With insurance providers dwindling, Florida homeowners are struggling to weather the availability (and affordability) storm

Attending a national insurance conference in Utah this week, Alejandro Perez Duque began realizing one common denominator during each of the discussions.

"Florida is what's on everyone's mind," said the director of PVG Insurance Group on Key Biscayne.

Fewer insurers (at least 10 declared insolvent in the past three years); higher rates (even the state's Citizens Property Insurance is asking for a 14% rate hike); and recent legislation aimed to help the consumer (although industry lobbyists and other groups have spoken against it) are just part of Florida's property insurance landscape.

The latest legislation is the passing of SPB 7052 by the Florida Senate. The Insurer Accountability bill states that:

* Insurers would be required to report their claims-handling policies to the state;

* Fines against insurers would increase from a maximum of $20,000 to $100,000 for "non-willful" violations, and from a maximum of $200,000 to $1 million for "willful" violations;

* Regulators would have broader authority to conduct examinations into insurer conduct;

* Insurers would be prohibited from paying bonuses to officers and directors while an insurer is (financially) impaired or insolvent; and

* Property insurance companies would also be prohibited from dropping a policyholder until the repairs on their home have been completed.

"I believe that recent legislation is positive for all," Perez Duque said, "and is yet another step in the right direction toward getting the insurance industry 'healthy.' There are a lot of bad actors that needed to be eliminated and this will help both consumers and carriers."

The legislation, sponsored by Sen. Travis Hutson (R-St. Augustine), was passed as a response to criticism over reforms enacted last year that curtailed the ability of policyholders to sue insurers over claims-handling disputes (after companies complained that lawsuits were driving up rates) and collect legal fees when favorable settlements are reached.

Previously, policyholders were not liable to pay insurers' legal costs if they lost. As a result, insurers said, the "one-way attorney fee" provisions encouraged law firms to file "frivolous" lawsuits against insurers that cost the industry far more in legal fees than the actual cost of the disputed claims.

But, some say, it left policyholders at a disadvantage by forcing those who want to file a lawsuit against insurers to either pay their attorneys upfront, or agree to pay a percentage of the money they ultimately win, leaving many unable to complete their repairs, attorneys argued.

In addition, extra costs to insurers, who must now track claims more closely and submit more frequent reports to regulators, likely would be passed on to the consumers.

According to reports, none of the recent legislation has yet to result in lower rates.

In addition to the 14% rate-hike request by Citizens (the insurer of last resort), First Community Insurance Co. requested an overall 44.8% rate increase; Kin Insurance Network asked for an overall 61.5% rate increase; and American Strategic Insurance Corp. and ASI Preferred Insurance Corp. are requesting near-20% rate increases.

Perez Duque knows firsthand how the insurance market was affected, especially in Florida, where hurricanes Ian and Nicole caused an estimated $10 billion in damages.

"(Last year) was a terrible year for personal lines insurance carriers, and $66 billion in reinsurance capacity went away," he said. "Some of that due to catastrophe claims and, of course, also due to the opportunity cost of better investments in an increasing interest rate environment."

In December, the Florida Senate approved sweeping legislation with SB 2-A that would overhaul the state's property insurance system, creating a $1 billion reinsurance fund; reducing litigation costs; forcing insurers to respond more promptly to claims; and increasing state oversight of insurers' conduct following hurricanes.

"Florida has done a lot to mitigate the impacts of a hardening insurance market in our state while working to keep policyholders at the forefront," said Florida's Chief Financial Officer, Jimmy Patronis. "For too long, unscrupulous insurance companies, public adjusters and attorneys have been allowed to drive the decline in the state's insurance system. Thankfully, last year we passed vital reforms to alleviate the fraud, waste and abuse that drives up rates for every Floridian."

Trying to solve the fraud issue is just one side of the insurance woes, particularly in South Florida.

"The lack of reinsurance capacity for coastal property will remain the challenge for 2023 and perhaps also 2024," Perez Duque said. "But we do see a light at the end of the tunnel as a "hard" insurance market has historically always ended once new capacity and carriers enter the market, and inflation should subside further.

"For now, we must all weather the storm and seek how to mitigate its impact as best as possible."