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Florida lawmakers reveal major proposed changes to property insurance laws

The proposed legislation is set to be voted on next week.
Incoming House Speaker Paul Renner (left) and incoming Senate President Kathleen Passidomo spoke during the Republican Party of Florida's Sunshine Summit earlier this year.
Incoming House Speaker Paul Renner (left) and incoming Senate President Kathleen Passidomo spoke during the Republican Party of Florida's Sunshine Summit earlier this year. [ JIM TURNER | News Service of Florida ]
Published Dec. 10, 2022|Updated Dec. 10, 2022

TALLAHASSEE — State lawmakers have a plan to resolve the state’s property insurance woes: require insurers to respond to claims faster, make homeowners file claims sooner, reduce the incentives to sue insurers and offer a taxpayer-funded $1 billion bailout program for companies.

The wide-ranging legislation was released Friday night, just three days before lawmakers are set to return to Tallahassee for a special session.

It’s unclear if any of the changes will lead to lower rates any time soon for Floridians, who are paying the highest homeowners insurance premiums in the nation.

But hundreds of thousands of homeowners covered by state-run Citizens Property Insurance are almost guaranteed to end up paying more.

Everyone with a Citizens policy would have to buy flood insurance, some as soon as April. And those with Citizens would not be able to renew their coverage if they receive policy offers from private insurers that are within 20% of the cost of the Citizens premiums.

The legislation would also allow the Office of Insurance Regulation broader authority to examine insurers’ practices. And insurers would be required to send any adjusters’ reports to the policyholder within seven days after they are created.

It would also create a new, taxpayer-funded $1 billion program to offer reinsurance, which is insurance that insurers buy ahead of storm season. Insurance companies have complained of rising costs of reinsurance.

The proposed legislation would make the most substantive changes to the state’s insurance laws in years. The bills are the product of weeks of negotiations involving top state lawmakers — and it’s unlikely to change substantively.

The bills, which each top 100 pages, appeared nearly identical, indicating that House and Senate Republican leaders have agreed on the major details.

In May, facing a potentially catastrophic series of insolvencies among Florida insurers (and the November election), lawmakers hastily met in Tallahassee for a special legislative session that did little more than stabilize the market.

Related: Florida lawmakers rush to pass property insurance reforms

Next week’s legislation builds on that, Senate President Kathleen Passidomo, R-Naples, wrote to senators Friday night.

“I believe the goal we all share is for Florida to have a robust property insurance market that offers homeowners the opportunity to shop for insurance that meets their needs and budget,” she wrote. “We also want to make certain that when damage occurs, claims are paid promptly and fairly, so homeowners do not have to contend with time-consuming and expensive litigation.”

Insurance isn’t the only issue on tap next week. Lawmakers want to give 50% discounts on tolls for motorists who record 35 or more transactions in a single month.

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They are also proposing delaying property tax rates for areas hit by Hurricane Ian and appropriating about $750 million for various restoration efforts.

But the focus will be on insurance next week, an issue that lawmakers have failed to tackle despite passing a handful of different bills in recent years.

Here are some of the details on what lawmakers are proposing:

Faster timelines

The legislation would dramatically change the time frames to file a claim and for insurers to respond to that claim:

• Homeowners would have one year, instead of two, to file a claim. They would have 18 months, instead of three years, to file a supplemental claim.

• Insurers would have 60 days, instead of 90, to pay or deny a claim. State regulators could extend it another 30 days in a state of emergency, such as a hurricane.

• Insurers would have 30 days, instead of 45 days, to conduct a physical inspection, even after a hurricane.

• Insurers would have seven days, instead of 14 days, to review and acknowledge a claim communication or to begin an investigation.

Limitations on lawsuits

Insurance companies have complained for years about the rate of litigation in Florida, and lawmakers are poised to dramatically reduce the incentive to sue:

• The legislation would eliminate the requirements that property insurers pay the attorney fees of policyholders who successfully file lawsuits over claims.

• It would end the practice of “assignment of benefits,” in which policyholders sign over their benefits to contractors, who seek payment from insurers.

• It allows insurers to offer policies that require the policyholder to engage in mandatory binding arbitration, which forces them into a dispute resolution process and forbids the policyholder from suing (and is often weighted in favor of the company). The insurer still would have to offer a policy without binding arbitration, and the policyholder who cedes their rights would have to receive an “appropriate premium discount.”

Citizens’ flood insurance requirements

For the first time, Citizens would require policyholders to have flood insurance that is at least equivalent to the coverage available from the National Flood Insurance Program.

Here are the deadlines lawmakers are proposing:

• For policyholders whose property is located within special hazard flood zones defined by the Federal Emergency Management Agency: April 1, 2023, for new Citizens policies and July 1, 2023, for renewing policies.

• For policies insuring property to a limit of $600,000 or more: March 1, 2024.

• For policies insuring properties to a limit of between $500,000 and $600,000: March 1, 2025.

• For policies insuring properties to a limit of between $400,000 and $500,000: March 1, 2026.

• For all other policyholders: March 1, 2027.

The News Service of Florida contributed to this report.