Florida House Speaker Paul Renner and key committee heads address the press on Dec. 14, 2022, following the conclusion of a three-day special session on insurance reform. Credit: Michael Moline
The Florida Legislature’s special session on insurance reform ended Wednesday in an air of inevitability: The House gave final passage to a bill extending a $1 billion subsidy to insurance companies but doing little to decrease premiums any time soon or provide relief for ordinary homeowners.
The bill creates a fund in that amount to help carriers purchase reinsurance against their risks in a chancy Florida market — this after creating a similar, $2 billion reinsurance fund as recently as May. The measure furthermore would make it harder for policyholders to retain attorneys to help them force carriers to pay in full.
Additionally, it would drive customers of Citizens Property Insurance Corp. Florida’s insurer of last resort, into significantly pricier policies on the private market. And most Citizens policy holders must purchase and maintain flood insurance coverage over the coming years that is at least equivalent to the coverage provided by the National Flood Insurance Program. That flood insurance would be on top of regular premiums.
House Speaker Paul Renner cast the products of three days’ debate this week as at least a start on easing the burdens on taxpayers imposed by escalating insurance rates, catastrophic damage from hurricanes Ian and Nicole, and general inflation.
“We don’t get to pick the moment we’re in, but this moment’s delivered three blows to all of our citizens: two terrible hurricanes; a property insurance market that has been teetering on the verge of collapse; and runaway inflation,” Renner told reporters following adjournment.
“Today, we addressed relief for all three categories,” he said.
Democrats, having failed to steer the House and Senate GOP supermajorities to provide direct relief to ordinary Floridians, nursed their wounds during a post-session press conference.
“Florida House Republicans and senators just passed a bill that provides a $1 billion bailout to insurance companies and no real rate relief to Florida homeowners,” Democratic caucus chair Fentrice Driskell said.
The legislation does little to force insurers to administer claims more quickly and fairly, instead making it harder for policyholders to retain attorneys to help them pursue claims, Driskell continued. Neither does it address the degree to which industry’s internal financial practices may contribute to market volubility.
“We’re at a time when Florida has its largest budget surplus in history and rather directly help homeowners we provided a bailout to the industry,” she said.
Gov. Ron DeSantis, who asked the Legislature to convene the special session after being pressed on insurance and housing costs during his reelection campaign this year, was conspicuous by his absence this week, although he was said to have been involved in crafting the legislation behind the scenes.
The governor also was pursuing a separate priority, about COVID safeguards and vaccines; he has asked the Florida Supreme Court to convene a grand jury to investigate that matter.
At least eight insurance companies have entered receivership in Florida since 2019, five of them during 2022 alone. Florida insurers together ran $1 billion in the red during 2020 and 2021; the last time they showed a profit was in 2016.
Part of the problem is that the global reinsurance market has tightened, making it harder for carriers operating in Florida to hedge against catastrophic risks endemic to the Florida market. The $1 billion Florida Optional Reinsurance Assistance program the Legislature just passed is designed to help them pay the reinsurance deductibles required under state regulation. Without it, they statutorily would be barred from selling policies here.
The bill also targets policyholders lawsuits against carriers they accuse of dilatory claims policies. Homeowners now will be barred from assigning their claims to their contractors or attorneys, generally more sophisticated litigants against well-lawyered carriers. And the bill repeals a law passed in 1893 requiring carriers to pay legal fees incurred by policyholders who beat them in court.
Carriers had gunning for those practices for years if not decades.
“Litigation isn’t the problem — it’s the scapegoat,” Ron Haynes of the Florida Justice Association, representing plaintiffs’ attorneys, said in a written statement.
“Behind every lawsuit is a homeowner or business owner who has been underpaid or wrongfully denied coverage. These people are desperate to repair their homes or restore their businesses. Policyholders are living up to their end of the bargain under the insurance contract. It’s time the Legislature put real reforms in place to ensure insurance companies do the same,” Haynes continued.
Bill sponsors conceded their fixes may take 18 months or more to result in lower rates, if then. It could depend on whatever new market or climatological events lay in store.
“We’re in a very grim reality with respect to the property insurance market. As you know, we don’t get to pick the reality or the market we’re in. We have to try to fix it,” Renner said.
“What I am confident of is that today we have fixed the property insurance market. That does not mean that tomorrow your insurance rates are going to go down, because tomorrow’s premiums are based on the storms of the last year and the few years preceding that. We still have a window of Irma claims to be filed.”
That storm hit in 2017.
“But this will begin the process of bringing new money into the state, both with respect to private insurance at the domestic [in-state] level but also reinsurance. It will take time, but I am confident that we have set the measures in place that are necessary to restore a healthy market like we enjoyed not so many years ago,” Renner continued.
Driskell lamented the focus on the carriers rather than homeowners.
“Hopefully, homeowners are watching and paying attention. We always talk about how elections have consequences. This is a substantial consequence. We believe that every Floridian deserves the freedom to be healthy, prosperous, and safe. But, along with that, we have to have voters who make sure they hold their elected officials accountable at the ballot box.
“They’re already feeling the pain and it’s only going to escalate,” she said. “And they need to remember that, and they need to remember the next time around to make sure they elect candidates who actually reflect their values.”
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