Florida Legislature Unveils Property Insurance Proposals
DECEMBER 12, 2022
By Jim Saunders
A lot can change as bills wind their way through the Florida Legislature, but proposals announced Friday show where discussions shall begin.
TALLAHASSEE, Fla. – With a special legislative session now underway, the Florida House and Senate late Friday released proposals that, if enacted in current form, would make far-reaching changes in the state’s troubled property-insurance system.
The bills (HB 1A and SB 2A) would take steps to reduce litigation costs, move policies out of the state-backed Citizens Property Insurance Corp., offer additional reinsurance to insurers and try to speed up claims.
The bills, which each top 100 pages, appeared nearly identical, indicating that House and Senate Republican leaders have agreed on the major details.
“I believe the goal we all share is for Florida to have a robust property insurance market that offers homeowners the opportunity to shop for insurance that meets their needs and budget,” Senate President Kathleen Passidomo, R-Naples, said in a memo to senators. “We also want to make certain that when damage occurs, claims are paid promptly and fairly, so homeowners do not have to contend with time-consuming and expensive litigation. SB 2A continues our efforts to focus on fair costs and strong protections for consumers while adding reasonable guardrails for insurance companies against the frivolous litigation and fraudulent claims that drive up rates for everyone.”
The insurance market has faced problems during the past two years, with insurers seeking large rate increases and dropping hundreds of thousands of customers because of financial losses. Citizens, which was created as an insurer of last resort, has seen its policy count more than double to 1.13 million.
Some of the bills’ proposed changes
The bills would eliminate requirements that property insurers pay the attorney fees of policyholders who successfully file lawsuits over claims. Insurers have long blamed the requirements for spurring litigation and driving up costs, while plaintiffs’ attorneys argue the elimination would make it financially difficult for policyholders to pursue valid lawsuits.
The bills would largely eliminate a controversial practice known as “assignment of benefits” (AOB) for property-insurance claims. In assignment of benefits, policyholders sign over claims to contractors, who ultimately seek payment from insurers directly. Insurance companies contend that the practice increases lawsuits.
The bills would seek ways to push policyholders out of Citizens and into coverage from private carriers. For example, Citizens policyholders would not be able to renew their coverage if they receive policy offers from private insurers that are within 20% of the cost of the Citizens premiums. Citizens officials say the state-backed insurer typically charges less than private insurers, creating a disincentive for policyholders to get coverage in the private market.
The bills would create the Florida Optional Reinsurance Assistance Program, which would make available additional reinsurance to carriers. Reinsurance, which is essentially backup coverage for insurance companies, plays a crucial role in Florida but has become increasingly expensive and difficult to purchase.
The bills would make a series of changes related to claims, such as shortening a timeframe from 90 days to 60 days for insurers to deny or pay claims. Also, the bills would reduce from two years to one year the time for policyholders to provide notices of loss for initial claims and reopened claims.
The special legislative session started Monday, and most observers expect hearty debate on the attempt to influence litigation.
“Litigation has caused costs to policyholders and alike to outstrip the premiums that are being paid,” Fred Karlinsky, a prominent insurance lobbyist and attorney with the Greenberg Traurig firm, said Friday night after the bills were released. He added that the bills will “hopefully serve to curb the abuses we have seen proliferate,” while providing balance.
House Speaker Paul Renner, R-Palm Coast, acknowledged last month that whatever passes during the special session will not quickly lead to lower rates for consumers.
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