Florida Legislature’s Special Session is Impacting Homeowners Insurance

The Florida Legislature’s Special Session is Impacting Homeowners Insurance Daily. I witness Floridians paying some of the highest homeowners insurance premiums in the nation. Reasons having little to do with their exposure to hurricanes and more because of claims fraud. Floridians are seeing homeowners insurance become costlier and scarcer. For years the state has been the home of too much litigation and too many fraudulent roof-replacement schemes. These two factors contributed enormously to the net underwriting losses Florida’s homeowners’ insurers cumulatively incurred between 2016 and 2021.

The abundance of unneeded new roofs on homes and flashy lawyer billboards at every turn claiming massive settlements on claims. Florida’s insurance market is on the verge of failure. This man-made catastrophe is causing financial strain on consumers. The annual cost of an average Florida homeowners insurance policy will skyrocket to $4,231 in 2022, nearly three times the U.S. annual average of $1,544.

Two major hurricanes made landfall in the state since 2016: 2017’s Irma and 2018’s Michael.

No direct hits occurred in Florida over the past three hurricane seasons.

Florida Needs Tort Reform

Florida currently, the site of 79 percent of all homeowners insurance lawsuits over claims filed nationwide, even though Florida’s insurers receive only 9 percent of all U.S. homeowners insurance claims, according to the Florida governor’s office. To illustrate how lawsuits have weighed on insurer operating costs, the Florida Office of Insurance Regulation (OIR), reported $51 billion was paid out by Florida insurers over a 10-year period, and 71 percent of the $51 billion went to attorneys’ fees and public adjusters. The 2020 and 2021 cumulative net underwriting losses for Florida homeowners’ insurers totaled more than $1 billion each year.

The state’s homeowners’ insurers have been forced to respond to these unfortunate market trends this year by restricting new business, non-renewing existing policies, and even canceling policies mid-term. Adding insult to injury, four homeowners insurance companies have been declared insolvent since February — all while more Americans are moving to Florida than any other state.

Florida Homeowners Forced to Use Citizens

Citizens Property Insurance Corp., the state-backed property insurer of last resort in Florida, has seen its policy count rise to nearly 900,000 this month. Its policy count figure stood at about 420,000 in October 2019. Citizens provides insurance coverage to homeowners unable to find a private-sector insurer willing to sell them a homeowners insurance policy.

Placing further pressure on the affordability and availability of homeowners’ insurance in the state, rating bureaus have downgraded financial ratings of some insurers operating in Florida.

The typical Florida homeowners’ insurance policyholder paid $2,505 for coverage in 2020, recently that figure rose to $3,181 in 2021. Based on data analyses from Florida’s OIR, and National Association of Insurance Commissioners (NAIC) what insurers are paying today for home replacement costs.

Special Session Two Steps Forward One GIANT Step Back

During a special legislative session in May 2022, Florida lawmakers passed Senate Bill 2B, which Gov. Ron DeSantis signed into law. The measure is aimed at easing homeowners’ premium increases and reducing excessive litigation. However, the modest “reforms” passed during the three-day session will not meaningfully strengthen a system on the brink of collapse.

“Since the special session of the legislature took place last month Florida’s private insurance market has been spiraling down a cliff,” said Mark Friedlander with Insurance Information Institute. “The legislature did not fix the problems that are causing the crisis in our state.”

In Tallahassee, lawmakers met to try and tackle the issue. Reinsurance was key, but Friedlander said even the global reinsurance market thinks Florida is too volatile. “It is not a market they want to invest in so they’re pulling back on the reinsurance coverage and, once again, they point the finger at the legislature for not addressing the critical issues driving this crisis,” said Friedlander. Between 2013  and 2020 Florida’s property insurance paid out $15 billion. Claims breakdown costs: 8% of that was paid to consumers will 71% was paid to attorney’s

My Safe Florida Home Program

In the Florida Legislature’s Special Session Impacting Homeowners Insurance, insurers will be unable to decline covering homes solely based on an aging roof.  The new legislation will also restore a 2006 program that offers homeowners up to $10,000 to storm-harden their houses. The program, My Safe Florida Home, plagued by fraud in the past, had no accountability measures preventing further issues discussed. It was also funded with only $150 million, 40 percent less than the $250 million the state committed in 2006.

The State of Florida is experiencing record growth, providing an ocean of real-estate and development-related cash, producing a record budget. But without a viable, let alone healthy property insurance market, that golden goose won’t last long.  The measures rushed through ahead of the holiday simply won’t cut it. Our own Senator and local insurance magnate Jim Boyd (R-Bradenton) is the Senate’s point man on insurance reform. Boyd has said he has asked Senate leadership to hold a summer workshop to further explore the issue.

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