Florida Senate passes property insurance overhaul

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TALLAHASSEE, Fla. (AP) – The Florida Senate on Tuesday approved sweeping legislation that would overhaul the state’s property insurance system, which has been plagued by insolvencies, high costs and major storms.

The bill would create a $1 billion reinsurance fund, reduce litigation costs and force some customers to leave a state-created insurer. It would also force insurers to respond more quickly to claims and increase state oversight of insurers’ conduct after hurricanes.

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The Republican proposal was introduced during the GOP-led Legislature’s second special session this year aimed at stabilizing the state’s home-owner insurance market. The state House is expected to give final approval to the measure this week.

Florida has struggled to control rising property insurance costs and keep insurers afloat in a market where natural disasters weigh heavily on the cost of doing business. The session comes after Hurricane Ian slammed into the southwest coast in late September and caused between $40 billion and $70 billion in insured losses.

The bill, which builds on insurance legislation passed in May, is not expected to immediately lower rates for policyholders, which has drawn criticism from Democrats. Supporters of the bill argue that it is intended to stabilize the market, which could lower rates in the future.

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“As we look forward, and as these reforms take place and expand into the rate-setting process, I absolutely believe it will lower your costs,” said Republican state Sen. Jim Boyd, who sponsored the bill law “While it may not happen today, I absolutely believe we will have rate relief as we go forward.”

Average annual premiums have risen to more than $4,200 in Florida, which is three times the national average. About 12 percent of the state’s homeowners don’t have home insurance, compared to the national average of 5 percent, according to the Insurance Information Institute, a research organization funded by the insurance industry.

“Homeowners in Florida are being crushed right now by the cost of housing and insurance costs are a big part of that,” said state Sen. Darryl Rouson, a Democrat. “Any action that doesn’t address the instability and costs to the consumer and doesn’t provide meaningful short-term relief for policyholders, I believe, fails to achieve our goals.”

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Senate Democrats introduced a round of amendments to the bill and peppered Boyd with detailed questions about the state of the insurance market, insurance litigation and various elements of the complex proposal.

Republicans rejected the Democratic amendments after several hours of debate and eventually passed the legislation.

The insurance industry has seen two straight years of net underwriting losses exceeding $1 billion each year in Florida. Six insurers have gone bankrupt this year, while others are leaving the state.

The insurance industry says litigation is partly to blame. Loopholes in Florida law, including fee multipliers that allow attorneys to charge higher fees for property insurance cases, have made Florida an excessively litigious state, a spokesman for the Institute of Insurance information.

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The Florida Office of Insurance Regulation has said the state accounts for 76 percent of the nation’s homeowner’s insurance claims, but only 9% of all homeowner’s insurance claims.

The legislation would eliminate “one-way” attorney fees for property insurance, which require property insurers to pay the attorneys’ fees of policyholders who successfully litigate claims, while shielding them from paying the attorneys’ fees of ‘lawyers of insurers when they lose.

Advocacy groups have argued that the insurance industry is to blame for refusing to pay claims and that policyholders are seeking them as a last resort. The alternative, arbitration, is tilted in favor of insurance companies, they say.

“The answer is punishing the people of Florida? They’re not going to have any opportunity to challenge a decision that an insurance company makes unless they’re independently wealthy,” said Ron Haynes, a Tampa attorney who speaks for the Florida Justice Association, to the House Appropriations Committee. “Insurance should be a covering blanket and not a blanket that suffocates you.”

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The bill would provide $1 billion in taxpayer funds for a program to provide carriers with hurricane reinsurance, which is coverage purchased to help ensure they can pay claims. It would offer “reasonable” rates in a market where companies have complained about rising costs.

The proposal would also speed up the claims process and eliminate the state’s assignment of benefits laws, in which property owners assign their claims to contractors who then handle the proceedings with insurance companies.

“This is groundbreaking legislation. In fact, it’s the strongest insurance reform package we’ve ever seen proposed in Florida,” said Mark Friedlander, a spokesman for the Insurance Information Institute. He called litigation abuse and profit allocation abuse “root causes of Florida’s property insurance crisis.”

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Florida’s shaky insurance environment has pushed homeowners who can’t get private coverage to the state’s public insurer of last resort, Citizens Property Insurance, which this summer surpassed a million policies for first time in almost a decade.

The bill would force people with Ciutadans policies to pay for flood insurance and require them to switch to private insurers if they offer a policy up to 20% more expensive than Ciutadans.

“We have a sweeping bill here that, in my view, is absolutely historic,” said Barry Gilway, president, CEO and executive director of Citizens. “It’s the beginning of a major change in the property insurance market in Florida. It’s going to bring capital back into the Florida market. It’s not going to happen overnight, but it’s going to happen a lot sooner than people think.”

Lawmakers this week are also expected to pass separate bills that provide property tax relief to people whose homes and businesses were made uninhabitable by Ian and refund 50 percent to travelers who pay more than 35 motorway tolls in one month with a transponder.


Associated Press writer Curt Anderson contributed from St. Petersburg, Florida.



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