Florida lawmakers aim to stabilize market with property insurance reform

Tallahassee, Florida — Florida lawmakers on Monday began pushing ahead with a plan to try to bolster the state’s struggling property insurance market, but homeowners shouldn’t expect an immediate relief from soaring premiums.

The Senate Appropriations Committee approved the plan (SB 2-D) on the first day of a special legislative session called by Gov. Ron DeSantis, property and casualty insurers dropped tens of thousands of customers and sought to significantly increase rates.

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Senate Banking and Insurance Chairman Jim Boyd, a Bradenton Republican who supports the bill, said he expects to see lower costs for homeowners in the short term. But he said the focus is on ensuring coverage remains available.

“We’re trying to stabilize the market right now, and I think that’s our job,” Boyd said.

The committee passed the bill by a 19-2 vote, but some members said it should do more to provide relief to homeowners — otherwise it won’t be enough to support the industry.

Senate Minority Leader Lauren Book, D-Plantation, unsuccessfully offered to freeze interest rates for a year, says insurance costs “overwhelm people”

“I believe we are deaf to what is really happening in the community,” said Sen. Randolph Bracy, D-Ocoee.

But Sen. Jeff Brandes, R-St. St. Petersburg, compares the state of the industry to “stage 4 cancer and failure”. He said the proposals in the bill were like treating “stage 1 cancer.”

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Senate and House leaders and Gov. Ron DeSantis’ administration reached an agreement on the proposal before it was released Friday night. While the Senate meets on Monday, the House of Representatives will meet on Tuesday.

The Senate and House of Representatives failed to reach an agreement on a property insurance bill during their regular legislative session that ended in March. But problems in the insurance market continued to mount, with three operators — Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co. — declared bankrupt and placed into receivership since February.

The bill touches on multiple issues, but much of Monday’s discussion focused on changes affecting roof damage claims, reinsurance and litigation.

In recent years, insurers have blamed questionable, if not fraudulent, roof damage claims for driving up costs and sparking a flood of lawsuits.

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The bill would partially allow insurance policies to include a new deductible for roof damage. The deductible will be 2% of the total insured value of the home or 50% of the cost of replacing the roof. For example, the 2% deductible on a $300,000 home is $6,000.

The deductible will not be charged for conditions like hurricane damage or a tree falling and puncturing a roof. But Sen. Bobby Powell of D-West Palm Beach questioned whether many homeowners could afford the deductible if the roof was damaged.

“Is there a way to make it easier for consumers to digest?” Powell asked.

Another part of the bill, however, would impose restrictions on insurers who refuse to write or renew policies because of aging roofs. If these decisions are based solely on the age of the roof, the companies cannot deny coverage to homes with roofs less than 15 years old.

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Boyd said that in many cases, the roof has been around for 15 years or so without any issues. But Brandes opposes the limit, saying insurers have put age limits on roofs because roof damage claims and lawsuits are fueling financial losses.

“Frankly, it’s the only mechanism they have,” Brandes said.

Another key issue for the industry is reinsurance, the backup insurance that insurance companies buy every year. Many people need reinsurance contracts by June 1, but are struggling to find or afford coverage.

The bill would provide up to $2 billion in state funding to provide short-term solutions. Insurers have long been required to purchase a certain amount of coverage through the Florida Hurricane Disaster Fund, a state program that offers relatively inexpensive reinsurance.

Under the bill, the $2 billion would provide another “layer” of reinsurance for insurers that otherwise might not be able to buy it in the private market. In addition, the bill requires that savings from this portion of the bill be passed on to taxpayers.

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The bill will also take a series of measures to reduce litigation costs. For example, it would make it harder for attorneys representing homeowners to get what’s known as a “contingency cost multiplier” — which can significantly increase attorneys’ compensation.

St. Petersburg Democratic Senator Darryl Rouson, who is a lawyer, questioned whether the contingency cost multiplier proposal would make it harder for homeowners to find lawyers to handle complex cases. Rouson and Sen. Audrey Gibson, D-Jacksonville, voted only against the bill.

But insurance agent Boyd played down concerns that homeowners couldn’t find a lawyer to take the case.

“There doesn’t appear to be a shortage of attorneys bringing these claims on behalf of homeowners,” Boyd said.