Florida’s legislative leaders on Tuesday outlined the measures they will consider during next week’s special session, which is mostly focused on addressing the state’s failing property insurance market.
The proposed legislation, dealing with an issue that has taken on more urgency in the aftermath of Hurricanes Ian and Nicole, includes the cost of litigation for property insurance claims, the availability of reinsurance for property insurance, and the claims-handling process, according to a joint proclamation issued by Senate President Kathleen Passidomo (R) and House Speaker Paul Renner (R).
The legislature will also consider legislation on providing tax relief related to storm damage and creating a statewide toll credit program for frequent commuters.
Critics have said that the insurance problem is too sprawling — and the special interests involved too powerful — to make much difference in a week. The Dec. 12-16 session will be the second special session this year dedicated to the state’s insurance market.
That’s an argument House Democrats made during a Tuesday afternoon press call.
“I don’t think …that a three day special session on something as complex as property insurance is the way to go about it,” said Hillary Cassel, a property damage attorney who is about to be sworn in for her first term in the state House after winning her seat in November. “This needs to be a yearly approach where multiple stakeholders come to the table and review the data to really provide an analysis of the status of the marketplace and provide some oversight to [the state Office of Insurance Regulation].”
Democrats on the call said the details so far provided by the GOP are too vague to issue a direct response, so instead they detailed their own proposals. House Minority Leader Fentrice Driskell said Democrats agreed that the legislature needs to address reinsurance, but it is unclear whether the GOP will want to institute the “robust” changes that Democrats want.
“We need to require mortgage companies that receive insurance proceeds to pay the interest earned on the proceeds to the home owner to the borrower actually putting money back in the pockets of Floridians. We need to preclude parent insurance companies’ claims of insolvency if they’re still writing policies in other states, because Florida should, in no way, get the short end of the stick. We need to cap premium increases or create a sliding fee scale so that consumers again can plan and budget and know what to expect, and we need to mandate that reforms passed must come with mandatory rate reductions. If it doesn’t, then we have no proof at all that it will actually help people.”
Stress on the market from catastrophic storms and rampant fraudulent lawsuits have pushed the state’s private home insurance market toward what lawmakers and industry analysts describe as a total collapse.
“We’ve never seen anything like this man-made crisis anywhere else in the United States,” Mark Friedlander, the Florida analyst for the Insurance Information Institute, told Gulfshore Business last week.
Friedlander pointed to a recently announced moratorium on writing new business in several Florida counties by Universal Property and Casualty, the largest private insurer in Florida. In total, 13 home insurers in Florida have stopped writing new business in either parts or the entire state since January, and insurers that remained in the state have canceled homeowner policies, he said.
More than 116,000 property insurance claim lawsuits were filed against insurance companies in Florida in 2021, compared to 20,000 claims in the rest of the country, according to the Insurance Information Institute figures cited in Gulfshore Business.
Renner said last month he wants to entice the private market to do business in the state and pass “systemic reforms” that will shore up the market and put downward pressure on premiums over time.
“We’re going to look at the kitchen sink, frankly, of options … and once we do that it’s important for people listening to know that will not result in an overnight drop in insurance rates,” Renner told reporters after he was named speaker. “We have to see probably two, three years as those policies turn over and we see a drop in the table of litigation.”
In a May special session, lawmakers passed new rules for roofs and created a $2 billion reinsurance fund to help private carriers stay solvent.
House Democrats called the special session, “a second bite at the apple following a lackluster attempt back in May” and announced a Tuesday afternoon press conference to outline what they would do to “to help make insurance coverage affordable, available, and accountable to the people of Florida.”
Renner told WFTV in November that he expects lawmakers to target one-way attorney’s fees and assignment of benefits agreements. He also said the state will need to funnel more taxpayer money into reinsurance, the coverage insurance companies buy to protect them from high claims.
Lawmakers are also under pressure to rein in Citizens Property Insurance Corporation, created in 2002 as an insurer of last resort. Citizens insures a growing number of Florida homeowners because of rates set by politicians that fall 30-50% below market value, leading critics to call it a “predatory” competitor.
Here is the legislation set for consideration next week:
– Reducing the cost of litigation regarding property insurance claims.
– Fostering the availability of reinsurance for property insurance.
– Improving the claims handling practices in property insurance.
– Modifying deadlines for notices of property insurance losses and limit the assignment of
benefits under property insurance policies.
– Prescribing property insurance requirements regarding alternative dispute processes,
coverage options, and agent practices.
– Increasing oversight of property insurance market participants.
– Improving the financial stability of the Citizens Property Insurance Corporation, reducing the
potential for assessments related to the Citizens Property Insurance Corporation, and
fostering the transition of Citizens Property Insurance Corporation policies to the private
property insurance market.
– Providing tax relief and other financial assistance related to damages resulting from
Hurricanes Ian and Nicole.
– Providing additional mechanisms to support the Division of Emergency Management for
natural disaster response, recovery, and relief efforts.
– Establishing a statewide toll credit program for frequent Florida commuters.
– Providing appropriations to implement such legislation.