A measure that aims to reform Florida’s property insurance industry was scheduled to get its last committee stop in the Florida House on Monday, but that vote in the Commerce Committee will now take place on Friday.

What You Need To Know

  • Bills in Tallahassee would prevent insurance companies from having to pay full amount to replace roofs

  • They would make it harder for homeowners to sue insurance companies

  • Supporters say the legislation won’t make rates drop right away, but it has to be done

  • Opponents say the measure goes to far

Republican Bob Rommel says the legislation (HB 305) is vital to deal with the “crisis” in the home property insurance industry, with rates going up 15%-30% annually for insurance companies in the state — with “no end in sight.”

According to the Florida Office of Insurance Regulation (FLOIR), Florida domestic property insurers posted a $1.6 billion operating loss in 2020 and have had net underwriting losses every year since 2015. And Citizen’s Insurance, the insurer of last resort in the Sunshine State, has added more than 100,000 policies in the past year. 

“What we are seeing is a wholesale withdrawal from the Florida marketplace of major companies,” said St. Petersburg Republican State Sen. Jeff Brandes, the Senate bill’s (SB 76) co-sponsor, when the bill went before the Senate Rules Committee last month. “And our discussion about getting other companies, like the Allstates, the Progressives, the State Farms, the major writers — they’re never coming into the state of Florida unless we make significant changes to this marketplace.”

The measures in the Senate bill include changes to state laws that would include insurers no longer being required to pay the full cost to replace damaged roofs.

“Unscrupulous contractors are soliciting claims from homeowners throughout Florida, literally going door to door,” says Mark Friedlander, the director of communications for the Insurance Information Institute. He says these contractors are promising homeowners they’ll get a new roof for free.

“Well, here’s the problem: they’re charging exorbitant rates,” Friedlander says. “They’re replacing roofs that really don’t need to be replaced.”

The Senate bill also targets what its sponsors claim is excessive litigation facing insurers. It would do so by requiring detailed notice of property insurance claims before litigation and would also change how attorney fees are awarded. Before a lawsuit is filed, the insurer must be notified of the claim in detail and be given sufficient time to inspect the property before a lawsuit is filed.

Tampa attorney Chip Merlin says the bill is on the right track in going after unscrupulous roofing claims, but errs by effectively stopping people from being able to bring on litigation and get fully paid. 

“These laws are going to harm those types of people who have been hurt by their insurance companies that have low paid, slow paid, and now they’re in litigation,” he says.
The bill would also reduce the amount of time policyholders would have to file claims after damages from three years to two years.

In a guest op-ed he recently penned for Florida Politics, Barry Gilway, the president/CEO of Citizen’s Property Insurance Corporation, cited a report from the state’s Office of Insurance Regulation that found Florida accounted for more than 76% of all homeowners’ litigation in the United States in 2019, despite the fact that the state had accounted for only 8% of all claims filed nationally that year.

However that study is “a misuse of data” and excludes other relevant data that would provide context, alleges Birny Birnbaum, a former chief economist with the Texas Department of Insurance and now executive director with The Center for Economic Justice based in Austin.

“An analysis of the publicly-available MCAS (Market Conduct Annual Statement) ratios indicates that the MCAS data presented in the April 2, 2021 letter are incomplete, without context and misleading,” Birnbaum writes in a letter made public by the Florida Consumer Action Network (FCAN) today. “A review of the available data suggests that homeowners litigation issues in Florida are associated with a small percentage of the homeowners insurers operating in Florida and is not an industry-wide problem. The data suggest that regulatory investigation of these companies’ claim settlement practices is the logical approach, as opposed to major changes in the civil justice system.”

During the Senate Rules Committee meeting last month, Sen. Brandes said the biggest factor leading insurers to have to request to raise their rates is the “one-way attorney fee statute,” which he said was “an incentive to litigate.” 

“Brandes isn’t promising that these rates are going to go down,” counters Merlin.

No one else supporting the proposals is either. They just say that things will get worse if reform isn’t enacted.

“Even if a new law goes into place, it’s not going to immediately resolve the issue. That’s the real problem here,” Friedlander said.

That Senate bill (sponsored by Bradenton Republican Jim Boyd) has passed all three of its committees and is now waiting to get its first vote on the entire floor, while the House bill must get through Commerce later this week.