Ahead of a Special Session later this month, Gov. Ron DeSantis made the case for reforms to make the homeowners insurance market more stable, while contending the state insurer of last resort could go “belly up” if that doesn’t happen.
DeSantis warned Thursday in Key Biscayne that further expansion of the Citizens Property Insurance Corporation could lead to capitalization issues if a major storm were to hit, while suggesting that state surplus money should be used to bolster the private insurance market with another reinsurance backstop.
“When you are the most empowered is when you can choose between, you know, half a dozen companies and they have to compete for your business. If you don’t have the ability to do that, and you get dumped onto Citizens or something like that, well, then the consumer doesn’t have, really, any power.”
“I would remind people about Citizens, because some people say everyone should just go on that. Citizens, if you had that, you had a massive storm, and it’s not capitalized enough to pay all the premiums, in state law it has mandatory assessments for all policies throughout the state,” DeSantis continued.
“Not just homeowners policies. Renters insurance policies, automobile policies,” DeSantis said, before outlining a potential pitfall of socialized costs.
“So think about it,” the Governor urged. “You could be renting an apartment in Coral Gables and a car that’s insured. There’s a massive hurricane that hits, like, the Panhandle. Citizens, if it went belly up, you could get hit with assessments based off that,” DeSantis warned.
DeSantis warned in October that Citizens was “unfortunately undercapitalized,” noting that the company’s relative lack of exposure in Southwest Florida minimized losses from this year’s catastrophic Hurricane Ian. Clearly those concerns haven’t abated.
The Governor said Thursday the “reinsurance” market “has been tightened,” but not in a way that is “Florida-specific.” Noting that the Special Session in May created a backstop fund for the burdened Florida market, a $2 billion “extra layer” of redundancy that kept “many more companies from going out of business,” he suggested more public money to support the private sector options, but did not offer an actual number.
“Since we have such massive budget reserves right now, could we provide a bridge on reinsurance as the rest of our market starts to get better? I think that if we had a functioning market, there would actually be opportunities for companies to want to come in here,” DeSantis said, expressing confidence that homes in Miami could “withstand a Category 5” hurricane.
DeSantis also suggested that “other states” could offer insights into how to fix the insurance market, lamenting attorney fees specifically.
“What are we doing different from these other states? I think we need reforms that are going to make our markets look like markets that have been more stable and durable,” DeSantis said Thursday in Key Biscayne.
“People look at Florida on how we’re doing right on a lot of things and copying us there. Well, wait a minute. These other states have more stable insurance markets. It’s not just property, unfortunately. There’s others. And we will tackle that as well.”
“Why are they more stable? It’s one thing to say that we have more perils, so marginally a premium will be higher here than some other part of the country. That’s kind of, you live in nice areas, but you recognize that. But it’s the turbulence. And it’s companies that got kicked out of the state,” DeSantis added.
The Florida market has seen at least $1.5 billion in losses in the last two years, with six companies leaving the state in 2022.
December 1, 2022 at 12:56 pm
It’s time for a state income tax to pay for disasters. The Tea Party mentality is killing the state. Best thing to do is sell your house to a New Yorker until the state turns blue and then come back.
December 1, 2022 at 4:41 pm
Damn! You are such an idiot. I think that’s going to be your new name “Eddiott Offen” with two ‘d’s and two ‘t’s. And when you see it, I want you to imagine me saying it loudly, like the way Ren used to scream it at Stimpy.
December 2, 2022 at 11:26 am
What a ridiculous comment. We don’t need a state income tax and we don’t need a bunch of people from other states to buy our houses then come here and ruin Florida. We need to control the scammers – roofers, lawyers, and public adjusters – who are milking the system and driving up rates and forcing people into Citizens. Eliminate attorney fee multipliers and allow companies to get actual cash value settlements on roofs. That will go a long way to bringing stability back to those market.
December 5, 2022 at 6:27 am
There is no need to “control” anyone if the process works. The first thing that needs to get done is to automatically trigger the appraisal clause in claims where the insurance company estimate and the insured’s estimate are so different that both parties cannot come to a quick settlement.
When this happens then if an agreement cannot be reached between the insurance company appraiser and the homeowner’s appraiser then an independent umpire makes the final payment amount decision and the case is settled (cannot be litigated afterwards since a final payment is agreed to by both sides).
The only issue here is that the cost of the umpire is split between the insurance company and the insured (about $1-$2k each) so the insured rarely uses this option and insurance companies don’t use it enough (even though they almost always have a right to choose to use it but then they would have to fully pay for the umpire) but this is peanuts compared to the high cost of litigation.
December 1, 2022 at 4:37 pm
The problems are entirely based on decades of Indoctrination that the Democrats have forced onto our children! They are taught to believe that they are *entitled* to receive benefits.
And since the insurance companies hire people that are *MUCH* smarter than politicians, they have adapted to the political rules with cunning & ruthlessness.
Who are the losers? You & me.
I’d be happy to provide an entire framework for Insurance reform. But I won’t without a consulting fee up front. Why? Because the stupid people will tear it apart out of ignorance, the politicians will shy away from it for fear of backlash from the stupid voters, the lawyers will attack it, to protect their lucrative fees & trial awards, the bean counters will protest because it would put them out of their jobs, and the contractors will complain because they like to sink their meathooks into payers with bottomless checkbooks.
And it’s not just homeowners insurance.
December 1, 2022 at 6:09 pm
So Ronnie wants to give. taxpayer $$ to private insurance companies. I wonder why he didn’t tackle this issue before re-election?
December 2, 2022 at 11:29 am
You really have no idea what you’re talking about, do you? We’re you even aware of the issue before reading this article?
December 1, 2022 at 7:10 pm
Excessive Attorneys fees are the problem. Appraisals would be significantly less costly for both sides. I’m in the insurance restoration business and find that attorneys and poor legislation in Tallahassee is the lingering problem.
Quality appraisals would help solve the problem
December 2, 2022 at 1:19 pm
Exactly. The “problem” isn’t a mystery. It’s not a mystery to the companies trying to figure out how to handle their Florida business any more than it’s a mystery to Ronnie. This is about litigation, period. Payouts are going into attorney pockets.
“Massive budget reserves” as a humble brag and faux solution which can never supplement reinsurance for national/international insurers. Oh, and yeah, of course it a tad “turbulent” to live in such a great spot with a few “more perils”, so the cost of living in free Florida is higher of course, swallow it guys. He’s a fool.
December 1, 2022 at 8:53 pm
In the spring when Demoteck asked for a special session and suggested following Altmaier’s recommendations, they were ridiculed. Then, after “generational changes in the special session, Demoteck was reviled by state officials because Demoteck would not recognize the “great job” that was done. Now, the election is over and the sky is falling in insurance. Someone owes Demoteck an apology.
December 2, 2022 at 11:35 am
Demotech has been part of the problem for 2 decades. They have provided false acceptable ratings for a ton of thinly capitalized Florida domestic insurers instead of telling the truth about their vulnerability. On the few occasions when they have tried to tell the truth, they got decimated and backed off due to political pressure. So far, we have been very lucky. But another Category 4 or 5 storm hitting south Florida or Tampa will be devastating for Citizens, the state, and a bunch of these fly-by-night Florida domestic insurers.
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