House passes property insurance bill over rate cut gripes

TALLAHASSEE, FLA. 3/09/22-Rep. Jay Trumbull, R-Panama City, makes his farewell speech, Wednesday at the Capitol in Tallahassee. COLIN HACKLEY PHOTO

In the face of rising property insurance rates, cancellations and a spate of insolvencies, lawmakers passed a large property insurance bill Wednesday designed to stabilize the troubled market.

The vote in the Florida House on SB 2D was 95-14, with Rep. Erin Grall of Vero Beach the only Republican to join a handful of Democrats opposing the measure. The bill will next head to Gov. Ron DeSantis’ desk. He is expected to sign it.

The bill limits attorney fees, sets up a $2 billion taxpayer-backed reinsurance fund and makes changes to how insurers cover roof damages. The provisions are designed to thwart what insurance companies say is driving their losses and therefore the large rate increases — spiking roof claims, lack of reinsurance and costly litigation.

Although many Democrats voted for the bill, even those who did expressed angst over many of the provisions.

A change in the law limiting the use of a “contingency fee multiplier,” which is awarded in complex cases to “rare and exceptional” cases, and another measure preventing attorney fee awards in assignment of benefits cases — in which a consumer signs over the benefits of a claim to a contractor — reduces a homeowner’s ability to sue their insurer over a disputed claim, some Democrats argued.

“This bill isn’t going to be the quick fix they’re expecting us to bring home,” said Rep. Christine Hunschofsky, a Parkland Democrat. “This bill in its best moment will stop (rate increases) from getting too much worse. That’s a step in the right direction … but it’s not enough.”

The main complaint from Democrats, however, was the lack of guaranteed rate reductions for homeowners.

Bill sponsor Rep. Jay Trumbull, a Panama City Republican, noted that the Reinsurance to Assist Policyholders Program, the reinsurance fund set up in the bill, requires companies who take advantage of the fund to pass on the reduced cost of their reinsurance to consumers in rate filings with state regulators by June 30. Reinsurance, though, is one factor of a rate request, so the overall rate could remain high, despite a small cut compared to the current rates.

For some Democrats, that wasn’t enough, and they offered amendments to require immediate 5% rate reductions and other amendments to impose rate cuts, which were rejected by Republicans.

“I don’t think it’s okay to just come here and say I did something if it’s damaging,” said Rep. Anna Eskamani, an Orlando Democrat. “You don’t want to do something if it’s damaging.”

Republicans, though, defended the plan as a way to eventually reduce rates.

“It will reduce the costs. It’ll bring more companies to our state,” said Rep. Ralph Massulo, a Lecanto Republican. “It’ll bring competition in our state which will also drive down costs.”

Other parts of the bill allow insurers to impose a new deductible for roof claims of up to 2% of the policy or 50% of the cost of the repairs. Homeowners can opt out of that deductible, but policies with the deductible will cost less.

The bill includes some consumer protections, such as a provision banning insurers from refusing to cover homes with a roof younger than 15 years old solely because of the age of the roof. Insurers will also be required to inspect damage on a home within 45 days of receiving a claim for non-hurricane damage.

Upon passage, Florida Chamber of Commerce President and CEO Mark Wilson praised the Governor for “tackling the root causes driving up property insurance rates.”

“As Gov. DeSantis rightly pointed out in his proclamation, it is clear Florida has a litigation problem that is costing Florida ratepayers when they can least afford it,” Wilson said in a news release. “The necessary lawsuit abuse reforms the Governor forged consensus around and put forth by Senator Boyd and Representative Trumbull in SB 2D/HB 1D will help build the infrastructure for a more stable and competitive insurance market.”