The Legislature passed an overhaul of the state’s homeowner insurance regulations Friday, the final day of the Legislative Session.
The changes aim to stop rapid increases on insurance premiums and renewal costs, but industry voices continue to wonder whether reforms were robust enough.
The legislation cracks down on contractors who press customers to make unnecessary repairs, and then charge insurance providers. It also looks to reduce attorney fees associated with challenged claims that land in court.
Senate Banking and Insurance Chairman Jim Boyd said everybody “had to give a little bit” in negotiations over the bill. But he said it would bolster an insurance market that has seen wide-ranging rate increases and policies pouring into Citizens Property Insurance.
“I do believe it will help the market kind of rebuild itself,” Boyd, the bill sponsor, said.
Banners flew above Tallahassee behind chartered planes and activists waived placards on street corners as the reform package grew from a bill of limited interest outside the insurance industry to one of the last outstanding matters heading into the final day of the Session. Ultimately, the bill passed in the Senate 35-5 and in the House 75-41.
“This will provide much needed relief for homeowners who have seen their insurance costs continue to rise over the past several years,” Boyd said.
But negotiations with the House over the last few weeks resulted in many industry priorities dropping from the legislation.
Sen. Jeffrey Brandes, a Pinellas Republican, said while the bill may stop the unrelenting annual increases absorbed by homeowners, it will not result in costs going down.
“This is maybe 40% of a solution,” he said.
A version previously passed in the Senate allowed carriers to sell policies covering only the depreciated value of roofs 10 years old or older. The House also approved a bill that would have allowed only the actual cash value to be paid for roof replacements, rather than the full replacement cost. But amendments passed on Friday took all language about roofing policy out.
Another last-minute change? While the legislation cut the time for consumers to file claims from three years to two, the Friday amendment allows one additional year for supplemental claims.
The amendment put in some non-solicitation prohibitions, also.
Limits for attorney fees were limited compared to the version originally passed in the Senate.
Still, Sen. Gary Farmer, a Broward Democrat, argued the attacks on court costs effectively target consumers.
“Homeowners don’t want to sue their insurance companies,” he said. They are terrified of being dropped or facing rate hikes.
Through the Session, several survivors of Hurricane Michael in 2018 testified about their own experiences fighting insurance companies. Marianna homeowner Joe Busby said his insurer undervalued damages to his home by more than $100,000. In the two and a half years since the storm struck, he hasn’t been able to move back in because he has been fighting over the low-ball offer.
Boyd said the expansive legal costs are a problem the industry faces only in Florida. About 8% of disputed claims originate in the state, but 76% of money in court settlements and verdicts is paid out here. And of that, 71% goes to lawyers.
A House addition to the overhaul came with reforming rate schedules for Citizens Property Insurance, the state-run insurer of last resort. The company by law cannot raise its rates each year by more than 10%, even as private property insurers raise them by 25% to 40%.
Rep. Bob Rommel, a Naples Republican, said that limit has put the state at enormous risk. The public carrier, established in 2002, has only about $7 billion in the bank right now, Rommel said, but if Florida were hit by a Hurricane Andrew-type disaster, the state would need to pay out some $100 billion in claims.
Meanwhile, as the cost of private insurance rises, Citizens has been writing 5,000 new policies a week, unable to turn customers away.
“It’s the fastest growing insurance company in America,” Rommel said, “except it’s not really an insurance company. It’s the state of Florida.”
The overhaul allows the state insurer to raise its rates at a faster clip. If signed into law, the bill would let Citizens gradually increase the allowable rate hikes up to 15% a year come 2026.
Democrats resisted the bill on a number of fronts. Sen. Janet Cruz, a Tampa Democrat, on Friday filed an amendment asking that Citizens not raise its rates next year. That failed on the Senate floor.
In the House, Rep. Evan Jenne, co-Democratic Leader, filed an amendment saying in exchange for industry giveaways, carriers should not be allowed to raise rates except in the event of a major windstorm.
“This amendment is really for you to go back home and say I stood up and made sure your rates went down” Jenne said to House members. “It’s my Day 60 gift to you.”
But that proposal too went down.
Still, the bill in the end picked up votes on both sides of the aisle.
Advocates within the industry thanked lawmakers in charge of reform, but said there remains work ahead.
“We are grateful to Senator Boyd, Representative Rommel, and the Legislature for taking important steps to rein in litigation costs and abuse that are driving up rates for homeowners,” said David Santiago, executive director of Floridians for Lawsuit Reform. “With SB 76, Florida joins 45 other states in moving away from the exploitable one-way attorney fee and puts a more common sense limitation on claims filings. However, Florida still accounts for 76% of all homeowners’ insurance litigation in America, and that means more work remains to address litigation loopholes, especially roofing scams, that result in higher premiums for families and seniors. We will continue fighting for rate relief for Floridians until the state’s property insurance crisis is fully solved.”