- On the opening day of a special session to address property insurance issues, lawmakers attempted to reduce litigation costs
- Unilateral lawyer’s fees and a regulation called “assignment of benefits” could be largely eliminated
- Democrats and trial attorneys argued that the proposals would amount to a giveaway for insurers and hurt consumers
- But supporters of the bill say Florida’s legal environment is the leading cause of runaway property insurance costs
TALLAHASSEE — Florida lawmakers began moving quickly Monday to pass major property insurance changes. Proponents said the plan would stabilize the troubled system and critics said it would hurt consumers.
Sen. Danny BurgessR-Zephyrhills said lawmakers need to take action as homeowners across the state face large rate hikes and struggle to find coverage.
“This is real, this is serious,” Burgess said before the Senate Banking and Insurance Committee approved the 105-page plan. “We are at crisis level”
However, opponents said the bill (SB 2-A) was aimed at insurers rather than helping homeowners.
“This bill doesn’t help them at all, not for a long time,” said Sen. Victor Torressaid D-Orlando.
The Senate and House of Representatives began a special legislative session heavily focused on property insurance. But a deal seemed already done: the Republican-dominated Senate and House of Representatives proposed identical bills and the House Speaker Paul RennerR-Palm Coast, told House members he expects Wednesday’s session to conclude at 6:00 p.m.
The plan addresses a myriad of issues, including trying to get customers from the government-backed Citizens Property Insurance Corp. out and into the private market. Another big part of the plan is to help insurers buy critical reinsurance, including by providing $1 billion in taxpayer money to support coverage.
But Monday’s biggest debate focused on changes that supporters say are needed to reduce claims grievances. Insurers have long had lawsuits ratcheting up costs, arguing that changes to attorneys’ fees and a controversial practice called assignment of benefits are needed.
The plan would partially eliminate so-called “unilateral” attorneys’ fees in property insurance cases. Under one-way attorneys’ fees, insurers pay the attorneys’ fees of policyholders who successfully file claims.
Insurers claim that one-time attorney fees create an incentive for litigation. Chairman of the Senate for Banks and Insurance Jim BoydR Bradenton called suits the “fundamental problem” that leads to higher rates.
“We need to address that root cause,” said Boyd, the plan’s Senate sponsor.
But critics said the change would make it harder for policyholders to fight insurers to get the money needed to fully repair homes. This is partly because homeowners would have to pay legal fees out of the money they might get in court cases.
Several speakers at the Banking and Insurance Committee meeting said the bill would limit policyholders’ access to courts and create a “David and Goliath” situation from which insurers would benefit.
“This bill gives Goliath a better helmet, and it hurts me,” he said Jonathan Albaughwhose family has been fighting a claim from Hurricane Michael, which made landfall in Mexico Beach in 2018 and wreaked havoc in northwest Florida.
Among other things, the plan would also eliminate the assignment of benefits, in which policyholders assign claims to contractors, who then collect payments from insurers. The insurance industry argues that awarding benefits fuels litigation, but lawyers and contractors say the so-called AOB helps homeowners who need to repair damage and have no experience dealing with insurers.
The property insurance system has collapsed in the last two years as private transport companies abandoned their insurance policies and increased rates due to financial problems. As an indication of the problems, six insurers were declared insolvent this year. Citizens, which was founded as an insurer of last resort, has also grown to more than 1.13 million policies.
Lawmakers held a special session in May to deal with property insurance, but problems lingered.
Parts of the new plan could increase costs, at least for some homeowners. For example, the bill would introduce a requirement that Citizens customers purchase flood insurance, which many typical property insurance policies do not require.
Democrats repeatedly questioned Monday whether the plan would result in lower interest rates for homeowners and unsuccessfully proposed changes. The Republican-controlled Banking and Insurance Committee passed the bill by direct ballot on the party line.
“What I didn’t see in the Republican bill is meaningful reform that will actually lower interest rates, and I believe Floridians sent us here to do that,” the House Minority Leader said Fentrice DriskellD-Tampa said.
Boyd expressed confidence that the plan will result in lower interest rates, although he acknowledged it would likely take 12 to 18 months for the changes to go through the interest rate process.
insurance commissioner David Altmaier told the Senate committee that the bill would go “a long way” to stabilizing the market.
“It will take some time,” said Altmaier. “It will take time for the provisions of this bill to stabilize the market and see the data points we need to see for insurance companies to comfortably lower their rates for consumers. But I think over the long term this legislation will go a long way in mitigating the rate hikes that we are seeing.”
– Intelligence Assignment Manager Tom Urban contributed to this report.