Florida's home insurance crisis: What state lawmakers could do to bring down rates
TAMPA, Fla. - Florida is ending another year with a continuing crisis in home insurance. The costs continue to soar, and state leaders said their reforms could take another year to deliver results, with no guarantees they will pay off at all.
State lawmakers have already reduced costs for insurance companies by making it harder to sue insurance companies, in the hope they would pass their savings onto all of us.
"The laws that we changed dramatically changed the litigation environment we had in the state," said Florida CFO Jimmy Patronis.
However, some lawmakers and consumer groups said Governor Ron DeSantis and legislative leaders have overstated the impact lawsuits have on our insurance rates.
"The cost of the so-called frivolous litigation is a few pennies on the premium dollar – nothing close to what’s driving the premium increases we are seeing," said consumer advocate Birny Birnbaum, who leads the Center for Economic Justice.
Insurance companies said a big part of the problem is their costs of reinsurance, or the insurance they have to buy to cover themselves. Risk models price that in part on the growing risks of climate change, and for a state flanked by water in hurricane alley, it's disproportionately driving up reinsurance costs in Florida.
Florida already committed billions in state money to insurance companies in the form of cheaper state-backed reinsurance. But, only a handful of companies tapped into it.
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Critics said that could be due to the fund not meeting all the requirements insurers need to cover most of the homes in Florida. On that point, Florida already had a state-backed catastrophe fund that serves a similar purpose, but some companies can't access it.
That's driving proposals to lower the attachment point, or make it easier for insurance companies to access the money in this fund.
"There’s a reason why we have a backup plan here in Florida to do that. We have the cat fund," said State Rep. Hillary Cassel, (D) Broward.
Meanwhile, hurricane victims said their insurance companies stalled and underpaid claims, and some even altered and reduced the damage estimates their own field adjusters wrote. That's why the state already stepped-up enforcement and fines on insurance companies.
"It’s a strong accountability bill that says you have to pay claims faster and if you don't do what you’re supposed to do the penalties will be higher," Florida House Speaker Paul Renner said.
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Consumer Watchdogs want to see more, including requirements, that insurance companies disclose profits, executive payouts and payments to their sister companies.
At the same time, the state has made several changes to make it harder to get or keep state-run Citizens' Insurance (because Citizens covers less and puts its customers at risk of high surcharges to cover its losses – and if that's not enough, surcharges on all the private homeowners' policies).
Birnbaum suggested going the other direction – making it easier to get into Citizens, because if Citizens can take on less risky policies, it could be more financially stable, and less likely hit us with surcharges as more and more private companies pull out of the market.
"If the companies don’t want to play ball. They don’t want to write, then let’s create not just an insurer of last resort, but a public insurer that actually competes for the business. I think that makes a lot of sense," said Birnbaum.
Lawmakers across the aisle said we need to do more to fortify our communities and homes, so they’re less likely to get damaged by wind and water.
That's why they replenished the MySafe Florida home program in special session – and may find more ways to give homeowners rebates and incentives to bolster their homes.