Property insurance reform moves to governor
Supporters said a new plan will stabilize the property insurance market. Critics said it doesn’t do enough to help homeowners.
But with hurricane season starting next week, Florida House members overwhelmingly gave final approval Wednesday to a measure that seeks to stem property insurance problems that have led to policyholders across the state losing coverage and seeing soaring premiums.
Rep. Jim Mooney, R-Islamorada, said lawmakers are “not going to fix insurance in a week.” But he said lawmakers needed to do something to address the problems.
“I think this bill gives us the ability to stabilize the market,” Mooney said.
Many Democrats, however, criticized the bill (SB 2-D), saying it wouldn’t provide immediate rate relief to homeowners.
“Smoke and mirrors. Dog and pony show,” Rep. Angie Nixon, D-Jacksonville, said. “Unfortunately, that seems to be all we’re doing here.”
House members voted 95-14 to approve the bill, which passed the Senate on Tuesday in a 30-9 vote. The bill is ready to go to Gov. Ron DeSantis, who called a special legislative session this week to deal with the property-insurance troubles.
The bill focuses on issues that insurers have repeatedly cited for problems in the industry, including costs of roof-damage claims, inability to find or afford reinsurance and litigation over claims.
The House and Senate could not agree on a property insurance bill during this year’s regular legislative session. 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.
One of the highest-profile parts of the newly passed bill deals with reinsurance, which is essentially backup coverage for insurers. Carriers need to have reinsurance contracts in place as soon as June 1, but, at least in some cases, are struggling to find affordable coverage.
Insurers have long been required to purchase certain amounts of coverage through the Florida Hurricane Catastrophe Fund, a state program that provides relatively cheap reinsurance. Under the bill, the state would provide $2 billion in tax dollars to provide another “layer” of reinsurance to insurers that otherwise might not be able to buy it in the private market. Also, the bill calls for savings under that part of the bill to ultimately be passed along to ratepayers.
Some Democrats described the $2 billion as a giveaway, with Rep. Michael Grieco, D-Miami Beach, saying it is “corporate welfare” for insurance companies. But Bob Rommel, R-Naples, pushed back against that description.
“They (insurers) are on life support,” Rommel said. “They barely have a heartbeat.”
Insurers in recent years have also blamed questionable, if not fraudulent, roof damage claims for driving up costs.
The bill, in part, would allow insurance policies to include new deductibles for roof damage. The deductible amounts would be 2% of the overall insured value of homes or 50% of the costs to replace roofs. For example, the 2% deductible on a $300,000 home would be $6,000.
Deductibles would not be charged on such things as hurricane damage or situations in which trees fall and puncture roofs.
Meanwhile, the bill would place a restriction on insurers that refuse to write or renew policies because of the ages of roofs. The companies could not refuse to provide coverage to homes with roofs that are less than 15 years old if the decisions are based solely on the ages of the roofs.
Insurers also have long complained about large numbers of lawsuits in Florida about claims. The bill would make a series of changes designed to reduce lawsuits and attorney fees in litigation about insurance claims.
That includes putting new restrictions on what are known as “bad faith” lawsuits against insurers. Also, the proposal would seek to make it harder for plaintiffs’ attorneys to receive “contingency fee multipliers,” which can significantly increase amounts paid to lawyers.
Rommel said lawmakers need to take away fear of Florida’s legal climate to help draw more insurance companies to Florida.
But Rep. Dotie Joseph, a North Miami Democrat who unsuccessfully tried to remove the bad-faith part of the bill, said it could limit the ability of homeowners to fight insurers in court.
“We’re talking about the bad players who take advantage of the little guy,” Joseph said.
During hours of discussion Wednesday, Democrats proposed amendments aimed at reducing or freezing rates, though the amendments were rejected.
“I happen to live in Broward County. Our homeowners’ rates are through the roof,” said Minority Leader Evan Jenne, a Dania Beach Democrat who proposed a rate freeze for a year.
But House bill sponsor Jay Trumbull, R-Panama City, said such proposals could lead to more instability in the insurance market because they would lead to rates that are not actuarially sound.
“If we’re going to address the rates, the only thing we can do is to address the cost drivers for those rates,” Rep. Ralph Massullo, R-Lecanto, said.