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Florida legislators set to pass property insurance fixes that may not help homeowners right away

Rep. Jim Boyd (R-Bradenton) on the House floor.
Florida House of Representatives
“We’re on a respirator in the homeowners’ market right now, and it’s not getting better,” Senate Banking and Insurance Chairman Jim Boyd, the bill’s Senate sponsor, said.

Bill sponsor Jim Boyd acknowledged the bill likely will not lead to immediate rate cuts for homeowners.

Florida lawmakers are poised Wednesday to give final approval to a series of changes aimed at shoring up the property-insurance market as homeowners lose coverage and face steep rate increases.

The Senate voted 30-9 on Tuesday to pass the proposal (SB 2-D), while the House is expected to vote on it Wednesday. Gov. Ron DeSantis called a special legislative session that started Monday to deal with issues such as reinsurance, roof-damage claims and lawsuits against insurers.

“We’re on a respirator in the homeowners’ market right now, and it’s not getting better,” Senate Banking and Insurance Chairman Jim Boyd, the bill’s Senate sponsor, said.

But Boyd acknowledged the bill likely will not lead to immediate rate cuts for homeowners — an issue that drew criticism from many Democrats, who called for freezing or reducing rates.

“I thought that was what we were here to do — to lower the rates for consumers,” Sen. Annette Taddeo, D-Miami, said.

A key part of the bill would lead to the state spending up to $2 billion to provide reinsurance for insurance companies. Reinsurance is critical backup coverage, but many insurers say they are struggling to find reinsurance coverage — or to afford it — in the private market.

Insurers have long been required to purchase certain amounts of coverage through the Florida Hurricane Catastrophe Fund, a state program that provides relatively cheap reinsurance. Under the bill, the $2 billion would provide another “layer” of reinsurance to insurers that otherwise might not be able to buy it in the private market. Also, the bill calls for savings under that part of the bill to be passed along to ratepayers, a process that could take months.

Insurers need to have reinsurance contracts in place as soon as June 1, which added urgency to lawmakers holding the special session and passing a bill. Boyd and Senate Jeff Brandes, R-St. Petersburg, said homeowners’ insurers could lose their financial ratings if they don’t have reinsurance, which could prevent them from writing coverage.

But some Democrats questioned spending $2 billion, with Sen. Janet Cruz, D-Tampa, calling it a “$2 billion tax giveaway” to prop up insurers.

“I challenge the words tax giveaway and prop up,” Boyd replied.

The House Appropriations Committee also approved its version of the bill (HB 1D) on Tuesday, preparing the issue to go to the House floor. House Speaker Chris Sprowls, R-Palm Harbor, said he expects to finish the session Wednesday.

The Senate and House were not able to reach agreement on a property-insurance bill during this year’s regular legislative session, which ended in March. But problems have continued to mount in the insurance market, with three carriers — Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co. — being declared insolvent and placed into receivership since February.

After DeSantis called the special session, his office and Senate and House leaders reached agreement on the proposal. Along with reinsurance, the measure focuses heavily on roof-damage claims and lawsuits that insurers blame for driving up costs.

The proposal, in part, would allow insurance policies to include new deductibles for roof damage. The deductible amounts would be 2 percent of the overall insured value of homes or 50 percent of the costs to replace roofs. For example, the 2 percent deductible on a $300,000 home would be $6,000.

Deductibles would not be charged on such things as hurricane damage or situations in which trees fall and puncture roofs.

The measure also would make a series of changes designed to reduce lawsuits and attorney fees in litigation about insurance claims.

That includes putting new restrictions on what are known as “bad faith” lawsuits against insurers. Also, the proposal would seek to make it harder for plaintiffs’ attorneys to receive “contingency fee multipliers,” which can significantly increase amounts paid to lawyers.

Brandes said litigation is “destroying the property-insurance market in the state of Florida,” and he called for going further in placing restrictions on lawsuits and attorney fees.

But Sen. Gary Farmer, a Lighthouse Point Democrat who is a plaintiffs’ attorney, said insurance companies would decline claims “like crazy” if they didn’t face the threat of lawsuits.

“Bad faith (lawsuits) and attorneys’ fees are the only things keeping insurance companies moderately honest,” Farmer said.

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