DeSantis gets property insurance reforms he requested. Will they work?

TALLAHASSEE — Pressed into action by Gov. Ron DeSantis to stem a growing crisis, Florida lawmakers delivered property insurance reforms sought by the governor and largely favored by the insurance industry.

Now the questions are whether they will work, and who will benefit.

Homeowners are struggling with higher rates, while insurers are failing and dropping coverage. DeSantis was under pressure to get something done.

The solution lawmakers came up with is a bill that the Senate sponsor said is more focused on stabilizing struggling insurers than delivering immediate rate relief.

The legislation, which cleared both chambers with bipartisan support and now heads to the governor, creates a $2 billion fund to help insurers pay potential hurricane damage claims, puts new limits on insurance lawsuits and allows policies with separate deductibles for roof damage, which will leave homeowners shouldering more of the cost for roof replacements.

Will premiums drop?

Policyholders clamoring for relief should see premium decreases from companies that access the $2 billion reinsurance fund. The companies are required to pass the savings on to customers, but lawmakers downplayed the idea of substantial rate cuts in the short term.

"This feels like to me a bill that gives the insurance companies the majority of what they want, but we don't really see the majority of what the consumer wants," said Rep. Michelle Rayner, D-St. Petersburg, before the bill cleared the House Wednesday.

Some called the bill a bailout for the home insurance industry, pointing to the $2 billion reinsurance fund.

"Corporate welfare, giveaways to corporations, that's what this is," said Rep. Michael Grieco, D-Miami Beach.

DeSantis and GOP lawmakers argue that helping insurers' bottom line helps their customers by ensuring there's a competitive market. Senate bill sponsor Jim Boyd, R-Brandenton, said the market is at risk of total failure, which should be more of a concern than quickly delivering a big rate cut.

"I can guarantee you this: Doing nothing we will be back in three weeks or four weeks because the market will be in collapse and then what do we do?" Boyd said.

Whether voters will buy that argument is a question that DeSantis and lawmakers must grapple with as they enter the heart of election season with cost-of-living issues such as property insurance, inflation and affordable housing at the top of mind for many voters.

Dogged by critics who claimed he was more focused on culture war issues than pocketbook concerns, DeSantis can now say he got something done on property insurance, an issue that has proven especially perplexing for policymakers in Florida, a high-risk state where insurers have struggled for decades.

Lawmakers from both parties who supported the bill said it might not be perfect, but they felt compelled to act.

"I think we find ourselves here between a rock and a hard place because we know that we want to do something, we've got to do something," said Rep. Fentrice Driskell, D-Tampa, the incoming House Democratic leader. "My constituents are feeling the pain and I think this is a step in the right direction."

Rep. Joseph Geller, D-Aventura, said he was supporting the bill "despite its flaws" because he didn't want to tell constituents "nothing is being done."

Democrats joined with Republicans in passing the insurance legislation. It cleared the Senate 30-9 and the House 95-14.

Several Democrats opposed the bill, though. Some argued it was more about politics and having something to point to on the campaign trail than actual progress.

"Smoke and mirrors, dog and pony show, unfortunately that seems to be all that we're doing here, putting on a political show," said Rep. Angie Nixon, D-Jacksonville.

Florida's property insurance market has been in crisis before, but Boyd — an insurance agent — said the current situation is one "I never dreamed we'd be in in Florida."

"I've been in the insurance business for over 40 years," Boyd said. "It's unbelievable what's going on right now."

Insurance companies say they are being deluged with frivolous lawsuits and questionable roof damage claims. They pressed for legal reforms.

Some Democrats pushed back against the fraud allegations, which DeSantis and Boyd have echoed. Critics of the bill worry that it will make it harder for policyholders to get legitimate claims paid if their legal options are further constrained.

"To the extent that this bill abrogates, erodes and pulls back the rights of consumers to access the courts... I can't support," said Sen. Darryl Rouson, D-St. Petersburg.

Democratic Sen. Jason Pizzo, D-Miami, said the bill "effectively is tort reform — not property insurance."

Boyd said he believes limiting insurers legal exposure will prompt rate cuts, but it could take up to 18 months for that to happen.

"I wish I could guarantee your constituents and my constituents that these rates will go down immediately," Boyd said. "I just can't guarantee that."

Democrats pushed for a rate freeze, but Boyd said insurers are "on the ropes" and he doesn't want to limit their options to stay financially viable.

"We'll look forward to the good results of this bill a little bit later on," Boyd said.

DeSantis also was careful not to promise immediate rate relief, warning Tuesday against hopes of "radical reductions" after the special session.

The governor said he hopes the legislation will strengthen the market and make Florida more attractive to insurance companies.

"I think the telltale will be are you going to have more business wanting to come into Florida and offer policies to people," he said.

Mark Friedlander, spokesperson for the Insurance Information Institute, said the legislative package passed marked an "important first step toward the stability of Florida's insurance market," but consumers should temper expectations.

"It's not going to end the crisis we're facing," he said.

Bailout for insurance companies?

While DeSantis is eager to tout progress on the issue, there could be political peril in some of the bill's provisions being perceived as anti-consumer or a bailout for big corporations.

The separate roof deductible equates to either 2% of a home's value or 50% of the value of the roof. Homeowners wouldn't pay the roof deductible for hurricane or tree damage.

Sen. Lori Berman, D-Delray Beach, called the $2 billion "basically a corporate bailout." Insurers don't have to pay for the reinsurance, which is insurance for insurance companies. The state could lose the money if Florida has a bad hurricane season.

Democratic state Sen. Janet Cruz, of Tampa, said the $2 billion reinsurance fund is helping "failing companies."

Boyd said companies are being hit with big reinsurance price increases that are "just crippling."

"I don't believe we're propping up failing companies," he said, adding: "There's some good carriers out there that are just having a heck of a time getting competitive reinsurance."

The big money attached to the bill and big changes to a number of aspects of insurance law underscore the urgency of the problem, which threatens homeowner's finances and the state's economy.

"This is the pocketbook issue of Florida today," said Sen. Jeff Brandes, a St. Petersburg Republican who argued Tuesday that the bill doesn't go far enough to help insurers facing a "man-made disaster."

"That man-made disaster is the litigation that is destroying the property insurance market in the state of Florida," said Brandes, who opposed what some saw as one of the more consumer friendly aspects of the bill, a provision aimed at stopping insurers from dropping coverage on homes with older roofs.

The bill prohibits an insurance company from refusing to write or renew a policy based on the age of a roof, provided the roof is less than 15 years old or an inspection determines there still is at least five years of roof life left.

Some Democrats wanted to see a tougher approach taken with insurers.

Sen. Gary Farmer, D-Lighthouse Point, said there should be more oversight of managing general agents, insurance company affiliates that he argued are used to siphon off money.

"That makes the big insurance company look like they're losing money but they're not, it's just getting funneled a different way...," Farmer said. "It's a shell game. They are cooking the books."

Contributed: Palm Beach Post reporter Hannah Morse.

Sarasota Herald-Tribune Political Editor Zac Anderson can be reached at [email protected]. Follow him on Twitter at @zacjanderson. USA Today Network-Florida reporter Jason Delgado is based in Tallahassee. He can be reached at [email protected]