Gov. Ron DeSantis signed a large property insurance bill Thursday evening, a measure designed to shore up a troubled industry that has seen a spate of bankruptcies, cancelations and rate hikes.
That volatility spurred DeSantis to call a Special Session, which concluded Wednesday when the House passed SB 2D. The measure was part of a batch of 10 signed bills DeSantis’ office announced he signed.
“This package represents the most significant reforms to Florida’s homeowners insurance market in a generation,” DeSantis said in a released statement. “These bills will help stabilize a problematic market, help Floridians harden their homes through the My Safe Florida Home Program, and pave the way for more choices for homeowners.”
One of the bill’s most contentious provisions is a Reinsurance to Assist Policyholders Program, a $2 billion fund backed by state taxpayer money to allow insurance companies to receive reinsurance, which has become more expensive for most companies and for others, difficult to obtain even at a high price.
Reinsurers have grown skeptical of entering the Florida market as litigation and roof claims have risen. Insurers claim those are the main culprits for their losses, which grew to $1.5 billion in the last two years, leading to large rate hikes for most homeowners.
The bill tries to address that by limiting the amount of attorneys fees and adding requirements for lawyers representing homeowners to prevail in court.
It limits the awarding of a “contingency fee multiplier,” given out in complex cases to “rare and exceptional” cases. Also, attorney fee awards in assignment of benefits cases, where a homeowner signs over the benefits of a claim to a contractor, are eliminated. For a homeowner to win a bad faith claim against an insurer, the homeowner must show a company is in breach of its contract.
Democrats criticized the RAP program as a bailout for insurance companies that, while it might be needed, didn’t guarantee rate cuts for homeowners. Republicans countered that the savings insurers receive on their reinsurance costs because of their participation in the RAP program must be reflected in new rate filings with state regulators by June 30.
Insurers will now also be able 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.
However, the bill also bars 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.
The My Safe Florida Home program touted by DeSantis allows homeowners to receive grants and credits to harden their home against wind damage.