Florida insurance rates stabilizing, but homeowners still feeling pain

Homeowners say they haven’t seen rates ease yet, but officials at a roundtable insurance discussion held by CFO Jimmy Patronis in Sarasota on Thursday urged further patience, saying rate increases are slowing as a result of increased competition from new carriers entering the market.

The roundtable featured the state’s top insurance officials, elected officials from Southwest Florida, leaders of business organizations and area policyholders.

Patronis called the state’s insurance crisis a “manmade” one caused as suing insurers became a “very profitable business.” Reforms enacted in 2022 and 2023 aimed at removing the profit motive are starting to work, he said.

Examples cited by Patronis included the introduction to Florida’s insurance market of eight new insurers, success of efforts to depopulate state-owned Citizens Property Insurance Corp., and signs that costs of reinsurance — bought by insurers to guarantee they can pay off all claims after major storms — are leveling ahead of the upcoming hurricane season.

Reinsurance costs account for about 45% of homeowner insurance premiums, Insurance Commissioner Michael Yaworsky said.

Excessive litigation made insurance more costly for everyone, said Tim Cerio, president and CEO of Citizens Property Insurance Corp.

Rising legal costs caused many insurers to leave the state because they could not operate profitably, several participants said.

Cerio said that prior to the reforms, “litigation almost buried Florida’s insurance market.”

Yaworksy said that a claim that costs an average of $2,000 rises to $9,000 when the claim is represented by attorneys.

“It makes a tremendous difference,” he said. “It doesn’t sound like a lot immediately, but it’s dramatically more when you multiply that by the number of lawsuits we were seeing. You can see a huge strain on the overall industry.”

Results emerging from legal reforms, officials say

Reforms enacted in 2022 and 2023 included changes to a law that enabled attorneys to collect their full legal fees if a litigated claim was settled by any amount, even $1, over their original claim offer.

The reforms barred policyholders from assigning benefits of their insurance policies to contractors, which contractors used to file lawsuits on policyholders’ behalf, often without their knowledge.

Lawmakers also restricted situations that allowed attorneys to file “bad-faith” lawsuits against insurers, and enabled insurers to impose deductibles on non-hurricane-related roof replacement costs.

Attorneys have argued that the reforms hurt policyholders by forcing them to hand over portions of their claim settlements to pay legal bills. The reforms also decreased the likelihood of attorneys taking small insurance claims, critics said.

Yaworksy, however, said the reforms brought Florida in line with the litigation structure that exists throughout the rest of the country.

As a result, reinsurance costs are expected to flatten or even decrease this year, and rate-hike requests that averaged 7.7% in March 2023 were down to 1.5% this past March, he said.

Florida Peninsula, a Boca Raton-based insurer, two weeks ago announced that it had filed for authorization to reduce its homeowner insurance rates by 2% on average. Slide Insurance’s most recent request calls for a 0.5% average reduction while Nationwide Mutual and First Protective recently requested increases of 1% or below.

Last year, private market insurers removed 275,000 policies from Citizens, Cerio said. So far this year, 115,000 policies have been removed and “perhaps another 245,000” could follow by year’s end, he said.

Citizens’ policy count has decreased from more than 1.4 million in September 2023 to 1.18 million as of April 18, a Citizens spokesman said.

Yaworksy said the Office of Insurance Regulation is developing a “fact book” to educate Florida residents about fundamentals of insurance and to correct misinformation, such as a recent report stating that the average premium in the state is $11,000.

Actually, it’s around $3,400, he said. A South Florida Sun Sentinel analysis of market share data collected by the state showed that premiums for coverage of single-family homes averaged $3,466 at the end of December.

Reforms holding insurers accountable

Roundtable participants also acknowledged consumer complaints about bad insurance practices.

Tasha Carter, the state’s insurance consumer advocate, said she heard complaints about insurers delaying handling claims, failing to respond to their policyholders, and underpaying or denying claim payments.

Several consumer protection laws, enacted with the 2022-23 reforms, “are actually working,” Carter said.

One reduces the amount of time insurers have to pay claims from 90 days to 60 days, she said. Another requires insurers to provide reasons for underpayment or denial of claims.

Insurers are also now prohibited from canceling policies on homes with active claims. Cancellations cannot take place until 90 days after repairs are complete.

Yaworsky said the Legislature’s Insurer Accountability Bill, enacted in 2023, gave “tremendous new ability” to the Office of Insurance Regulation to take action against carriers who violate policyholders’ rights.

“We want good players within our marketplace, but if you are not behaving appropriately, we will absolutely take action and we will hold you accountable to those decisions,” he said.

Three compliance reports are available on the office’s website documenting violations of state insurance regulations, primarily failure to timely submit required reports. The most recent report, released in January, document three license suspensions, two cease-and-desist orders, and 68 fines levied against insurers.

Ninety companies were cited in the report for violations that did not result in enforcement action.

Homeowners say they’re still feeling pain

Several policyholders appeared at the roundtable discussion to report how rising insurance costs have made their lives more difficult.

Cassie Brewer said her home, in St. Petersburg’s Yacht Club Estates, was dropped by Citizens after $200,000 in upgrades drove the cost to rebuild the property over $700,000. Brewer and her husband then were forced into the private insurance market, where they said their insurance costs have reached $14,000 a year.

“Where does it stop? If it goes any higher, we’re probably going to have to sell” like several neighbors, she said.

John Hendrick, of Madeira Beach, said a December 2022 law requiring Citizens policyholders to also carry flood insurance beginning in April 2023 would force him to drop his Citizens policy in June.

“Seniors are being eaten alive financially,” he said.

Patronis explained that the law was enacted after Hurricane Ian caused widespread flooding in Central Florida of homeowners who weren’t in mandatory flood coverage areas. The storm also sparked litigation in the Fort Myers area over the question of whether damage was caused by wind or flooding.

Flood damage is not covered by typical homeowner insurance policies in Florida, Patronis said. The flood insurance requirement, he said, “makes sure there’s coverage all around.”

Patronis added, it also “helps keep the cost of litigation down.”

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].

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