Florida’s modest step on property insurance

News-Sun (Sebring, FL)

Florida lawmakers set modest goals for the recent week's special session on property insurance, and that's exactly what they achieved. The handful of reforms aren't likely to make a serious dent in fast-rising rate increases, at least for the near term. It's also unclear if the changes will bring more protections and oversight to an opaque industry. The outcome is the product of a disengaged Legislature and state regulators who were unprepared.

Lawmakers seemed preordained to return to Tallahassee, having failed to address insurance during the regular session in an election-year where rates are increasing by double-digits and insurers are shedding tens of thousands of policies. On the consumers' side, lawmakers are reviving a 16-year-old program that could give homeowners up to $10,000 to storm-harden their homes, which could help curb skyrocketing rates. The measures also bar insurers from refusing to cover some homes solely because of an older roof. For the industry, the legislation creates new access to reinsurance, a critical financial backstop for carriers, and limits the amount attorneys can collect in lawsuits against insurance companies.

The changes can help but many certainly amount to low-hanging fruit. The home hardening program, known as My Safe Florida Home, could enable thousands of homeowners to get free home inspections and matching state grants to replace their windows, doors and roofs, But the program's past iteration was marred by incompetence and fraud during its two-year run. Considering their support for the program, lawmakers should have used the opportunity to provide it the resources necessary to be both meaningful and accountable. But legislators gave the program $150 million, 40% less than the $250 million the Legislature committed in 2006. Given the state's growth, healthy reserves and increased risks from a warming climate, this wasn't the time to be pound-foolish.

Lawmakers also took steps to curb the number of lawsuits filed against insurers over disputed claims. Carriers and Florida officials have long blamed excessive litigation by trial lawyers and fraudulent claims from roofers for driving up costs. The bill limits an attorney's ability to charge double or triple their normal rates, except in a "rare and exceptional circumstance." It also eliminates automatic payments for attorneys who are assigned benefits under a lawsuit against insurers, and it tightens anti-fraud provisions governing how contractors can solicit homeowners to make an insurance claim.

Lawmakers, though, haven't done any analyses to determine what effect the legislation will have on homeowners' rates. State officials said it's unlikely rates will go down for at least 18 months. They also don't know how many companies would tap into the reinsurance program. Another unknown: How much do those lawsuits actually cost insurers?

"This has been a constant source of frustration," House Speaker Chris Sprowls, R-Palm Harbor, told reporters about the lack of data on Tuesday. "It is very difficult for us to do anything on any policy area without information."

What's going on here? Florida's property insurance crisis and the state's vulnerability to hurricanes is hardly a last-minute surprise. Why hasn't the speaker, the Senate president or the governor demanded some hard data and straight answers long before now?

"We haven't heard from anyone from (the Office of Insurance Regulation)," Sen. Jeff Brandes, R-St. Petersburg, remarked Monday more than two hours into a Senate committee hearing. State Insurance Commissioner David Altmaier sat in the back of the room. Legislators this week convened no panels of experts and heard no testimony from key state insurance officials, including the Department of Financial Services, which splits insurance regulation with Altmaier's office. The legislation passed by the House and Senate, released less than 72 hours before the start of the special session, each received a single hearing, and Republican leaders entertained no serious debate or discussion about amending them.

As the Tampa Bay Times' Lawrence Mower noted, the Legislature — from start to finish — spent a total of three days in Tallahassee to address what most agree is a five-alarm crisis in the state's insurance market.

Sen. Jim Boyd, R-Bradenton, the Senate's point person on the reforms, said he's asked Senate leadership to hold a workshop over the summer to explore the issue. We won't hold our breath. What's required to get Tallahassee's attention? The Legislature found plenty of time this year to marginalize gays, fight Disney World and create a new elections police force. But the Office of Insurance Regulation still hasn't produced data about lawsuits against insurers that lawmakers wanted underway this year. Maybe Jimmy Patronis needs to pay more attention to his regulatory responsibilities as the state's elected CFO instead of tweeting about Joe Biden's flaws and the best chicken fingers in Jacksonville.