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Florida Legislature passes property insurance overhaul

“What this bill signifies to me is hope,” one lawmaker said. But it has no guarantees that homeowners’ rates will go down.
Members of the Florida House of Representatives work during a legislative session at the Florida State Capitol, March 8, 2022, in Tallahassee.
Members of the Florida House of Representatives work during a legislative session at the Florida State Capitol, March 8, 2022, in Tallahassee. [ WILFREDO LEE | AP ]
Published Dec. 14, 2022|Updated Dec. 14, 2022

TALLAHASSEE — The Florida Legislature passed sweeping changes to the state’s property insurance laws on Wednesday.

Now it’s time for Florida homeowners to wait — and hope their premiums go down.

This week’s legislation, passed during a hasty special session in Tallahassee, is meant to stabilize the state’s imploding property insurance market.

It offers a $1 billion taxpayer-funded aid program for struggling insurers and sharply limits the incentives to sue those companies.

One thing it won’t do — at least any time soon — is lower rates for Floridians, who are paying the highest homeowners insurance premiums in the nation.

And those with state-backed Citizens Property Insurance policies will likely end up paying more than they do today.

“What this bill signifies to me is hope,” said Rep. Tom Leek, R-Ormond Beach. “Hope and a plan to make sure that we as the state of Florida are doing everything we possibly can to repair a broken property insurance market.”

“Hope don’t pay your bill,” said Rep. Patricia Williams, D-Pompano Beach.

Each chamber passed the legislation during a 48-hour blitz less than a week after the bill was introduced. Public testimony in some committees was limited to a minute. On Wednesday, Republican leaders limited Democrats’ total debate to 80 minutes.

The result was never in doubt. On Tuesday, the Senate approved the bill with a 27-13 vote, largely along party lines. The House on Wednesday voted 84-33.

Related: Florida insurance fees, company payouts a ‘problem,’ GOP lawmaker says

Limiting lawsuits

One of the few things lawmakers agreed on this week is that the homeowners insurance market is in a crisis that has been building for years. Six companies have gone out of business this year.

Republicans’ solution is largely a giveaway to the insurance industry, which has complained for years that it’s been sued too often. The state does have a disproportionate number of lawsuits for the number of claims. In 2019, the state accounted for 16% of the nation’s homeowners claims, but 76% of the nation’s litigated homeowners claims, state regulators say.

Why there are so many lawsuits is hotly in dispute, with Republicans this week blaming fraudulent trial lawyers and Democrats blaming insurance companies holding up claims.

State regulators won’t have any detailed data from insurers on litigated claims until March at the earliest, Insurance Commissioner David Altmaier told lawmakers this week.

The legislation passed Wednesday would largely eliminate the requirements that property insurers pay the attorney fees of policyholders who win 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.

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And it would allow insurers to offer policies that require the policyholder to engage in mandatory binding arbitration in lieu of a lawsuit. The policy would have to be cheaper than one without binding arbitration.

Insurance companies have also cited the high cost of reinsurance — insurance that insurers buy to pay out claims during storms — for their struggles. In response, lawmakers created a $1 billion taxpayer-funded program to offer reinsurance.

The legislation has no guarantees that companies will lower homeowners’ rates, and Republicans had no analyses demonstrating that lower rates would be the result.

But House Speaker Paul Renner, R-Palm Coast, said the insurance market is so dire that the priority was keeping insurance companies from going out of business.

“That’s where we are. I don’t like that. Floridians don’t like that,” Renner told reporters. “We’re in a very, very bad spot. So the win today is the hope that we can continue to have insurance for everyone.”

In time, rates might come down, Renner said. That was not enough, Democrats said.

“We’ve heard a lot about stabilizing markets,” said House Minority Leader Rep. Fentrice Driskell, D-Tampa. “What about stabilizing checkbooks?”

Alternatives rejected

Republicans called the legislation a balanced proposal, pointing to the fact that they were shortening the timelines for insurance companies to pay or deny a claim (60 days instead of 90) and to conduct a physical inspection (30 days instead of 45), among other time frames.

But the legislation also reduces the time for a policyholder to file a claim, from two years to one.

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

The legislation was crafted behind the scenes, after weeks of meetings between Gov. Ron DeSantis’ office and GOP leaders in the House and Senate.

It went untouched during this week’s session, with Republicans rejecting every amendment Democrats proposed. One of those was filed Wednesday by Rep. Anna Eskamani.

Her proposal would have prohibited bonuses or awards to property insurance executives at companies that raise rates. She cited reporting in the Times/Herald that insurer CEOs made millions in years without storms.

Related: Florida insurance company execs saw big payouts in years without hurricanes

“There is nothing more disgusting than profiteering off the backs of Floridians,” said Eskamani, D-Orlando.

Renner said that high executive compensations, particularly for companies that are now insolvent, “doesn’t sit well.” And he expects to “see some results” from insurers after this week’s session.

“There’s been a lot of talk for many, many years that the things we did today will change the market,” Renner said. “We absolutely have higher expectations coming out of this session for insurers to see that progress.”