Debris after Hurricane Irma hit the Florida Keys. Credit: Florida Fish and Wildlife Commission photo
Legislation intended to shore up Florida’s crumbling insurance industry is ready to send to Gov. Ron DeSantis to sign following a three-day special session of the Florida Legislature to address the deteriorating marketplace, skyrocketing premiums, and widespread policy cancellations on the eve of hurricane season.
The state Senate adopted the package on Tuesday and the House on Wednesday. Both GOP-dominated chambers rebuffed every attempt by Democrats to freeze and/or reverse double-digit rate hikes, leaving the plan as crafted by House and Senate leaders and DeSantis’ office before the special session even began.
Rep. Joe Geller, a Broward-Dade Democrat, stood up in protest Tuesday to blast the leaders and the governor’s team for crafting the legislation behind the scenes, not making it public until late Friday, with the special session beginning the following Monday, and ramming it through without input from other lawmakers.
Bill sponsors in both chambers refused to accept any changes proposed by House or Senate members who gathered at the Capitol to work on the problem.
“Why don’t we legislate anymore?” said Geller, whose numerous proposed amendments were all defeated, including one requiring an insurer to prove its rationale for canceling a homeowner’s policy.
“We should be going back and forth over the course of some weeks. Why didn’t we do this in regular session anyway? Why does it wait until the Friday night before? If there’s a problem with the amendment … by God, we ought to be fixing it, not voting it down. We’re supposed to come here, to use an old-fashioned word … we called it legislating.
“Do our jobs. Please. We’re the Legislature. Let’s legislate.”
House and Senate Democrats lamented concessions by the legislation’s sponsors that policyholders won’t see immediate relief, and some called it an outright corporate bailout.
“This special session did not address the real issue Florida homeowners need: being able to afford their insurance policies,” said Sen. Annette Taddeo, a Miami-Dade Democrat and gubernatorial candidate, in a post-session statement Wednesday. “The majority of this body voted in favor of more bailouts for insurance companies.”
On Tuesday, Sen. Janet Cruz, a Hillsborough Democrat, said the key provision of the package — a $2 billion appropriation to aid insurers over the next two years — is “a tax giveaway” for insurers at taxpayer expense.
Job 1 was to keep insurance companies afloat
The bill sponsors, Republicans Sen. Jim Boyd of Manatee-Sarasota and Rep. Jay Trumbull of Bay County, said policyholders would feel some relief down the road, but Boyd said Job 1 was to curb the volume of insurance companies going out of business in Florida.
Industry experts with the Federal Association for Insurance Reforms and Florida TaxWatch told the Phoenix over the last two weeks that the make-or-break issue is whether primary insurers in Florida can secure billions of dollars of reinsurance coverage from larger companies to help them cover large payouts that would otherwise bankrupt them.
Reinsurers are walking away from the marketplace here, the experts said, due to high payouts related to increasingly severe weather and increasingly costly litigation over claims.
In response, the legislation creates a $2 billion reinsurance fund to be called Reinsurance to Assist Policyholders, or RAP. Insurers who draw on the funds are required to apply for rate decreases by June 30. It is not clear in the legislation how soon those decreases would have to go into effect, but it requires regulators to “expedite” the applications. Boyd said Tuesday that consumers likely won’t feel rate relief for 12 to 18 months.
The bill would allow insurers to charge separate deductibles for roof damage of up to 2 percent of the home’s total insured value or 50 percent of the cost to replace the roof. Deductibles would not apply to a total loss of the structure, a loss caused by a hurricane or a tree fall, or a loss requiring repair of less than half of the roof.
Addressing allegations that fraud in roof claims is driving up insurance losses, the new legislation limits roofing contractors’ ability to solicit homeowners to file claims. It sets tough limits on attorney fees in litigation between insurers and policyholders. Democratic critics blasted that provision, saying it restricts policyholders’ ability to force their insurance companies to pay up.
Other key provisions in Senate Bill 4D:
- Companies can’t refuse to insure roofs less than 15 years old or when inspections show they have at least another five years of useful life.
- State regulators must promptly carry out their duties to analyze and report why insurance companies in Florida have failed and to hold the companies accountable.
- Puts $150 million into a “My Safe Florida Home” program to pay for hurricane mitigation inspections and provide matching grants of up to $10,000 to “harden” homes against hazards.
In addition, lawmakers passed Senate Bill 4D, addressing building codes, roofing, and a package of new condominium regulations following the deadly Champlain Towers condo collapse in Surfside last June.
Many lawmakers voted yes despite reservations
The vast majority of lawmakers voted for the insurance overhaul, despite reservations about helping insurance companies without providing immediate relief for homeowners.
“I don’t think, unfortunately, that our constituents are going to see the results that they want to see right away,” said House Democratic Leader Rep. Fentrice Driskell of Hillsborough County during debate Wednesday. “This is an important first step for us to take. But it can’t be the last step.”
As happened in the Senate Tuesday, the House on Wednesday voted down a raft of Democratic-sponsored amendments, including a one-year freeze on rate increases, a mandatory 5 percent reduction in premiums, requiring insurers to disclose the effects of climate change on their business, and breaking down their policy issues by race and sex.
The defeat of those amendments kept the House bill consistent with what the Senate passed on Tuesday, allowing the final product to go the governor, who is expected to sign it, having helped craft it pre-session with Republican leaders in the House and Senate. DeSantis convened the special session under political pressure while insurance companies filed for insolvency and tens of thousands of insurance policies were cancelled around the state.
House and Senate leaders refused to hear amendments seeking to address rapidly rising rents, ruling them to be out of order although the sponsors argued the rent crisis is another aspect of the housing crisis.
Following adjournment, members of the Florida Legislative Black Caucus expressed dismay and exasperation at the outcome of the special session.
“Where is the relief for property owners and consumers? Taking an inch when we could take a mile is unacceptable,” said Rep. Patricia Williams, a Broward Democrat. “Twenty-seven amendments from the Democrats and not one was accepted to assist homeowners. There’s good in the bill but not enough.”
“It’s unfortunate that we are going back to our districts and we are going to have to figure out a way to work with our local governments to combat this housing crisis,” said Rep. Daryl Campbell.
“As a Legislature, I feel like we dropped the ball,” he said. “We can’t guarantee that rates will drop. We are going off of invalid data. We weren’t given the data that we needed to make a concise decision on how to address the matter or even see what the root causes are. We have a lot of work to do.”
Rep. Michele Rayner, representing a west-coast district from Hillsborough to Sarasota, said the legislation doesn’t do what legislative leaders promised.
“I did not come up to Tallahassee for insurance companies; I came up to Tallahassee for consumers,” Rayner said. “All of my constituents need relief now. And the issue that I have is that we were told that rate reduction was the legislative intent of this bill. And we don’t see that in this bill.”
Meanwhile, lawmakers made clear that the property insurance crisis is far from over, with three double-digit rate hikes as high as 49 percent already in the works, new policy cancellations issued last week, and more insurance companies expected to go bust after June 1 because they cannot secure reinsurance coverage.
The state-run insurer of last resort, Citizens Property Insurance Corp., has doubled in volume in the last 18 months to absorb newly uninsured homeowners, causing lawmakers to fear triggering of hefty assessments on all types of insurance policies statewide.
Phoenix reporter Issac Morgan contributed to this report.
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