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Here's how property insurance could change in Florida

A resident of Mexico Beach looks over damage caused to the Florida Panhandle by Hurricane Michael in October 2018.
Scott Olson
/
Getty Images
A resident of Mexico Beach looks over damage caused to the Florida Panhandle by Hurricane Michael in October 2018.

Heading into a special session this week to address the state’s troubled property insurance market, legislative leaders said late Friday they will focus on issues such as roof damage claims, litigation and reinsurance.

The House and Senate released outlines of bills for the session, which Gov. Ron DeSantis called after lawmakers could not reach agreement on insurance changes during this year’s regular session.

“I believe the legislation I will file for your consideration during the special session will address the many issues leading to the instability of the current property insurance market in our state,” Senate Banking and Insurance Chairman Jim Boyd, R-Bradenton, wrote in a memo to senators. “The proposal balances fair costs and protections for consumers while adding reasonable guardrails for insurance companies against the frivolous litigation and fraudulent claims that drive up rates for everyone.”

In a memo to House members, House Appropriations Chairman Jay Trumbull, a Panama City Republican who has played a key role in negotiations, said the legislation will include “policies that we believe will help curb abuses in the market without creating unintended consequences. In developing this legislation, we have worked to balance the interests of the stakeholders in Florida’s insurance market while ensuring that the consumer remains paramount in the conversation.”

The outlines indicated that a major part of the legislation will deal with roof damage claims. Insurers blame questionable, if not fraudulent, roof damage claims for driving up costs.

The outlines said the legislation, in part, would allow insurers to require deductibles for roof damage, something the Senate has sought in the past. Also, the legislation would rein in decisions by insurers to refuse to write or renew policies because of the ages of roofs. They would be prevented from refusing to write or renew policies if roofs are less than 15 years old.

Insurers also have long blamed litigation for troubles in the industry. The legislation, in part, would put additional restrictions on what are known as “contingency fee multipliers” that can substantially increase fees paid to attorneys who represent policyholders in insurance disputes, according to the outlines.

The legislation also would authorize $2 billion to expand insurer access to the Florida Hurricane Catastrophe Fund, a state program that provides relatively cheap reinsurance. The House outline said insurers who take part would have to reduce rates for policyholders to reflect the savings.

Many insurers need to have reinsurance contracts by June 1 and are struggling to find the critical backup coverage. Industry officials say global reinsurers have increased prices and limited the amount of coverage they are selling in the Florida market.

“The rubber meets the road for many carriers on June 1,” Kyle Ulrich, president and CEO of the Florida Association of Insurance Agents, said during an online event held this week by the AM Best rating agency.

During the regular session, the Senate wanted to be more aggressive in trying to bolster the insurance industry, while House Speaker Chris Sprowls, R-Palm Harbor, said changes passed in 2021 should be given more time to work.

But problems have continued to mount in the insurance market, with three carriers — Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co. — being declared insolvent and placed into receivership since February.

Also, the state Office of Insurance Regulation approved an agreement May 13 that will lead to FedNat Insurance Co., Maison Insurance Co. and Monarch National Insurance Co. canceling 68,200 policies. The three insurers are part of the same holding company.

As an outgrowth of the problems in the market, thousands of policies a week have poured into the state-backed Citizens Property Insurance Corp, which was created as an insurer of last resort. Citizens had more than 851,000 policies as of the end of April and is expected to top 1 million this year.

Jim Saunders is the Executive Editor of The News Service Of Florida.