Florida’s property insurance bill slips past House. However, it is not a panacea

The reform package for Florida’s property insurance market, included in the bill being discussed during this week’s special session, has now cleared its last real hurdle in the legislature after being approved by the House of Representatives. It’s a sensible step in the right direction, but not a panacea for all of Florida’s future insurance challenges.

Florida map

This week’s special session of the Florida Legislature appears to have done its job by quickly approving sweeping reform measures that have the potential to have a relatively significant impact on the state’s property insurance situation.

The bill did not pass without opposition, however, and many believe power has now shifted from consumers in the state, prompting broad opposition in the House of Representatives from Democrats.

The bill is extensive and includes issues related to Florida’s property insurance market, the issues that have led to litigation and fueled fraud, and provisions to improve the reinsurance situation in the state with another $1 billion taxpayer-backed stratum below FHCF.

The partisan concerns largely relate to the elimination of one-way attorney fees and the abolition of the Assignment of Benefits (AOB), which now make it much harder for consumers to sue their insurers and hold them accountable.

However, with fraud and litigation being such a problem in Florida, action had to be taken and these were two of the most important actions for the global reinsurance industry.

“This special session was all about relief,” said House Speaker Paul Renner (R-Palm Coast). “I’m proud of the House’s work in striking a difficult but careful balance to stabilize Florida’s property insurance market and the growth of Citizens Insurance. We have created more competition in the market and taken significant steps to reduce frivolous claims while holding insurers accountable to consumers.”

READ :  Fed's preferred measure of inflation shows prices surged again last month

“I’m proud of the reforms we passed during this special session,” said Representative Tom Leek (R-Ormond Beach). “The carefully considered provisions in this law will expand capacity in the property insurance market, improve consumer accessibility and hold insurers accountable.”

“We have a tremendous amount of consumer protection in property insurance legislation,” added Representative Bob Rommel (R-Naples). “I appreciate Spokesman Renner for supporting the billing of a robust legislative package that is a great start in stabilizing the Florida property insurance market.”

For a contrasting view, Rep. Yvonne Hinson (D-Gainesville) said, “This legislation puts homeowners to the test for everything. They will make hiring a lawyer so cumbersome and expensive that most homeowners cannot afford it.”

Democrats said they could not support providing additional taxpayer-backed reinsurance, the $1 billion layer called the Florida Optional Reinsurance Assistance Program (FORA), which provides reinsurance support to layers below the FHCF while doing nothing to at least freeze rates for consumers.

But for Florida to lower homeowner insurance rates, it needs to get its property insurance market in order and stem the tide of claims-related fraud and litigation.

This is the only way to restore reinsurance and capital markets confidence in the government’s non-life insurance industry and these reforms are a major step in a positive direction, although concerns about consumers’ loss of power are certainly valid and the government may need to address them moving forward .

Barry Gilway, CEO of Florida Citizens, is confident that passing the law will make a real difference: “These reforms will reduce litigation and stabilize the property insurance market in Florida by attracting new capital and giving reinsurers the confidence to do business for a… healthy market to provide necessary cover . A stable market will benefit consumers by reducing the pressures that drive up premiums.

READ :  5 common auto collision repairs and how much they cost

“For Citizens, the bill provides the tools to return to our remaining role over time while ensuring policyholders have financially sound private market options. This is historic legislation.”

However, it is not a panacea for all of the challenges Florida’s property insurance market will face in the future.

Other aspects matter, including risk-based pricing. Something Florida’s insurers need to consider and have a firm grip on to move forward.

Because even with the passage of this legislative reform, which Gov. Ron DeSantis is likely to sign into law this week, the reinsurance market still wants to be sure that it is covering its claims costs, capital costs, expenses and a margin when operating in Florida.

That means property insurance needs to be priced appropriately for the risk and climate change is a significant concern for the industry right now, plus burgeoning insurance assets on the coast and ongoing concerns about the quality of some of the housing stock in storm-prone areas of Florida’s coast are becoming a concern be an expensive place to insure and be reinsured.

If the problem of litigation and fraudulent claims can be at least partially solved by these new measures, the market might at least have a chance to adopt a reasonable pricing framework that doesn’t penalize every Floridian for the dysfunctional state of their property insurance market, while rebuilding reinsurance market support .

Florida carriers should also not feel that this legislation puts them out of a bind, as we believe reinsurance capital will be much more selective going forward when working with carriers and pricing risk transfer to them.

READ :  Auto insurance will get even more expensive for 1.2 million NJ drivers in the new year

While litigation and fraud have been a major factor in Florida property insurance problems, insurers must be able to prove their own financial resources.

Optionally thinly capitalized may no longer be a viable strategy, while business plans running on cheap reinsurance in a super-soft market may no longer have the support they had in the past (super-soft rates may never recur anyway). .

Read all of our Florida insurance and reinsurance market news and analysis.

Print friendly, PDF & email

Leave a Reply

Your email address will not be published. Required fields are marked *