Fix property insurance and put consumers first

Over the past several months, Floridians have been opening their property-insurance renewal notices and gasping in sticker shock — or with dismay when they learn their policies won’t be renewed.

And if they were expecting help from Tallahassee, they were sadly disappointed: The Legislature had more important things to do, like finding ways to threaten teachers who acknowledge racism or sexual orientation. Lawmakers spent so much time engaging in cultural firefights that they didn’t have the time to address a flaming crisis in a critical component of Florida’s economy.

Gov. Ron DeSantis says he’s not averse to a special session to deal with property insurance (and condominium safety, another issue that slipped off lawmakers’ to-do lists despite the fatal collapse of a 12-story tower in Surfside that claimed 98 lives). There’s good reason to call lawmakers back.

Start with those insurance premiums. Prior to the legislative session, insurance industry analysts said the average rate increase was close to 25%. As TCPalm reported in January, Florida homeowners had the highest national average insurance premiums at $3,600 — compared to a national average of $1,398.

Despite those increases, a legislative analysis showed that from 2017 through the second quarter of 2021, Florida domestic property insurers had collective net losses of more than $1 billion.

That helps explain why five insurance carriers have declared insolvency over the past three years, and around a dozen more have blocked or sharply restricted the number of new policies they are willing to issue in Florida. The troubles reach even the biggest names in the market; last month, Progressive said it would be dropping thousands of Florida property policies. In September, the Insurance Journal reported that Florida’s state-backed “insurer of last resort,” Citizens, was taking on new policies at the jaw-dropping rate of 5,000 to 6,000 a week.

Lawmakers considered a few different solutions during the session that ended earlier this month. But once again, lawmakers seemed focused on solutions that would either reduce the value of insurance policies in Florida, or pave the way for future premium increases. The bill that went the furthest (SB 1728) would have hit Florida policyholders with a 2% deductible for roof repairs — that’s 2% of their entire policy value, not the actual cost of fixing damage. That will be devastating to homeowners on fixed incomes, forcing them to contribute thousands of dollars toward roof repairs they thought their policies covered. That bill died because House Speaker Chris Sprowls balked at the potential hit to consumers.

But that doesn’t fix Florida’s crumbling insurance market.

As they almost always do, lawmakers pointed to Florida’s undeniable problem with insurance-related litigation. Data from the state Office of Insurance Regulation shows that less than 8.2% of all property insurance claims come from Florida — but the state is responsible for 76% of the insurance-related litigation. Clearly, something is out of whack in the Florida market; many have pointed to an increase in dubious solicitations by companies promising “free roofs” to gullible homeowners, who are then led to sue their insurers when coverage is denied.

If that’s really the root of the problem, though, why do lawmakers consistently insist that the biggest part of any solution is to make consumers suffer more, or force them to take on greater risk? Why not focus more attention on going after the shady characters who are making off with illicit profits? And why don’t they look for ways to make the state’s insurance market stronger, such as restrictions on national insurers who create “pup” companies that limit risk to Florida, but siphon profits back to the national name brand?

Most of all, why can’t Florida lawmakers, insurance companies and the state’s powerful trial-attorney associations sit down and collaborate on sensible reforms that preserve the rights of consumers and the value of their policies but shut down the scam artists and frivolous litigation?

These may seem like unachievable goals, but there has to be an explanation as to why Florida, more than any other state, keeps lurching from insurance crisis to insurance crisis. If lawmakers come back — and they should — they should look for solutions that protect consumers first, instead of pandering to the powerful special interests that have brought this state’s market to a crisis point.