Floridians struggle to keep property insurance policies

SEBRING — Florida's property insurance market is in crisis, but you don't have to tell Highlands County residents that.

Like other property owners in the state, local homeowners are receiving cancellation notices from insurance carriers the state Office of Insurance Regulation has declared insolvent.

Mark Friedlander, the Florida analyst for the Insurance Information Institute, says Universal Property and Casualty, the largest private insurer in Florida, just announced a moratorium on writing new business in several Florida counties due to the unstable market. In total, 13 home insurers in Florida have stopped writing new business in either parts or the entire state since January, he says.

It's also no secret that carriers have paid out billions of dollars to fight fraudulent and frivolous claims from roofing companies that have the homeowner's permission to collect from insurance companies. Roofing companies have been knocking on doors and promising homeowners they can get them a new roof for free, even when the roof has minor damage.

The state's property insurers paid out $15 billion in claims – many of them fraudulent — between 2013 and 2020. A single attorney alone has filed 10,000 lawsuits against insurance companies in Florida, the analyst says.

And who pays the lawyers when the insurance companies lose in court? The insurance companies, which kills their bottom line.

Highlands County residents who find themselves without property insurance can go to the state-run Citizens Property Insurance Corporation (CPIC). Citizens insurance is required to offer an option for homeowners within 30 days, but the state agency is straining under the weight of homeowners seeking policies through them. The state agency says it's processing 30,000 new policies a month and will reach a million policyholders by January. Its systems can't keep up.

Curtis Slade of First Insurance of Lake Placid Inc. says he's hearing from people whose insurance carriers are in trouble.

"We have received quite a few calls from new prospects due to some of the recent insolvency issues and we have had success in finding alternate coverage for them," he says. "For many, Citizens is quickly becoming the only option available."

Chapman Insurance Group is an agency that helps homeowners and business owners find the right property insurance with the right insurance carrier.

"We've had five go into liquidation this year," says Brian Chapman Jr., who has a home in Lake Placid. "It's miserable. State law gives us 30 days to replace that policy for the customer or they lose coverage on that policy. We do our best to find them a new carrier."

Megan Peck, office manager at Budget Bi-Rite Insurance of Sebring, has seen the same trend in Highlands County.

"We tell folks we'll help them find a carrier, we shop them with other carriers," Peck says. "We can't find a new carrier for perhaps 1 percent of callers."

Bi-Rite and other insurance carriers have found a way to bypass fraudulent roof replacement schemes by recommending a roof inspector it trusts, Peck says. That way, homeowners don't have to rely on a roofing company knocking on doors for an honest assessment. It also protects insurance companies against fraudulent claims.

"It's been happening, it's definitely been happening, especially after the recent hail storm," she says of roofing companies pricing new roofs. "Some people are elderly and can't get on their roof, so they entrust a stranger and go into it blindly."

So Peck and other insurance company managers suggest letting the insurance company inspect the roof.

"We have an inspector we prefer, for our clients too, and he gave us a deal if they wanted him to come out to do a special inspection at a small fee. So they were able to get a legitimate opinion that we trust, too."

There is relief, however, in the new property insurance law that took effect July 1. It took a special Legislative session to write it.

The Legislature promised $2 billion of reinsurance coverage at no cost to insurers. Known as the Reinsurance to Assist Policyholders (RAP) program, it bucks up insurers so they can pay claims. In return, carriers must reduce rates to policyholders.

The new law also prohibits contractors from inducing a homeowner for the purposes of making a property insurance claim for roof damage unless they also notify the homeowner of their rights.

According to Peck, the new bill helps protect homeowners from carriers who cancel them because their roofs are too old. The new rule: Homeowners can't be canceled when a roof is less than 15 years old, or when an older roof is still in good shape.

"Insurance companies were non-renewing homeowner policies when roofs hit a certain age," Peck says. "They put a cap on that."

Slade also likes the rule on roof life.

"It is nice that the insured are being given an opportunity to provide a 'roof useful life certification' to their insurance companies for roofs that are over 15 years old. I think that there is the potential for SB 2D to help a lot of the issues that have become prevalent over the last few years," Slade said, "but it will take time to see the full effects."