Florida Senate approves insurance overhaul that hits homeowners hard
TALLAHASSEE — New limits on lawsuits, changes that will push homeowners out of Florida’s state-backed insurer and another $1 billion in taxpayer money to bolster the troubled property insurance industry were approved Tuesday by the state Senate.
The legislation (SB 2A) is poised for final approval Wednesday in the state House, with the Republican-led Legislature expected to then end this week’s special session that was called by lawmakers to stabilize a staggering insurance market that was further rocked by September’s Hurricane Ian.
The bill, approved 27-13 by the Senate, is decidedly industry-friendly. But it comes with no guarantee that premium rates will drop.
Still, for customers — especially the 1.1 million policyholders in state-supported Citizens Property Insurance Corp. — the measure will certainly have an impact.
“My constituents are getting screwed,” said Sen. Jason Pizzo, D-North Miami Beach.
Sen. Jim Boyd, R-Bradenton, an insurance executive sponsoring the legislation, said serious steps are needed to improve a Florida market, where more than a dozen insurance companies have stopped writing homeowners’ policies, including seven that recently went out of business altogether.
“We’re facing a crisis in property insurance. And we’ve got to take dramatic steps to fix it,” Boyd told senators.
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Other legislation set for final House approval seems aimed at softening the potential blow of the insurance changes.
One measure (SB 4A) provides property-tax refunds for homes across 16 Florida counties that sustained major damage from Hurricane Ian and later, Hurricane Nicole. Another (SB 6A) offers a 50% toll discount, beginning Jan. 1, for next year to SunPass and other Florida transponder accounts whose drivers record 35 or more transactions in a month.
Two special sessions on insurance this year
But insurance is what has really pulled lawmakers back to the Capitol.
Citizens now has double the number of policyholders from two years ago, as Floridians who can’t find private coverage to meet mortgage requirements are relying on getting a state-backed policy.
But under SB 2A, people would be barred from renewing Citizens’ policies if a private insurer offered one that was within 20% of Citizens' premium. That’s basically the same requirement for first-time Citizens’ policy-seekers.
New standards are also added. First-time Citizens’ customers in a flood zone would be required to have flood insurance, beginning in April. Homeowners renewing Citizens’ policies in flood prone areas would need the added coverage by July.
Pizzo pointed out that even high-rise condominium dwellers with Citizens’ policies in his Miami-Dade district will have to buy costly flood insurance.
“You’re doing an absolute disservice for the citizens of this state by voting for this bill,” Pizzo said. “I’m telling you, this is a very bad bill.”
$1 billion in taxpayer money for insurers
Lawmakers also are pushing another $1 billion in taxpayer money into a reinsurance fund for insurers to use. During a May special session — which Gov. Ron DeSantis called on property insurance — the Legislature had set aside $2 billion for reinsurance, basically insurance for insurance companies who complain that its cost on the private market has become prohibitive.
Boyd said that shrinking the number of Citizens’ policyholders is necessary, since insurance data shows its policies are about 30% cheaper than the common market rate now. In Miami-Dade, Citizens is 40% cheaper.
Because of its better price, that diminishes its historic role as the state’s “insurer of last resort,” lawmakers said.
But some of the most vigorous debate Tuesday swirled around limits on the ability of customers to sue their insurance company when they’re not satisfied with their claim outcome.
Boyd insisted that “the root” of Florida’s insurance problems stem from lawyers suing over claims. He cited industry-endorsed statistics that shows Florida accounts for 7% of the nation’s insurance claims, but 76% of lawsuit costs over claims.
But Democrats argued that the legislation will further a power imbalance between customers and their insurer.
“I’m a kindergarten teacher going up against an insurance company, and I’m sure they have an attorney there,” said Senate Democratic Leader Lauren Book of Plantation.
Customers will find it harder to sue insurers
Banned under the bill are so-called, one-way attorney fees, which will make homeowners shoulder more of the costs of suing. Critics warn that homeowners will be put in a tough spot, even if they win a lawsuit, since a large share of their settlement would now go to paying their own attorneys’ fees.
In another step aimed at discouraging lawsuits, the legislation allows insurers to offer policies that require property owners to enter binding arbitration, barring them from suing. These policyholders would be assured of some discount on their premiums.
Also prohibited would be the use of Assignment of Benefits (AOB), which many homeowners rely on to hire a contractor who will battle directly with their insurers.
Florida homeowners pay the highest premiums in the country, almost three times the national average, according to the Insurance Information Institute, an industry organization.
These premiums also are climbing at a rate of about 33% annually, compared to 9% boosts across the rest of the nation.
While the Senate was debating the legislation, a House committee also was advancing its own version — in advance of an expected final vote Wednesday on the package.
House Democrats in the Commerce Committee argued that the measure went too far in protecting insurers at the expense of policyholders.
“People don’t want to hire a lawyer, but they have to,” said Rep. Hillary Cassel, D-Dania Beach, an attorney who specializes in property law. “They’re forced to because insurance companies aren’t transparent.”
Rep. Dotie Joseph, D-North Miami, said the insurance market could be stabilized without such action.
“We can make sure that the market is stabilized while at the same time providing relief to consumers and protecting their rights to access the courts,” Joseph said. “And you know what? They might not even need rights to access the court in the same way if the insurance companies were playing fair in the first place.”
Rep. Tom Leek, R-Ormond Beach, the co-sponsor of the insurance bill, pushed back, saying if action wasn’t taken, Florida residents would soon be in a position where they wouldn’t be able to find coverage at all.
“You’ll just be out of your house, on your own, with no recourse,” Leek said. “If you want rate relief, you have to stabilize the markets.”
John Kennedy is a reporter in the USA TODAY Network’s Florida Capital Bureau. He can be reached at firstname.lastname@example.org, or on Twitter at @JKennedyReport
USA Today Network-Florida government accountability reporter Douglas Soule is based in Tallahassee, Fla. He can be reached at DSoule@gannett.com. Twitter: @DouglasSoule