion-dollar fund forms the central policy divide between Byron Donalds and David Jolly. ## Jolly’s plan: A full replacement of the catastrophe system Democrat David Jolly proposes stopping the Cat Fund from selling cheaper reinsurance to private insurers. Instead, he wants to use the fund to directly cover hurricane and wind damage for all insured Florida homeowners. Under Jolly’s proposed model: - Split coverage model: The state catastrophe fund would directly cover all wind and hurricane risks for Florida homeowners. Private insurance companies would only cover "traditional perils"—such as pipe bursts, fallen trees, or slip-and-fall incidents. - 60% to 70% premium drop claim: Jolly asserts that removing hurricane risk from commercial carriers would lower private homeowner policy premiums by 60% to 70%. - Eliminating Citizens Insurance: By absorbing all wind risk into a pre-funded state catastrophe entity, Jolly argues the state could completely replace both the Cat Fund and Citizens Property Insurance, the state-run insurer that covers homeowners who face challenges finding coverage on the private market. - Capitalizing the fund: Jolly proposes seeding his new sovereign wealth fund with approximately $12 billion currently in the Cat Fund, directing a portion of state tourist-tax revenues into the fund (requiring changes in state law), and restricting how much profit insurance companies can transfer to out-of-state affiliate firms. ## Executive action on affiliate fees and profit-shifting A key pillar of Jolly’s funding strategy targets affiliate profit-shifting. In Florida's insurance market, parent companies or hedge funds often create holding companies that own an insurance provider alongside several sister companies (such as adjusting firms, corporate administrators, or restoration services). Parent companies often set up holding structures where an insurance provider pays sister companies for administrative or adjusting services. This mechanism shifts revenue out of the insurance business, which is subject to state profit caps and the risk of claims loss, and into affiliate companies where those strict regulations and risks do not apply. - Past liquidations: In 2014, Sunshine State Insurance went into liquidation after paying millions out to affiliate companies for duplicate services as its insurance reserves ran dry. - State audit findings: State regulators examined 53 Florida insurance companies between 2017 and 2019. Excluding outliers, the insurance companies reported $432 million in losses while their affiliate companies made $1.8 billion in profits. When counting outliers, insurance entities reported $61 million in net income compared to $14 billion earned by affiliates. The Office of Insurance Regulation (OIR) found that 19 out of 30 evaluated Florida-based companies had affiliate fees that were not "fair and reasonable." - Jolly's proposed cap: Jolly pledges to issue executive action and pursue legislation capping affiliate fees at a "fair and reasonable" national benchmark of roughly 20%, down he said from current Florida fees that range from 23% to 30%—and in extreme cases, up to 60%. Jolly argues keeping those profits in Florida to be taxed will help capitalize the state wind fund. ## Donalds’ plan: Protecting the private market, tort reform, and consumer tools Republican Byron Donalds rejects government-run insurance models, arguing that replacing the private market will inevitably lead to public bailouts and higher costs for taxpayers. Donalds’ plan focuses on maintaining market competition while tweaking existing state structures: - Cheaper state reinsurance: Donalds wants to maintain the Cat Fund as a reinsurance provider, making it easier and cheaper for private carriers to purchase state-backed reinsurance so they can pass savings along to policyholders. - Shrinking Citizens Insurance: Donalds emphasizes keeping the pool of Citizens policyholders small to minimize the financial exposure of state taxpayers. - Defending tort reform: Donalds strongly supports and promises to preserve the legal reforms signed by Governor Ron DeSantis in 2022, which made it harder and financially riskier for policyholders to sue insurance companies over disputed claims. - Grant and permit reforms: Donalds proposes reforming the My Safe Florida Home grant program so home-fortification grants are more likely to deliver premium discounts, alongside building-permit reforms aimed at lowering storm repair costs. - Insurance scorecard: Donalds advocates creating a state-run consumer scorecard displaying clear comparison data on insurance pricing, claims approval rates, and denial percentages. ## Fact Check: The "Hurricane Tax" claims and the $1,000 ad Both campaigns have accused each other of backing a "hurricane tax," but an examination of state law and campaign claims reveals important context behind both arguments. ## Donalds’ attack ad against Jolly A Donalds campaign advertisement claims: "No matter where the storm hits, Jolly's hurricane tax will hit everyone... According to a new study, a thousand dollars per Florida family every single year." Fact Check: The study cited in Donalds' ad did not evaluate Jolly's catastrophe fund proposal. Instead, it examined a separate legislative proposal to expand Citizens Property Insurance's wind-only coverage statewide. The $1,000 figure was derived from a theoretical worst-case scenario in which a major storm completely depleted Citizens' financial reserves, triggering emergency assessments. The Florida State University professor who authored the study declined to comment on the ad. ## The current system's hidden "hurricane tax" Jolly points out that the existing system backed by Donalds carries an explicit, legally mandated mechanism for post-storm surcharges: - Citizens surcharges: If major hurricanes strike and Citizens Property Insurance runs out of money to pay claims, Citizens policyholders face a surcharge of up to 15% on their premiums. On a $6,700 policy, that single surcharge exceeds $1,000. - Broad emergency assessments: If a deficit still remains after the initial surcharge, state law triggers an emergency assessment of up to 10% per year on nearly every property and casualty policy in Florida. That tax applies to homeowners, renters, auto insurance, boat insurance, and pet insurance policies until the debt is cleared. Jolly points out that Donalds defends the system that allows these surcharges. Donalds counters that keeping Citizens small makes it highly unlikely those surcharges will ever be needed. ## Lawsuit reform: Protecting tort reform vs. opening courtrooms When home insurance premiums surged, state leaders blamed the crisis on widespread lawsuit abuse, passing sweeping legal reforms in 2022 to make it harder and financially riskier for policyholders to sue insurance carriers. Former State Insurance Commissioner David Altmaier and Governor Ron DeSantis justified the crackdown by citing data showing Florida accounted for only 8% of all homeowners' claims nationwide, but 76% to 78% of all property insurance litigation. However, those figures have faced scrutiny because they relied on non-public, confidential industry filings and excluded key segments of the insurance market. Former insurance regulator and economist Birny Birnbaum argues the statistic lacks essential context, saying more than half of Florida’s property insurance companies had little or no litigation—noting lawsuit volume was concentrated among specific carriers rather than being an industry-wide problem. This debate over legal reform directly drives how both candidates view state policy: - Byron Donalds defends the 2022 lawsuit restrictions and promises to maintain them. "We're going to keep Gov. DeSantis' tort reforms in place," Donalds stated. Industry supporters like Mark Friedlander of the Insurance Information Institute argue the legal limits are working, pointing to new carriers entering Florida and stabilizing premiums as proof that "the proof is in the premium bill." - David Jolly opposes the restrictions and pledges to roll them back so policyholders can hold insurance companies accountable in court. "Look, I am somebody who actually thinks we should unleash the courtrooms and juries and allow people to petition and sue insurance companies," Jolly stated. Critics of Florida's legal limits—including Republican Louisiana Governor Jeff Landry—contend that wholesale tort reform has left legitimate storm victims struggling to get their property damage claims paid. ## Donalds vs. Jolly: In their words The candidates and industry experts offer opposing perspectives on market intervention, state risk, and legal liability: Byron Donalds argues that David Jolly's state catastrophe fund would be a disastrous government takeover of the private market: "His insurance plan is socialism; it's basically removing the private sector unilaterally and putting government in control. We already know that when you put government into control, it always fails the people... We're going to keep Gov. DeSantis' tort reforms in place." David Jolly defended the need for government intervention when private markets fail, while denying his plan contains a "hurricane tax": "We have to recognize, when private markets fail, government has to step in... The current model relies on a hurricane tax. Mine does not... I am somebody who actually thinks we should unleash the courtrooms and juries and allow people to petition and sue insurance companies." ## More from Craig Patrick's Money, Power & Politics The debate over home insurance highlights two fundamental visions for Florida: Donalds' reliance on private market competition supported by legal limits and state reinsurance, versus Jolly's model of a public catastrophe framework combined with strict oversight of insurer finances. In upcoming segments of Money, Power & Politics, Political Editor Craig Patrick will continue to analyze candidate proposals on energy policy, data centers, health care costs, and state taxes ahead of the November election.