A former state senator who started a petition urging lawmakers to come together this spring to work to resolve Florida’s troubled property insurance market is advocating for sideline reforms ahead of another special session on the issue more later this month.
“This is the most pressing pocket problem facing Florida today,” said former Republican Sen. Jeff Brandes, who represented part of Pinellas County until it reached the limit of his mandate after the November elections.
Newly retired from the legislature, Brandes, who continues to work in real estate, says he plans to start a think tank that focuses on several key issues facing the state, including property insurance.
“It’s the Achilles’ heel of the Florida real estate market. It’s the Achilles’ heel of Florida’s growth,” Brandes said. “If Florida isn’t successful, then what you’re going to do is shrink the middle class in the state because people won’t be able to afford a home.”
Florida homeowners who purchased homeowners insurance in the private market have seen their rates increase annually by about 33%, and that number is expected to rise to 40% next year. More than one million policyholders are insured by the state-backed insurer of last resort,
Citizens Property Insurance Corporation, which offers rates at least 20% below market value.
Private insurance companies face tough market conditions, including excessive litigation and fraudulent claims. As a result, six insurers left the state this year, with more than 20 on the brink of insolvency.
“I have seen this quickly become the number one issue in my community [that] that my constituents are facing,” Brandes said.
State lawmakers will meet in Tallahassee Dec. 12-16 to pass more laws aimed at fixing the state’s ailing property insurance market, which took another hit after the hurricane Ian made landfall in September and destroyed thousands of homes. In October, Governor Ron DeSantis called a special session and signed an executive order providing property tax relief to residents recovering from the Category 4 storm.
Republican House Speaker Paul Renner recently hinted to reporters that lawmakers are open to considering a range of possible solutions aimed at fixing the state’s broken property insurance market. “We’re going to look at the kitchen sink, frankly, options.”
The Republican supermajority in the legislature will likely face tough choices when it comes to the rising cost of reinsurance, Renner suggested. “When you have a market that is contested, I think it is fair to say that you have to consider things that I, as a curator, would not want to do, which is to put in place certain of our reserves to support the private market.”
Renner explained that such a move would only make sense with more permanent solutions, such as the passage of new legislation aimed at limiting the disproportionately high number of lawsuits against insurance companies in the United States. State.
As insurers leave the market, homeowners pay more for their coverage.
Six private insurance companies have left the state so far this year, and more than 20 more are on the verge of running out of funds, according to the state’s Office of Insurance Regulation.
The Insurance Information Institute, a nonprofit that studies industry trends, believes rate increases will only get higher, said Mark Friedlander, spokesman for the institute in Florida.
“And there are a variety of factors in there: the ongoing issues of litigation abuse and roof claim abuse, combined with the losses from Hurricane Ian, combined with the higher cost of reinsurance.”
Data from the state’s Office of Insurance Regulation shows that 76% of homeowners’ lawsuits against insurance companies are filed in Florida, but the state accounts for 8% of all claims in the United States.
Friedlander says the insurance industry wants lawmakers to end so-called ‘one-way attorney fees’ that property insurers are required to pay every time they lose their cause.
“Florida is very liberal on these fees compared to other states,” Frieldander said. “As a result, again, it’s an incentive to sue insurers, which we don’t have in other states because of much tighter regulations.”
Friedlander says that last year 116,000 lawsuits were filed in Florida against insurers. That estimate for this year is 130,000 – but that was before Hurricane Ian.
With so many lawsuits pending, the market is unlikely to stabilize anytime soon, even if lawmakers end one-way attorney fees later this month.
“Any changes in the laws will not affect lawsuits already filed,” Friedlander said. “Sometimes prosecutions can take years to work their way through the court system, so nothing will change immediately.”
House Speaker Paul Renner recently told reporters that it was possible to settle one-way attorney fees. “It’s in the sink of things that we’re going to discuss,” Renner said. “I don’t think any decision has been made, but it’s certainly a decision that people see as Florida being a bit of an outlier in the way we operate there.”
Former state senator Jeff Brandes said he’s confident lawmakers will end one-way attorney fees when they meet in the next session. “They do not have the choice.”
“There’s a whole lot to do with citizens,” Brandes said. “There’s a lot to do with the private market, but unless you’re dealing with litigation, none of that matters, okay.”
When they met in the last legislative session, they failed to correct the many problems facing the market, especially when it comes to ending one-sided attorney fees, Brandes explained.
“Honestly, they haven’t done enough,” Brandes said. “They knew what they had to do, but they didn’t want, because of politics and because of an election year, to do the things necessary to really fix the market. They no longer have that opportunity to wait and throw. They pushed the can so far down the road, we’re off the road.
Florida’s state-backed insurer of last resort is growing at a rapid pace.
Another big issue lawmakers could address is the growing number of homeowners getting their coverage through the state-backed insurer of last resort: Citizens Property Insurance Corporation.
Since January, the number of citizen policies has increased by around 48%. The state-backed insurer of last resort added more than 360,000 new policies this year, bringing the total to more than one million.
Former state senator Jeff Brandes said citizen rates typically fall below 30 to 50 percent of market value, depending on where a property is located.
“The big problem with Citizens is that it’s a predatory competitor,” Brandes said. “Their prices are not set by actuaries. They are set by politicians.
Limiting the rapid growth of new citizen policies is one of the issues lawmakers need to address to help the market.
And Brandes says the issue is so big and complex that he doubts lawmakers will have time to fully address it during the weeklong special session.
“I just don’t know if the Legislature will be able to tackle all of these things in a week the way they need to. There are so many things.
Brandes says he expects lawmakers to try to tackle the bigger issues later this month, but he says they’ll have to come up with more solutions when they meet again in March to the 60-day ordinary session.
“This patient is very ill and needs multiple surgeries to survive.”