Achieving economic equilibrium in the property insurance marketplace

We, the Florida Legislature passed a bill addressing the property insurance market because the market needs correction. Florida consumers are experiencing non-renewals and insurance premium hikes because of natural disasters, litigation, and insurance companies going out of business or deciding to no longer do business in Florida.

From 2009 until 2015, we had a prosperous insurance market because major hurricane activity was limited. Leaders of Florida insurance companies could not foresee the following five years of hurricanes, so they did not financially plan accordingly to remain solvent.

The partisan bill focuses on making Florida a desirable place for property insurance companies to do business with the goal of reaching economic equilibrium, which means property insurance should be more affordable with optimal services because of the marketplace competition encouraging fair prices and good services.

I believe we can reach a place of economic equilibrium longer term here in Florida, but Florida residents deserve relief sooner than later. The bill does not address any immediate relief but could potentially assist with the longer-term stability of the market. Still, it is not balanced and is more focused on providing immediate relief for the insurance companies but not for consumers.

There are good parts in the bill that enforces insurance companies to review claims and process claims faster. To curtail fraud, there are also more strict time limitations for consumers to report claims. It also changes the assignment of benefits arrangement so that construction services price assessments can be more aligned with the fair market value.

The one part of the bill that made it difficult to support was discontinuation of consumer legal representation that the insurance company could pay for if the legal representation won the claimant's case by more than 50% above the pre-suit settlement amount. During the previous session, Senate Bill 76 was very helpful in mitigating unnecessary lawsuits. Since its passage, we have seen a 30% decrease in litigation surrounding claims.

I believe de-incentivizing litigation that does not bring beneficial consumer support for legitimate claims, helps make insurance more affordable. We should have laws like Senate Bill 76 that prevent an attorney from taking a case with $15,000 for damages offered to only gain a total of $16,000 claimant offer in court because anyone can agree that type of litigation is unnecessary.

The new bill that passed on Dec. 14, 2022, now makes all claimants to either pay for attorney fees and associated costs upfront out of pocket, PFS (proposal for settlement), or claimants pay attorney fees and associated cost out of the awarded amount to fix their home once they win the litigation.

For example, if your wind damage caused $20,000 worth of damage and you hire an attorney to litigate your claim because it was previously denied or severely discounted, your attorney fees would be paid out of the $20,000 if you win. Another component of the bill I could not support was the requirement of all Citizen Insurance policy holders (including those who don't live in a flood zone) to purchase flood insurance by 2027.

We will go into the 2023 session filing bills and amendments to continue to work on the property insurance market instability with bipartisan efforts. Even though we provided the insurance industry with $1 billion, I would like for us to consider providing funds that are tied to a temporary property insurance rate freeze or reduction so that consumers can have immediate relief.

We also need to consider how we can use public dollars to subsidize catastrophic events when insurance companies don't have the financial ability to serve their clients. To stabilize our Florida Property Insurance market, we do need to have a market where insurance companies can make an economic profit to do business here, but we also need to protect consumers to ensure they have the property protection they pay for and the ability to hold the insurance companies accountable in the cases where it is more profitable for the insurance company to deny a claim and go to court than to pay a claim.

Democrats voted "no" on this bill in efforts to negotiate the much-needed changes to address Florida property insurance challenges. We are committed to working with leadership to consider our ideas during the upcoming session and ultimately help Floridians with immediate and longer-term relief.

Gallop Franklin II is a member of the Florida House of Representatives representing District 8.

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