Column: new Florida property insurance law ‘generous’ to insurers

By Adam Ellis

Gov. Ron DeSantis recently signed Senate Bill 2-D into law and, in so doing, gave the insurance industry a generous benefit at the expense of Florida property owners.

The law is essentially another layer of reinsurance — it's a $2 billion fund (plus additional money from the general budget if the governor so desires) that insurance companies can tap into, free of charge.

The law is explicit that no premiums shall be charged to insurance companies for their participation in the program. The law is also clear that insurance companies may draw from the fund without any offsets for reimbursements that they may have received from other reinsurance sources. It provides for 100% reimbursement (90% of losses plus 10% for "loss adjustment expenses") to insurance companies, which is powered by tax dollars.

The law also provides for rulemaking authority, and specifically states that no findings are required for any rules deemed to be enacted on an emergency basis. The rulemaking authority created is specifically exempt from Florida Statute 120.54, which requires single-subject rules, public notice, public rule development workshops and notice of estimated regulatory costs, to name just a few highlights.

None of these procedural safeguards are required for rules promulgated under the new law.

While the law does provide for a rate reduction to consumers, which is to be commensurate to the cost savings realized by the companies participating in the program, it appears that the insurance companies themselves are free to determine the amount. There is neither a mechanism for oversight nor a penalty for failure to comply.

The law also makes it more difficult to maintain a lawsuit against an insurance company. Florida Statute 624.155 allowed for, among other things, suits against insurance companies based on bad faith, but the new law does away with that and now requires claimants to specifically prove a breach of contract.

While refusing to pay a valid claim for years and years might not actually be a breach of contract, it could certainly be bad faith, but Floridians no longer have that option available.

You can also expect to see a separate roof deductible tacked on to policies at the next renewal, which means more out of pocket costs for claims which include roof damage.

Finally, the law creates a new avenue for insurance companies to collect legal fees against the insured when cases are dismissed, and removes an avenue for the insured to collect legal fees against the insurance companies.

Attorneys are more likely to accept clients whose claims include favorable fee-shifting provisions, which means less attorneys may be inclined to represent insureds in policy disputes.

Florida needed some relief, but this certainly isn't it. This new law props up private companies with taxpayer dollars, and further skews an already uneven playing field in favor of big insurance.

Adam Ellis is a civil trial attorney in Tallahassee focused on employee rights.