With homeowners seeing double-digit rate increases and policies pouring into the state-backed Citizens Property Insurance Corp., many lawmakers say changes are needed in Florida’s property-insurance system.
But the House and Senate appear to be staking out different positions about how far those changes should go.
A House panel Wednesday took up a proposal that would allow larger rate increases for Citizens customers and place additional restrictions on claims and lawsuits against property insurers. But the measure is far more modest than a Senate bill that would allow insurers to limit payments to customers who sustain roof damage and take aim at fees paid to attorneys who represent policyholders.
The House Insurance & Banking Subcommittee signed off Wednesday on the House proposal, which was an amendment that scaled back a property-insurance bill (HB 305) sponsored by Naples Republican Rep. Bob Rommel. For procedural reasons, the panel cannot vote on the revised bill until its next meeting.
But the changes came a day before the Senate Rules Committee is scheduled to take up a broader bill (SB 76), sponsored by Senate Banking and Insurance Chairman Jim Boyd, a Republican from Bradenton. If the bill clears the committee, it would be ready to go to the full Senate.
With private insurers facing financial problems, regulators last year approved dozens of rate increases topping 10%. Also, as the market has tightened, Citizens, which was created as an insurer of last resort, has gained more than 100,000 policies during the past year.
“It’s a crisis, and we need to address it without giving the insurance company too much power,” Rommel told the House panel. “But we need to make sure that we can attract carriers to the state of Florida that want to do business here. And right now, it’s very difficult under the current legal environment.”
The House proposal, in part, calls for changing part of state law that prevents Citizens from raising rates on individual customers by more than 10% a year. Under the proposal, that limit would increase to 11% in 2022 and continue increasing annually until it hits 15% in 2026.
Citizens leaders contend that the state-backed insurer’s rates are lower than many private carriers, contributing to the surge in policies at Citizens. Insurance regulators held a hearing Monday on a proposal by Citizens to raise rates by an overall amount of 7.3%, though individual policyholder rate increases would vary widely.
Among other things, the House proposal also would shorten a timeframe for customers to give notice of claims to insurers after damage occurs. That timeframe would be reduced from three to two years. In addition, the bill would require giving a 10-day notice before lawsuits are filed to allow insurers to make offers.
But the House proposal does not go along with two major parts of the Senate bill. Those parts deal with insurance industry complaints that questionable, if not fraudulent, roofing claims and plaintiffs’ attorney fees are driving up costs in the insurance system.
The Senate bill would allow insurers to use what is described as a “reimbursement schedule” in determining how much they would pay for roof damage. For example, insurers would be required to provide full replacement coverage for roofs less than 10 years old. But they would be allowed to provide less coverage for other roofs — effectively leading to policyholders with older roofs facing the possibility of paying more out-of-pocket costs to repair damage.
Also, the Senate bill also would place additional restrictions on plaintiffs’ attorney fees.
Florida allows plaintiffs to collect attorney fees when they prevail in cases against insurance companies, with the amounts typically set by a calculation of the number of hours spent on a case and a reasonable hourly rate.
But courts also can approve what are known as “contingency risk multipliers” that increase the fees. Under the Senate bill, however, contingency risk multipliers could only be awarded “in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.”