Homeowners face higher insurance costs as legislators cope with crisis

TALLAHASSEE — Florida lawmakers opened a special session Monday on the state's crumbling property insurance market — with proposals certain to make many homeowners pay more for coverage in coming months.

An immediate target: Citizens Property Insurance Corp., the state-backed insurer of last resort which has doubled in size over the past two years.

With 1.1 million customers now, pending legislation would bar people from renewing the cheaper coverage if a private insurer offered a policy within 20% of Citizens' premium.

New Citizens' customers in a flood zone also would for the first time be required to have flood insurance, beginning in April. Homeowners renewing Citizens' policies in flood-prone areas would need the added coverage by July.

"We take a hard look at where Citizens should be," said Senate Banking and Insurance Chair Jim Boyd, R-Bradenton, who runs an insurance company, in describing the bill, (SB 2A).

Boyd said insurance data shows Citizens' policies are about 30% cheaper than the common market rate now. But it's important, he said, that Citizens again become "the insurer of last resort, which it's supposed to be."

The Republican-led Legislature is expected to wrap up the special session, possibly by Wednesday night.

With Florida's insurance industry rocked by insolvencies and companies withdrawing from the storm-plagued state, lawmakers largely are enacting changes aimed at satisfying insurers' needs, possibly at the expense of homeowners.

Among the steps poised to be finalized: Steering another $1 billion in taxpayer-money into a reinsurance fund that companies can tap if they have trouble paying claims. During a May special session on insurance, lawmakers put $2 billion of Florida taxpayer money into reinsurance for companies, who complain about the private industry cost of such insurance for insurers.

But seeming to acknowledge that insurance customers will take a hit under the legislation, GOP leaders have added to the insurance session other measures advanced Monday more certain to help at least some Floridians.

A tax relief package for homeowners who lose property in a hurricane and a toll credit program pushed by Gov. Ron DeSantis to ease commuter costs also are poised for approval this week.

But insurance is the main focus.

Democrats, vastly outnumbered in the House and Senate, argued that the proposed industry fixes unfairly fell heavily on customers. The insurance measure was approved 9-3 by the Banking and Insurance Committee in a party line vote, with Democrats opposed.

"We cannot leave the consumers behind while we try to stabilize the market," said Sen. Geraldine Thompson, D-Orlando, who proposed an amendment defeated by the committee that would have retained more legal authority for homeowners.

Republicans argue that the industry-friendly approach is needed to keep companies writing policies in Florida and stabilizing a market staggered most recently by Hurricane Ian, which has already spawned $10.2 billion in insurance claims. It was one of the worst storms in Florida history.

"I believe that this will get at the root problem of our cost increases," said Boyd, who cited frequently mentioned industry numbers that show Florida accounts for 7% of the nation's insurance claims, but 76% of lawsuit costs involving claims.

Estimates point to whatever level Ian's claims eventually reach as an enormous threat to the finances of insurers and, in turn, Floridians.

Most burdens added

to homeowners

Other changes advancing Monday eliminate so-called one-way attorney fees, which will make homeowners shoulder more of the costs of suing in court. Critics warned that homeowners will be put in a tough spot, even if they win a lawsuit, since a large share of their settlement would now go to paying their own attorneys' fees.

In another step aimed at discouraging lawsuits, the legislation allows insurers to offer policies that require property owners to enter binding arbitration, barring them from suing. These policyholders would be assured of some discount on their premiums.

Also banned would be the use of Assignment of Benefits (AOB), which many homeowners rely on to hire a contractor who will battle directly with their insurers who have long opposed it.

Homeowners would have to file an insurance claim within one year, not two, as current law allows. Any supplemental claim would have to be filed within 18 months of damage, instead of three years.

In a rare swipe at insurance companies, the legislation would force insurers to pay or deny a claim within 60 days, instead of the current 90-day window. State insurance officials, though, could extend that limit another 30 days, during a state of emergency, typical following a hurricane.

Florida's premiums are

the highest in the U.S.

A sign of the magnitude of Florida's insurance woes, the session is the second special session called this year on the issue. In May, lawmakers similarly tried to placate insurers and make coverage easier to obtain with a host of pro-industry moves.

Florida homeowners pay the highest premiums in the country, almost three times the national average, according to the Insurance Information Institute, an industry organization.

These premiums also are climbing at a rate of about 33% annually, compared to 9% boosts across the rest of the nation.

But as long as the industry is troubled in Florida, high premiums will endure. More than a dozen insurance companies have stopped writing homeowners' policies in Florida this year, including a half-dozen that have gone out of business altogether.

Also teed-up is a bill that would offer tax relief to those who had homes damaged by Hurricane Ian or Nicole. Lawmakers had passed legislation earlier this year providing tax relief for such property — but that law doesn't take effect until Jan. 1.

Senate Bill 4-A allows the measure to be retroactive, letting homeowners apply for property tax refunds if their home was "rendered uninhabitable" for at least 30 days.

Local governments are expected to lose $18.3 million in property taxes with the measure. But lawmakers are expected to offset this revenue loss with state funds.

Sen. Travis Hutson, R-St. Augustine, the bill sponsor, told the Senate Community Affairs Committee those dollars will be settled during the regular session, which begins in March.

But Chris Doolin, lobbyist for the Small County Coalition of local governments, told the panel the potential tax impact on Lee County, alone, could be as much as $20 million. Lee County was the hardest hit by Hurricane Ian in September.

"Everything in here is good, but that is a missing link," Doolin said. "I just wanted to raise the issue, not to be dealt with today or during the special session, but as we go into the regular session."

DeSantis already delayed property tax payments in the 26 counties affected by Ian until next June. The bill also pulls $750 million from the general revenue fund to supplement hurricane relief efforts.

Heavy Sunpass, other

transponder users to see refunds

The Senate Fiscal Policy Committee also approved a bill that sets aside $500 million to create a toll relief program that will be in effect throughout 2023.

The measure (SB 6A) would provide a 50% refund in the form of an account credit for Florida drivers who use SunPass or another Florida-issued transponder to pay at least 35 tolls monthly.

Sen. Nick DiCeglie, R-Indian Rocks Beach, the bill sponsor, said during the committee meeting that the bill could save some Floridians up to $550 for the year.

"With the inflationary pressures that we're all experiencing, I believe it's good public policy to help folks who are traveling, paying higher gas prices," he said.

John Kennedy is a reporter in the USA TODAY Network's Florida Capital Bureau. He can be reached at jkennedy2@gannett.com, or on Twitter at @JKennedyReport

USA Today Network-Florida government accountability reporter Douglas Soule is based in Tallahassee, Fla. He can be reached at DSoule@gannett.com. Twitter: @DouglasSoule