Legislature advances home insurance reform bills

TALLAHASSEE – Efforts by Democrats to include a rate freeze, climate change considerations, increased capital requirements for companies and other proposals in property insurance legislation all failed Tuesday, as the Republican-dominated Florida Legislature moved closer to passing the reform bill sought by Gov. Ron DeSantis.

While the Florida Senate was rejecting floor amendments put forward by Democrats, a Florida House committee heard the bill for the first time. Both chambers are expected to pass legislation and send it to the governor by the end of the week.

Day two of the all-hands-on-deck effort in Tallahassee to stabilize the troubled insurance market further highlighted the dire state of the industry.

Democratic Sen Gary Farmer noted that 13 struggling Florida insurers currently are in receivership (seven of them are home insurance companies) in arguing that the capital requirement for insurers should be increased from the current $15 million.

"$15 million dollars is a joke," he said.

Republicans rejected that amendment and more than a dozen others put forward by Democrats, a number of them touching on rates.

A significant portion of the legislation is aimed at limiting lawsuits against insurers. Miami Democratic Sen. Jason Pizzo said it "effectively is tort reform not property insurance."

Yet there is no guarantee those legal reforms will results in rate reductions. The bill's sponsor, Republican Sen. Jim Boyd, R-Bradenton, said he believes limiting insurers legal exposure will result in rate cuts, but said it could take up to 18 months for that to happen.

Democrats pushed for a rate freeze.

"At least the freeze allows us to know we're not seeing another rate increase," said Democratic Sen. Bobby Powell.

Boyd said insurers are "on the ropes" and he doesn't want to limit their options to stay financially viable.

"We'll look forward to the good results of this bill a little bit later on," he said.

The state's property insurance market is plagued by a variety of issues, including skyrocketing rates and a parade of companies dropping policies or going out of business.

DeSantis called a special legislative session to address the issue, and lawmakers are moving swiftly to pass legislation. In addition to limiting lawsuits, the legislation they are pursuing puts $2 billion in state money at risk to bolster insurers struggling to get affordable reinsurance and allows policies with separate roof deductibles equating to either 2% of a home's value or 50% of the value of the roof.

Democratic state Sen. Lori Berman said the $2 billion is "basically a corporate bailout."

Insurers don't have to pay for the reinsurance, which is insurance for insurance companies. The state could lose the money if Florida has a bad hurricane season.

Boyd said the reinsurance fund will help ease the pressure on companies.

"That will give them ability to provide that reinsurance level that normally they would have to pay for, that's costing them so much in the marketplace right now and their ability to survive essentially in this market," he said.

The big money attached to the bill and big changes to a number of aspects of insurance law underscore the urgency of the problem, which threatens homeowner's finances and the state's economy.

"It is something if you're looking to buy into Florida to be able to have access to affordable insurance is very, very important," DeSantis said during a press conference Monday in Cape Coral.

The GOP-led Legislature is taking aggressive steps to salvage the market. Their effort is particularly notable given the timing – 2022 is an election year and the special session, just months ahead of November, spotlights a pocketbook issue for millions of property owners.

Democrats argue the legislation is tilted too much toward insurers and not enough toward consumers, and have been pushing to have a variety of other provisions included.

Farmer also proposed a failed amendment that sought to have state regulators analyze climate change data insurers are using to make rate decisions and publicize that data.

He also pitched for more oversight of managing general agents, insurance company affiliates that he argued are used to siphon off money.

"That makes the big insurance company look like they're losing money but they're not, it's just getting funneled a different way...," Farmer said.

"It's a shell game. They are cooking the books through the use of managing general agents."

Jason Delgado is a reporter for the USA Today Network-Florida. He's based in Tallahassee. Reach him at [email protected]