Lawmakers pass property insurance revamp

April 30, 2021

Jim Saunders

TALLAHASSEE --- Grappling with problems in the property-insurance market, Florida lawmakers Friday passed a plan that could lead to larger rate increases for customers of the state-backed Citizens Property Insurance Corp. and steps to curb roof-damage claims and lawsuits.

But the plan was not as far-reaching as a Senate proposal that would have effectively shifted more costs to many homeowners when they sustain roof damage.

Senate Banking and Insurance Chairman Jim Boyd, R-Bradenton, said everybody “had to give a little bit” in negotiations over the bill (SB 76). But he said it would bolster an insurance market that has seen wide-ranging rate increases and policies pouring into Citizens Property Insurance.

“I do believe it will help the market kind of rebuild itself,” Boyd, the bill sponsor, said.

The bill, however, drew criticism from some lawmakers who said it went too far --- and others who said it didn’t go far enough. Sen. Annette Taddeo, D-Miami, complained about the prospect of increased rate hikes for Citizens customers.

“There is no sugar-coating this,” Taddeo said. “It literally is going to raise the rates.”

But Sen. Jeff Brandes, R-St. Petersburg, said the bill will not fix financial problems in the insurance market.

“We are on an unsustainable trajectory,” Brandes said. “This bill is 40 percent of what it needed to be.”

The Senate voted 35-5 to approve the bill, and the House followed with a 75-41 vote. The bill now goes to Gov. Ron DeSantis.

The bill came against the backdrop of regulators last year signing off on dozens of rate increases topping 10 percent. Also, as the insurance market has tightened, Citizens has gained more than 120,000 policies during the past year.

The insurance industry points to problems such as litigation costs and questionable, if not fraudulent, roof-damage claims. Also, officials argue that Citizens, which was created as an insurer of last resort, often charges lower premiums than private insurers.

Lawmakers such as Brandes argue that growth in Citizens poses a major financial risk to the state. But the issue of raising Citizens’ rates is tricky politically because homeowners in some areas have few --- or no --- other options for coverage.

The bill would make a series of changes. They include:

--- Allowing larger annual rate increases for customers of Citizens. Such increases currently are capped at 10 percent, but that limit would be gradually raised to 15 percent.

--- Preventing contractors from soliciting homeowners to file insurance claims, including offering incentives to homeowners. That part of the bill is intended to curb roof-damage claims. It also seeks to prevent public insurance adjusters from offering incentives to inspect for roof damage.

--- Taking steps to try to limit fees of attorneys who represent homeowners in lawsuits against insurers. That involves using a formula that would look at how much money is awarded in court judgments and how much money was offered by insurers to settle claims before the lawsuits.

--- Reducing from three years to two years the time to file claims, with an additional year for supplemental claims. 

The Senate initially sought more far-reaching changes to attorney fees and roof-damage claims. In part, it proposed creating a “reimbursement schedule” that would have allowed insurers to sell policies that provide reduced payments for repairing or replacing roofs over 10 years old. For example, insurers could have reimbursed 70 percent of the costs for metal roofs over 10 years old and 40 percent of the costs for concrete-tile and clay-tile roofs. 

The change would have led to shifting more costs to many homeowners when they have roof damage. But the House balked at the idea, which was not included in the final bill.

Like Brandes, Sen. Doug Broxson, R-Gulf Breeze, said he is concerned that lawmakers continue to “kick the ball down the road without making major changes.”

But Sen. Gary Farmer, D-Lighthouse Point, likened the insurance industry to “Chicken Little” and disputed arguments about major financial problems among insurers.

“It’s a manufactured crisis --- a completely manufactured crisis,” Farmer said.