TALLAHASSEE – Ignoring concerns that the bill doesn’t provide policyholders immediate relief from high premiums, the Republican-majority Florida Senate on Tuesday approved bipartisan legislation that aims to stabilize Florida’s troubled property insurance market, which the bill’s sponsor warned is in danger of imminent collapse.
A handful of Democrats joined Republicans in approving new efforts to limit lawsuits against insurers and other changes to the market amid dire warnings that its failure could result in even more pain for homeowners and the economy.
“I can guarantee you this: Doing nothing we will be back in three weeks or four weeks because the market will be in collapse and then what do we do?” said Sen. Jim Boyd, R-Bradenton, the bill sponsor.
Some Democrats argued that the industry’s problems are exaggerated and partly of its own making, but with insurance companies failing, rates increasing dramatically and homeowner’s losing coverage there is intense pressure on lawmakers to act. The bill passed 30-9.
Gov. Ron DeSantis bowed to that pressure and called a special legislative session to address the insurance crisis. Lawmakers are moving quickly to pass reform measures, with the Republican-dominated House expected to approve the legislation Wednesday and send it to the governor for his signature.
Florida’s property insurance market has been in crisis before after major storm events, but Boyd — an insurance agent — said the current situation is one “I never dreamed we’d be in in Florida.”
“I’ve been in the insurance business for over 40 years,” Boyd said. “It’s unbelievable what’s going on right now.”
Insurance companies say they are being deluged with frivolous lawsuits and questionable roof damage claims. They sought relief in the form of limits on attorney’s fees and other legal changes.
Some Democrats pushed back against the fraud allegations, which DeSantis and Boyd have echoed. Critics of the bill worry that it will make it harder for policyholders to get legitimate claims paid if their legal options are further constrained.
“To the extent that this bill abrogates, erodes and pulls back the rights of consumers to access the courts… I can’t support,” said Sen. Darryl Rouson, D-St. Petersburg.
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Democratic Sen. Jason Pizzo, D-Miami, said the bill “effectively is tort reform — not property insurance.”
Yet there is no guarantee those legal reforms will result in rate reductions. Boyd said he believes limiting insurers legal exposure will prompt rate cuts, but it could take up to 18 months for that to happen.
“I wish I could guarantee your constituents and my constituents that these rates will go down immediately,” Boyd said in his closing comments. “I just can’t guarantee that.”
Democrats pushed for a rate freeze.
“At least the freeze allows us to know we’re not seeing another rate increase,” said Sen. Bobby Powell, D-West Palm Beach.
Boyd said insurers are “on the ropes” and he doesn’t want to limit their options to stay financially viable.
“We’ll look forward to the good results of this bill a little bit later on,” Boyd said.
DeSantis also was careful not to promise immediate rate relief, warning Tuesday against hopes of “radical reductions” after the special session.
Still, DeSantis hopes the proposals will strengthen the market and make Florida more attractive to insurance companies.
More companies, he contended, will allow policyholders to policy shop and therefore force market competition. He described such market conditions as the “most important first step.”
“I think the telltale will be are you going to have more business wanting to come into Florida and offer policies to people,” DeSantis added during an event Tuesday in Gadsden County.
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In addition to limiting lawsuits, the legislation approved by the Senate puts $2 billion in state money at risk to bolster insurers struggling to get affordable reinsurance and allows policies with a separate roof deductible equating to either 2% of a home’s value or 50% of the value of the roof. Homeowners wouldn’t pay the roof deductible for hurricane or tree damage.
Sen. Lori Berman, D-Delray Beach, called the $2 billion “basically a corporate bailout.” Insurers don’t have to pay for the reinsurance, which is insurance for insurance companies, but they must reduce rates. The state could lose the money if Florida has a bad hurricane season.
Democratic state Sen. Janet Cruz, of Tampa, said the $2 billion reinsurance fund is helping “failing companies.”
“We’re propping up a corporation because we want Floridians to have coverage,” she said.
Boyd said companies are being hit with big reinsurance price increases that are “just crippling.”
“I don’t believe we’re propping up failing companies,” he said, adding: “There’s some good carriers out there that are just having a heck of a time getting competitive reinsurance.”
The big money attached to the bill and big changes to a number of aspects of insurance law underscore the urgency of the problem, which threatens homeowner’s finances and the state’s economy.
“It is something if you’re looking to buy into Florida to be able to have access to affordable insurance is very, very important,” DeSantis said during a press conference Monday in Cape Coral.
Opinion:Enforcing existing laws could solve Florida’s property insurance crisis
The GOP-led Legislature is taking aggressive steps to salvage the market. Their effort is particularly notable given the timing — 2022 is an election year and the special session, just months ahead of November, spotlights a pocketbook issue for millions of property owners.
“This is the pocketbook issue of Florida today,” said Sen. Jeff Brandes, a St. Petersburg Republican who argued Tuesday that the bill doesn’t go far enough to help insurers facing a “man-made disaster.”
“That man-made disaster is the litigation that is destroying the property insurance market in the state of Florida,” said Brandes, who opposed what some saw as one of the more consumer friendly aspects of the bill, a provision aimed at stopping insurers from dropping coverage on homes with older roofs.
The bill prohibits an insurance company from refusing to write or renew a policy based on the age of a roof, provided the roof is less than 15 years old or an inspection determines there still is at least five years of roof life left.
Some Democrats argued the legislation still is tilted too much toward insurers and not enough toward consumers, and pushed to have a variety of other provisions included.
Sen. Gary Farmer, D-Lighthouse Point, wanted more oversight of managing general agents, insurance company affiliates that he argued are used to siphon off money.
“That makes the big insurance company look like they’re losing money but they’re not, it’s just getting funneled a different way…,” Farmer said. “It’s a shell game. They are cooking the books.”
Jason Delgado is a reporter for the USA Today Network-Florida. He’s based in Tallahassee. Reach him at JDelgado@gannett.com
