Florida Insurance Crisis Requires Focusing On Enforcement

If you're a homeowner in Florida, chances are that your property insurance rates are increasing at an unprecedented pace. With insurers raising rates by as much as 111%, declining coverage or going insolvent, homeowners are feeling the brunt of a weakened insurance market.

With no substantive new insurance legislation passed this year and the market in decline, it's easy to understand why a special legislative session has been scheduled. As lawmakers head into this session, I urge them to consider the great strides on insurance reform in recent years.

Last year, SB 76 and SB 1598 were signed into law to provide consumers more protection and discourage the type of fraudulent activity that increases policy rates. It was dismaying to see a temporary injunction preventing enforcement of a key fraud-preventing element of SB 76 shortly after. It can take at least 18 months before the market benefits from a new bill, but it'll take even longer to see the full effect from SB 76 pending the outcome of an upcoming trial.

Lawmakers need to take care to ensure that legislation proposed during special session places consumers first. Too often, language meant to aid homeowners actually reduces their protections.

There are several key areas where action can be taken right now without further legislation:

Insufficient enforcement, fraudulent claims

Despite having laws in place to punish unlicensed claims activities, and solicitation and advertising for claims requiring licensing and regulation, an investigator recently revealed that state attorneys aren't always prosecuting fraudulent claims even when state regulators pursue investigations. This may disincentivize fraud investigators from utilizing their limited resources on building these cases. We're all paying the price with fewer choices and higher premiums. We need to enforce existing property insurance laws and give them appropriate time and resources to make an impact.

Insurance rates

Policyholders are being taken advantage of by unlicensed and unregulated "bad actors" who artificially increase claim frequency and severity, leading to "shrinkflation" – higher rates with less coverage. State attorneys need to understand how fraud is affecting every consumer in Florida, not just the individuals involved in a single claim. Reducing fraud statewide will, in turn, lower premiums. According to a report last year from Florida's Insurance Consumer Advocate, insurance fraud costs the average family $400-$700 annually in increased premiums.

Litigation on legitimate claims

Litigation is incentivized when insurers don't pay what is owed on legitimate claims. This extends the claims process leaving more claims open and unpaid. Insurers shouldn't dispute legitimate claims and should pay what's fairly due to avoid policyholder disputes resulting in litigation.

Florida Hurricane Catastrophe Fund

The single most important step that can be taken during the legislative session is to increase access to the Florida Hurricane Catastrophe Fund so insurance carriers aren't forced to purchase expensive reinsurance from foreign entities and pass those costs to policyholders. This could have a significant impact on insurance rates.

As advocates for policyholders, the Florida Association of Public Insurance Adjusters seeks a stronger insurance market, but not one that comes at the price of less coverage and more cost to homeowners. With another active hurricane season approaching and the insurance market in decline, it's up to our state attorneys and insurers to act fast to disincentivize fraud and focus on enforcement to help bring the market to an equilibrium.

Chris Cury is president of the Florida Association of Public Insurance Adjusters' board of directors. He obtained his public adjusters license in Florida in 2008 and is focused on advocacy for insurance consumers.