A major rewrite of property insurance laws that seeks to limit lawsuits and stabilize a beleaguered market was signed into law by Gov. Ron DeSantis, sparking outcry from Democrats who say it gives too much to insurance companies without mandatory rate reductions or protections for consumers.
“The issues in Florida’s property insurance market did not occur overnight, and they will not be solved overnight,” DeSantis said. “The historic reforms signed today create an environment which realigns Florida to best practices across the nation, adding much-needed stability to Florida’s market, promoting competition and increasing consumer choice.”
The bill, SB 2A, imposes changes to property insurance lawsuits long sought by the industry that limit the ability for homeowners to file and win court challenges in a claim dispute; sets up a $1 billion reinsurance program backed by taxpayer money; and makes several changes to state-run Citizens Property Insurance designed to push its policyholders into the private market.
Several Democratic amendments to mandate rate freezes and reductions were rebuffed by Republicans during the Special Session. The bill passed along party lines in the House and in the Senate, just one Democrat, Sen. Linda Stewart of Orlando, voted for the bill. Two Senate Republicans, Erin Grall of Vero Beach and Ileana Garcia of Miami, voted against it.
“Floridians are losing yet again,” said Florida House Democratic Leader Fentrice Driskell of Tampa after DeSantis signed the bill. “I worry for our neighbors on fixed incomes. How many people are going to lose their homes before this ‘trickle down’ plan offers any relief? I’m worried about Florida’s retirees. This bill definitely wasn’t written to help them.”
The new law also imposes earlier deadlines on insurers to respond to claims. Insurers will now have 7 days instead of 14 to review and acknowledge a claim and start an investigation; 30 days instead of 45 to inspect a home and 60 days instead of 90 to pay or deny the claim. However, the Office of Insurance Regulation can extend those deadlines if warranted.
DeSantis and supporters of the bill, though, say the drastic changes were needed to entice insurers to return to the Florida market, which has seen six companies fail this year and dozens of others cancel policies and hike rates.
The bill eliminates one-way attorney fees for consumers who prevail in a lawsuit against their insurer and allows carriers to offer discounts to homeowners who opt to use mandatory binding arbitration to settle disputes with their insurer instead of through a lawsuit. It also bars homeowners from signing over their benefits of a claim to a contractor, a practice known as assignment of benefits, typically used in the case of emergencies to speed repairs.
The Florida Optional Reinsurance Assistance program, or FORA, is a $1 billion fund insurers can pay into to receive reinsurance coverage below the Florida Hurricane Catastrophe Fund, or Cat Fund, which has a threshold of $9 billion before claims are paid.
Global reinsurance giants have either left the Florida market or raised rates so high that small domestic companies can’t afford it. That has left some without the necessary coverage required for the homes they have signed on to cover, putting them at risk of failure. Demotech, a ratings agency, threatened to downgrade 17 companies last summer, and did downgrade three before backing off.
Citizens has seen its policy count more than double in two years, from about 500,000 to more than 1.1 million today, as private companies pull back from the market. That has put the rest of the state at risk of assessments if a major hurricane wipes out Citizens’ ability to pay claims.
Under the new law, Citizens customers in flood zones must buy additional flood coverage and if any homeowner receives an offer from the private market within 20% of the Citizens rate, they must move out of Citizens.