Property insurance legislation starts to come into focus ahead of Special Session

Damage from Hurricane Michael in the Panama City area.

Negotiators with the House, Senate and Gov. Ron DeSantis’ Office are close to an agreement on legislation lawmakers will pass during the Special Session, which starts Monday and is aimed at stabilizing Florida’s creaky property insurance market.

According to key executive branch and legislative staffers and lobbyists familiar with the negotiations, while there isn’t a done deal, a rough outline for the bills has been discussed within the last week.

One of the main provisions is a prohibition on one-way attorney fees for lawyers representing contractors. The one-way attorney fee statute would remain in place, however, for lawyers representing homeowners.

The provision is sought by insurance companies to limit costs related to assignment of benefits, or AOB, a practice in which a homeowner signs over the benefits of a claim to a contractor or repair company, who then does the repairs and handles the claim for the homeowner. Insurers cited the practice as the source of a jump in claim costs, as some repair companies did unnecessary work. Lawmakers passed a bill to curtail the use of AOBs in 2019, but insurers complain some contractors are finding loopholes to the measure.

Another provision aimed at lowering attorneys fees would reduce the use of the “contingency risk multiplier” which is used to multiply fees in complex or difficult cases. The measure would restrict its use to “rare and exceptional” cases. Trial lawyers have said the fee multiplier is essential to attract lawyers to difficult or expensive cases, and infringing on it could leave some consumers without representation.

Insurance companies would also be able to require consumers pay a deductible of up to 2% for roof repairs as part of the slate of bills to be considered by lawmakers. Regulators are already allowing insurers to offer roof deductibles as an option to consumers.

Some of the measures under discussion build off of previously passed laws and provisions considered during the regular Session but never passed. For instance, the Legislature passed SB 76 in 2021, which required a claimant to file a notice of intent to sue 10 days before filing the lawsuit. Insurance companies have complained some lawyers aren’t following the law, so a new measure under consideration would impose fees on lawyers who don’t file a notice of intent.

Other provisions would seek to close loopholes surrounding the AOB law.

Also under discussion are measures to make it easier for companies to receive payouts from the Florida Hurricane Catastrophe Fund, or CAT Fund. Currently, claims would have to exceed $8.2 billion for the CAT Fund to pay claims. Reducing that threshold would make it cheaper for companies to purchase reinsurance, alleviating pressure on some smaller companies that could see ratings downgrades without legislative action.

Sen. Jeff Brandes, a St. Petersburg Republican, pushed to lower the threshold to $4.5 billion during the regular Session, estimating it could save homeowners $150 per year, but the idea never gained traction.

What doesn’t appear to be on the table for the Special Session are measures dealing with Citizens Property Insurance, a state-run company designed to be the safety net for the market, covering homes deemed too risky for the private sector to cover at an affordable rate. Citizens has seen its policies double in two years, to more than 800,000, and it could reach 1 million by the end of the year.