Editorial l Governor expects property insurance reform

If you have a homeowner's insurance policy, you probably know firsthand that the Florida property insurance market is in crisis. If your insurance company has remained in the state – many have already fled Florida – perhaps you were faced with a big rate hike, or maybe a statement of modified coverage or demand to replace your roof to continue getting insurance, or even a policy cancellation.

Since Florida's legislators spent their time in regular session earlier this year focused on culture war topics, they're having to meet in special session to deal with the state's all-important property insurance issues – which are key to the state's even more-important housing market. That session, called by Gov. Ron DeSantis, runs from Monday, May 23, through Friday, May 27.

Florida's property insurance market instability should not surprise anyone; it's been a long time coming, and it hasn't been a secret. It began in the early 1990s, after the enormously destructive Hurricane Andrew resulted in a number of insurance firm failures. It continued in the early 2000s with creation of Citizens Property Insurance Corporation (Citizens), the state-run, not-for-profit "insurer of last resort" that quickly became the largest insurer in the state. Six Florida-based insurers have failed or dissolved since 2018, four in the past year.

Last month, community leaders at the Citrus County Chamber of Commerce luncheon heard about the dire situation from Carl Rockman, a Citizens VP. He expressed the industry view that roofer fraud, and laws that allow exorbitant attorney fees, are to blame. He also warned that amid the property insurance industry meltdown, Citizens is having to pick up more and more policies. This increases the risks for everyone, as by law Citizens may assess every insurance holder in Florida – not just other Citizens customers – if it runs out of money due to widespread, costly claims.

This whole question of how to keep the property insurance industry in Florida from imploding is complex. If you've done your research, you've probably read dozens of recent articles, editorials and reports. One takeaway is that legislators really need to focus on this matter, and do it right now.

Part of the issue is due to current Florida law and the building code – for example, requiring full roof replacement if 25 percent is damaged, "one-way attorney fees" that make insurance companies responsible for all fees no matter who wins in a legal fight, and "attorney fee multipliers" that allow charging of up to three times normal rates.

It's easy to blame the attorneys and the legislators, who are loathe to anger the trial attorney bar. But everyone else involved comes in for blame as well. Insurance companies may try to settle right away to avoid having to pay attorney fees that can be dramatically higher than the consumer settlement itself. Or the company, with an eye on the bottom line, may make absurdly low settlement offers – which of course sends consumers directly to their lawyers. And homeowners who should know better fall for the "you can get a new roof for free, just let me handle it" line, assigning insurance benefits to the roofing vendor who then is in full control of decisions and negotiations with the insurer.

No one should expect a one-week legislative session to "fix" everything, and even legitimate fixes might not show up in the market and people's wallets until much further down the road. However, several bills were pre-filed for the Special Session this week that address legal fees, insurance company practices, Citizens regulations, the building code, roofer business practices, and homeowner issues. There's also a proposal for creation of a special reinsurance fund, as well as for CFO Jimmy Patronis' anti-fraud/education efforts.

Pay attention to what they're doing in Tallahassee. Let your legislators know what you think. It all matters, even the small steps.