‘Hope’ won’t fix Florida’s property insurance crisis

The new year will bring enhanced savings options for those looking ahead. Democratic and Republican members of Congress get a lot of grief for not working together, an attitude reflected by their low public-approval ratings.

There is merit to the claim that partisanship too often prevents progress — or at least what passes for it. But that charge is not altogether true, as demonstrated by a financial Christmas gift for Joe and Jane Sixpack that is soon expected to become law. The measure will encourage Americans to save more, allow their retirement savings to accumulate longer, give late-starters a chance to enhance their savings and allow more financial flexibility for Americans facing a costly emergency.

The concept behind the proposal is that too many people are not prepared for the financial challenges of their retirement years. Given the clear trend away from private-sector pension plans, people need to do more than rely on Social Security. At best, that venerable program is not enough — and was never intended to be enough — to provide for retirement. That's why savings vehicles like 401(k) programs are in place. The new law expands provision for prudent savers to help themselves. For starters, it recognizes this country's aging population. That's why it raises the age when people will be required to take annual minimum distributions from their 401(k)s. An editorial from the Champaign (Illinois) News-Gazette.

If you thought the original was disappointing, the sequel provided more of the same. Last week's special session of the Florida Legislature marked the second attempt this year by Gov. Ron DeSantis and state lawmakers to address the property insurance crisis. The first one produced changes that favored the insurance industry; this one's no different.

What came out of the recent three-day special session were bills that continue to put the burden of propping up a faltering industry that is key to the state's all-important real estate market squarely on the backs of homeowners. Floridians already pay an average of $4,231, up from $1,988 in 2019, according to an Insurance Information Institute analysis. That price will probably continue to grow, despite the new legislative fix.

Private insurance firms will receive $1 billion from state coffers to cover the reinsurance they buy as a backstop to help pay claims. Policyholders will find it more difficult to legally challenge any offers property insurers may give in response to claims. If you believe you'll get a break through Citizens Property Insurance Corp., think again. The legislation makes it easier for the state to force policyholders out of lower-cost Citizens coverage and onto policies from higher-priced private carriers.

"I don't like that. Floridians don't like that," House Speaker Paul Renner acknowledged at a press conference. "But we're in a very bad spot."

Granted, fixing Florida's property insurance market is, well, daunting. Litigation has been a problem for an industry that over the years has paid billions in claims. The rising cost of reinsurance makes it difficult for firms to operate in Florida, and the fact that the market is dominated by so many smaller, private insurers carrying ever-increasing risks is problematic, too. Florida also can't continue with Citizens Property, the state-backed insurance carrier that is supposedly "the insurer of last resort," being an only option for policyholders who can't find coverage elsewhere.

The plan the Republican-dominated Legislature produced had an air of desperation. "Long-term?" asked State Rep. Tom Leek, R-Ormond Beach, who sponsored the bill. "There is hope and a plan."

Unfortunately, there were other realities that lawmakers favoring the bills failed to take into consideration, and in some cases, rejected outright. For example, Democratic lawmakers offered amendments: pushing for insurance rate freezes and consumer subsidies and other protections for policyholders. But those amendments were defeated by party-line vote. For Florida's property insurance customers, there's no hope the new round of industry-friendly legislation will provide immediate relief from fleeting homeowner's insurance availability or skyrocketing premiums. State Sen. Jason Pizzo, D-North Miami Beach, put it succinctly: "My constituents are getting screwed."

The bottom line is, Florida needs a far more comprehensive approach to help both consumers and the industry than what state lawmakers took a three-day special session to concoct.

Thanks to a warming planet, the state is becoming more susceptible to storms, surges and flooding, particularly in low-lying coastal areas that remain magnets for population growth. For years, state leaders have turned a deaf ear to climate change, taking a laissez-faire approach to development and growth management that is now beginning to cost Floridians big-time.

It also hasn't helped when state leaders prefer public confrontation over collaboration in addressing both consumer and industry needs. That was exemplified by this year's name-calling and complaining to federal home mortgage agencies after Demotech, Inc., an Ohio based insurance financial ratings firm, announced it would downgrade 17 insurers operating in Florida. Going after the one ratings agency still willing to do do business in Florida was not the way the state should conduct business, much less help consumers obtain affordable insurance options.

As lawmakers dished out their industry-slanted offerings, Gov. DeSantis was in Sarasota announcing his plans to petition the Florida Supreme Court to convene a grand jury to investigate "any and all wrongdoing" related to COVID-19 vaccines - a cheap political stunt and an obvious distraction from the more pressing insurance issue all rolled into one.

If the Governor wants to show the world an accomplishment worthy of his presidential aspirations, he should focus on finding a better way to address the property insurance meltdown in his home state.

An editorial from the Palm Beach Post.