In a major development, the Florida Senate passed reforms proposed to the state’s insurance laws through Senate Bill 76. The bill, filed by Sen. Jim Boyd, R-Bradenton, was approved by the Senate Rules Committee on March 25, 2021 and was passed on April 9, 2021
A market in crisis
Insurers, in the recent past, have repeatedly voiced their concerns about the financial problems in the industry. Issues pertaining to litigation costs and a surge in roof claims are the major contributing factors to their unease. In 2020, the regulators signed off on several rate bumps for private insurers. The state-backed Citizens Property Insurance Corp. also reported increased financial risks and high policy counts.
“The reality is the marketplace in Florida is shutting down,” Barry Gilway, Citizens’ CEO told the regulators.
The Florida Office of Financial Regulation recently found that the losses borne by property insures could increase twofold from 2019 to 2020. Insurers believe that the need for reforms to help the distressed insurance market is higher than it has been in the past. Senator Boyd, the sponsor of the bill, himself is the CEO of Boyd Insurance & Investments in Bradenton, whose own rates saw a 40% jump in 2020.
“The rising cost of property insurance in Florida has affected everyone,” Boyd said.
“We are in a crisis now for our homeowners market.”
What does the bill entail?
A recent report presented to Florida Legislature found that the fees paid to attorneys by Florida careers are greater than the damages paid. The lawsuit costs incurred by insurers result in higher premiums for those insured. The proposed legislation seeks to dissuade litigation as it is one of the major factors ailing the property insurance market. The legislation, if it comes into effect, will reduce the time a policyholder has to file a claim from three years to two. This will encourage claimants, insurers, and attorneys to seek ways to resolve disputes out of the court and reduce attorney fees borne by both the insurers and the insured. The bill also proposes that attorney fees be based on how successful the insured was in getting the amount demanded and not on how many hours were spent on a case.
Boyd noted that the number of roof claims that went to court in 2020 was more than three times the number of 2013. A “reimbursement schedule” introduced in SB 76, will allow insurers to pay less for replacing roofs over ten years old. For additional coverage, homeowners will have to pay more.
The bill has invited criticism from consumers, trial lawyers, and, in the house, Democrats. Critics say that the bill will diminish the ability of policyholders to seek redress in court and will adversely affect the consumers. The Senate is visibly divided on this bill that will have far-reaching implications for Florida’s property insurance market.