Florida Lawmakers Seek Fix For ‘Massive Losses’ Suffered By Insurers

Florida lawmakers took action last week to address the state's growing property insurance problems.

The state Senate passed Senate Bill 76, Property Insurance, by Sen. Jim Boyd, R-Bradenton. The legislation addresses several issues surrounding the rising cost of property insurance in Florida, Boyd said.

Specifically, the bill clarifies options for insurance coverage related to roof damage and replacement, creates a uniform period for filing a property insurance claim, requires that the insured party provide notice to the insurance company before filing a lawsuit, and changes how attorney fees are awarded in property insurance litigation.

"We want to make certain that Floridians have access to property insurance that is both reliable and affordable. Right now we have a situation in our state where homeowners are paying more for their property insurance, and yet insurance companies are suffering massive losses," Boyd said. "One of the biggest drivers of rate increases is the extraordinary number of roofing claims in Florida. This bill provides a needed update to roofing policies to both protect homeowners and prevent the abuse of claims by predatory attorneys and contractors."

The Senate will now need to reach an agreement with the House, which has already moved forward with a separate property insurance bill HB 305 with differing views from SB 76. The House bill would not allow insurers to provide reduced payments for roof damage.

Rising Insurance Rates

However, supporters of SB 76 are arguing that the bill can help subdue the rising insurance rates facing homeowners, which came in light of major financial losses experienced by insurers; recent data has shown that over 50 insurers in the state have reported a combined $1.57 billion in underwriting losses in 2020 alone.

Specifically, the bill allows property insurers to only offer homeowner's policies that adjust roof claims to actual cash value if the roof is older than 10 years. The bill also allows property insurers to offer homeowners the option of purchasing a stated value limit for roof coverage. A homeowner that is offered such a policy would receive a disclosure that their insurance policy does not provide replacement cost coverage insurance for the roof.

In a total loss of the primary structure, a reimbursement schedule and stated value sublimit do not apply and the insurer's liability will be for the total amount of insured property as provided in the policy. The bill also creates a uniform two-year period for filing a property insurance claim, supplemental claim, or reopened claim.

The current high rates and limitations to roof repairs, in conjunction with the projected active Atlantic hurricane season, are also creating challenges for thousands of Floridians who have recently been unexpectedly dropped by their insurers and might seek litigation.

Customers Getting Dropped

Getting non-renewed has become a challenge for tens of thousands of Florida homeowners over the past few years as insurers look for ways to get risky properties off their books.

Two South Florida companies recently targeted some of their policyholders for non-renewal. Fort Lauderdale-based Universal Property & Casualty, which no longer writes policies in its home region, is declining not to renew 2,500 of its policies. With more than 700,000 policies in Florida, spokesman Travis Miller pointed out that the number of non-renewals “pales in comparison to both the total number of policies written by the company and the amount of new business it has historically written.”

Coral Gables-based Weston Insurance Co., which specializes in windstorm coverage, is non-renewing about 500 of its wind-only policies, according to a local agent with access to proprietary information from insurers. Weston’s CEO and president did not respond to an email seeking confirmation.

It’s not clear how many policies are being non-renewed statewide, but the troubling trend is reflected in the rapid increase of customers fleeing to state-owned Citizens over the past year. Since April 2020, the company’s policy count has increased from 445,000 to 563,000 and is now growing by 4,000 policies a week. Citizens officials expect to have more than 700,000 by the end of the year, prompting a push by legislators and Citizens’ new chairman to make the company less attractive by raising premiums and cutting agents’ commissions.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.