A homeowners insurance reform package heads back to the Senate after winning approval on the House floor Wednesday 74-43.
The bill goes back to the upper chamber with new language about Citizens Property Insurance rates and a different approach as it relates to attorneys fees.
“There’s not a person in the room who doesn’t agree there is a problem with insurance rates rising 25% to 35% a year,” said Rep. Bob Rommel, who has carried the legislation in the House. “If we do nothing rates will double in two years. If we still do nothing, they will double again in two years.”
The Naples Republican said lawmakers must address the skyrocketing costs for home policies. The only way to address the high cost of insurance in Florida, he said, is to reduce the costs of claims that land in court.
If a judgment obtained by the claimant in a settlement offer by the insurer, excluding reasonable attorney fees and costs, is less than 20% of the disputed amount, each party pays their own attorney fees and costs. If that difference is between 20% and 50%, the insurer pays the claimant’s attorney fees and costs equal to the percentage of the disputed amount obtained times the total attorney fees and costs. Any more, the insurer pays the claimant’s full attorney fees and costs.
“This makes sure lawyers get paid fairly, but not abusively,” Rommel said. He noted that Florida accounts for just 7% of all property insurance claims, but 77% of all lawsuits.
Rommel also said it’s important the state allow Citizens, the state-run insurer of last resort, to raise rates at a faster pace if necessary. The public insurer can only implement increases of up to 10% now, and the legislation would gradually increase that over the next five years, ultimately allowing boosts of 15% by the year 2026.
That’s still much less than the private market rate increases consumers must swallow now; homeowners this year in Florida have been hit by hikes of 25% to 40% anecdotally. Rommel said Citizens is writing 5,000 new policies a week and has a high exposure now in the event of a Hurricane Andrew-level catastrophic disaster.
Democratic critics, though, said this legislation is the wrong answer to the problem.
“Citizens is growing in customers,” said Rep. Anna Eskamani, an Orlando Democrat. “The reason why is insurance in the private market is so expensive people are turning to Citizens as the only option.”
Rep. Geraldine Thompson, a Windermere Democrat, said Floridians know and live with the risks of living in Florida, from sinkholes to hurricanes. Most pay insurance for years knowing they may someday need services.
Rep. Omari Hardy, a Broward County Democrat, said insurance companies can’t be happy to accept higher premiums but resist the obligation to help people when it’s time to help. “Typically litigation does not occur until an insurance company denies the claim,” he said.
Thompson pointed to Hurricane Michael survivors, like Joe Busby, a Marianna man who hasn’t been able to return to his home more than two years after the disaster because he has been fighting in court. Helping insurance companies avoid responsibility for denying claims is not the solution, she said.
She also noted even former House Speaker Allen Bense, a Republican far more knowledgeable about state law than the average consumer, has similarly run through adjusters in the wake of Hurricane Michael. “He said the number one obstacle is the insurance company,” Thompson said.
The House shot down an amendment Tuesday that would have required reduced rates if the reforms pass for insurance companies.
The legislation also includes other controversial elements. Those include allowing coverage for roof replacement to cover the cash value, not the full replacement cost. It also reduced time to file claims from three years to two.
Those changes for the most part were included in the legislation when it was passed in the Senate last month
Rommel declined to forecast the reception in the Senate to the amended bill.
“I don’t make predictions, but it’s very good policy,” Rommel told Florida Politics.
Sen. Jim Boyd, a Bradenton Republican and the Senate sponsor, suggested there are still challenges ahead.
“We still have some work to do in order to enact reform that will lower rates,” Boyd said. But he said he supports the changes involving Citizens.