Guest Column
Enforcement is the best solution to Florida’s insurance crisis | Column
Too often, language meant to aid homeowners actually reduces their protections. We need to focus on enforcing the strong, pro-consumer laws that are already in place.
The approach of Hurricane Irma in 2017.
The approach of Hurricane Irma in 2017.
Published Apr. 21, 2022

If you’re one of the 14 million homeowners in Florida, chances are that your property insurance rates are increasing at an unprecedented pace with seemingly no end in sight. With some insurers raising rates by as much as 111 percent, others declining coverage or going insolvent, homeowners are paying the cost and bearing the burden of a weakened insurance market.

Chris Cury
Chris Cury [ Provided ]

With no substantive new insurance legislation passed this year and the market in decline, it’s easy to understand why a special legislative session has now been scheduled. But, as lawmakers head into this session, I urge them to consider the great strides on insurance reform in recent years. Last year, SB 76 and SB 1598 were signed into law, to provide more protection for consumers and discourage the type of fraudulent activity that drives up policy rates.

It was dismaying to see a temporary injunction issued by a federal judge preventing enforcement of one of the key fraud-preventing elements of SB 76 shortly after. It can take at least 18 months before the market sees the impact from a new bill, but it will take even longer to see the full effect from SB 76 pending the outcome of an upcoming trial.

Lawmakers need to take care that any proposed legislation that results from special session is not just crafted with the insurance carriers in mind, but also includes concerns for consumers. Too often, language meant to aid homeowners actually reduces their protections. We need to focus on enforcing the strong, pro-consumer laws that are already in place.

There are several key areas where action can be taken right now without further legislation.

Insufficient enforcement and fraudulent claims

We need a deterrent. Multiple bills have been passed in recent years adding criminal penalties and substantial fines for engaging in unlicensed claims activities. Solicitation and advertising for claims currently require licensing and regulation in Florida. An investigator recently revealed that state attorneys are not always prosecuting fraudulent claims even when state regulators pursue investigations. This disincentivizes fraud investigators from using their limited resources on building cases against many bad actors. We are all paying the price with fewer choices and higher premiums. We need to commit to enforcing existing property insurance laws and giving them appropriate time and resources to make an impact.

Insurance rates

Policyholders are being unfairly taken advantage of by unlicensed and unregulated bad actors who are artificially driving up claim frequency and severity in Florida, leading to “shrinkflation” — higher rates with less coverage. State attorneys need to understand how fraud is affecting every consumer in Florida, not just the individuals involved in a single claim. Reducing fraud across the state will, in turn, lower premiums. According to a report last year from Florida’s Insurance Consumer Advocate, insurance fraud costs the average family $400 to $700 per year in increased premiums.

Florida hurricane catastrophe fund

The single most important step that can be taken during the legislative session is to Increase access to the Florida Hurricane Catastrophe Fund so insurance carriers are not forced to purchase expensive reinsurance from foreign entities and pass those costs down to policyholders. This could have a significant impact on insurance rates.

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Litigation on legitimate claims

Litigation is incentivized when insurers do not pay what they owe and what is fair on legitimate claims. This draws out the claims process leaving more and more claims open and unpaid. Insurers should not dispute legitimate claims and should pay what is fairly due to avoid policyholder disputes resulting in litigation.

As advocates for policyholders, the Florida Association of Public Insurance Adjusters seeks a stronger insurance market, but not one that comes at the price of less coverage and more cost to homeowners. With another active hurricane season approaching and the insurance market in decline, it’s up to our state attorneys and insurers to act fast to cut down on fraud and focus on enforcement to help bring the market to an equilibrium.

Chris Cury is president of the Florida Association of Public Insurance Adjusters’ board of directors. He obtained his public adjusters license in Florida in 2008 and is focused on advocacy for insurance consumers.