Q&A of the Day – 2023 Changes with Florida’s Property Insurance
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station’s page in the iHeart app.
Today’s Entry: (In reference to property insurance) Double what it was 2 years ago: same carrier and not Citizens. What has Desantis done, or the senate done about this insanity? This is the issue for me.
Bottom Line: The answer is a lot. However, the bad news is that there aren’t any quick fixes to a crisis which took decades to create. For everything Florida has going for it right now, a stable property insurance market isn’t one of them. Florida’s property insurance crisis is real. It’s still getting worse in real-time, and yet the state has taken huge steps, and in my view the necessary ones to turn the tide. That is at least by the time the state’s second special legislative session tackling the issue had concluded in December. I thought it was important to tee up this topic as Florida’s state legislative session gets underway for a couple of reasons. I’ve heard from several people about this issue of late as homeowners are getting crushed with huge increases as annual renewals come up and because this isn’t an issue which will be addressed in this year’s legislative session due to reforms having recently been passed. So, what’s happened, what can you expect from here and what can you do? Let’s dive in.
Here’s a refresh as to what happened in the first special session last year. Legislation passed which...
- Significantly limited attorney fees
- Lawyers not able to receive direct financial incentives from contractors who’ve been assigned benefits
- Created an optional roof deductible
- Insurers not able to refuse coverage if a roof is under 15 years old (inspections may be requested by insurers for roofs older than 15 years)
- Amended Florida Building code to state that whole roof repairs aren’t required when damage is present in one section of the roof
All of these were helpful. But what the first session didn’t meaningfully address enough was litigation reform. That became a focus in the second legislative session in December. The key changes which came out of that one...
- The state of Florida created a reinsurance pool to provide stability to insurers
- Limited new claim deadlines to 1 year from 2 and from 3 years to 18 months for supplemental claims
- Reduced the time for insurance company payouts or denials from 90 to 60 days
- Repealed one-way attorney fees in litigation (meaning each party must pay attorney fee cost for litigation)
- Prohibits the assignment of benefits to a third party (for policies issued after January 1st of this year)
- Requires a court finding of breach of contract before a policyholder can sue a property insurance company
From Florida’s original insurance crisis following the ‘04-’05 hurricane cycle and subsequent Great Recession through the current one, I’ve analyzed, covered and advocated for policy changes. What was accomplished by the end of the December special session accomplished what needed to be accomplished in Florida. Insurance can be complicated but the reasons for our crisis aren’t. There were two primary drivers.
- Florida’s the riskiest state with the highest payouts for property insurers
- Florida has only 8% of the country’s property insurance policies but has had 78% of the litigation
One of those the state can’t do anything about. The other was completely controllable. Thankfully and finally, they did take the necessary actions to control what they could control. The litigation reform is huge. So why hasn’t there been an obvious and immediate benefit for policy holders? There are two primary reasons for that one. It wasn’t possible to enact these policies retroactively, so they only apply to new policies issued this year. The litigation pipeline disaster will have to work itself out which will continue to place huge pressure on Florida’s existing property insurance companies throughout this year. Additionally, as you’re no doubt aware, last year’s one-two punch of Hurricane Ian’s devastating effects backed up by Hurricane Nicole’s impact was the last thing our property insurance market needed. This year will be a transitional year for Florida’s property insurance market and Floridians generally won’t feel the positive effects of the reforms just yet. What could happen sooner than later to ease the burden would be for new property insurers to enter the Florida market with the new rules in place creating opportunity and price competitiveness. Over the longer run what can you expect? As I’ve previously illustrated, the litigation cost to the average Florida property insurance policy holder has totaled $680 annually. The legal abuse of Florida’s property insurance market has proven to be more devastating to our property insurance market than any hurricane which has struck our state over the past decade preceding Ian. So, what can you do in the meantime?
You’d mentioned you’re not with Citizens. If you have insurance options, it’s as important as ever to try to use them. I would not let any property insurance policy auto renew without inquiring about what options might exist. This can be done directly with carriers but for most the best bet would be reaching out to a property insurance broker to research the options for you. There are no promises on how this may go, but during the previous insurance crisis about a decade ago, I was able to save about $3,000 annually for the same coverage by switching property insurance carriers. Hopefully this helps until Florida’s property insurance market’s mess stabilizes.