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Florida bill would limit roof claims, attorney fees to corral runaway property insurance rates

By John Haughey | The Center Square Feb 3, 2021

(The Center Square) — Florida’s businesses and 6.2 million homeowners are seeing — or will see — double-digit increases in property insurance premiums as insurers cite ballooning reinsurance costs, “loss creep” from 2017-18 hurricanes and coastal flooding among factors driving rate hikes.

Insurers also uniformly insist excessive litigation plays a significant role disrupting the state’s property insurance market, even after lawmakers adopted a 2019 reform measure.

Several 2021 bills have been filed addressing Florida’s unstable property insurance environment with the Senate Banking and Insurance (BI) Committee Tuesday advancing a proposal designed to reduce attorney fees to dissuade litigation and limit roof damage claim costs. 

Senate Bill 76, filed by its chair, Sen. Jim Boyd, R-Bradenton, was approved 9-3 but the measure faces uncertain prospects when the 60-day legislative session begins March 2.

And that’s scary, Sen. Jeff Brandes, R-St. Petersburg, told the panel.

“What we are facing right now in the state of Florida is a death spiral in the world of property insurance,” he said, noting relief is not only necessary for millions of Florida families and businesses, but to sustain the financial viability of 60 private insurers still operating in the state and discourage enrollment in Citizen’s Insurance, the state-subsidized “insurer of last resort.”

Several factors are spurring the surge in Florida property insurance rates.

Florida was abandoned more than a decade ago by corporate insurers. Those that remain are mostly thinly-capitalized independents significantly influenced by “reinsurance” rates. Reinsurance is, essentially, insurance for insurers.

After a decade without a landfall hurricane, 2017’s Irma caused $17 billion in damage and 2018’s Michael, $12 billion. Citing “loss creep” from the storms, reinsurers are demanding Florida policy renewals raise rates by 25-to-45 percent. 

Since December 2019, 55 insurers have raised rates by more than 10 percent and dozens by more than 15 percent, including several between 30-40 percent. More proposed rate hikes await hearings before the state’s Public Service Commission (PSC).

Last month, Florida Insurance Commissioner David Altmaier told the committee excessive litigation continues to impose costs despite the 2019 adoption of an “assignment of benefits” (AOB) reform bill. He displayed Google search results for ‘roof insurance claim Florida,’ scrolling through pages of law firm solicitations.

“We need to really spend some time on this, brainstorming ideas and coming up with ways that we might be able to mitigate this kind of activity so there’s not such an incentive to file complaints of this nature,” Altmaier said.

Boyd’s SB 76, a result of that “brainstorming,” would reduce attorney fees by limiting “contingency risk multipliers” only to “rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner,” reduce from three to two years the deadline for filing claims and require policyholders provide notice 60 days before filing lawsuits. 

The bill would allow insurers use a “roof surface reimbursement schedule” that factors in roof ages and types. Insurers would only be required to provide full coverage for roofs less than 10-years-old, meaning policyholders with older roofs could pay more to repair damage. 

Sens. Perry Thurston, D-Fort Lauderdale, and Annette Taddeo, D-Miami, raised numerous questions about SB 76’s potential to hurt the most vulnerable by forcing them to pay more for roof damages, diluting their legal capacity to challenge insurers in court and by making the system even more complicated. 

“Does something need to be done? Yes, it does,” Thurston said. “Does it all need to fall on our citizens and policyholders? I don’t think so.” 

Boyd, an insurance broker, said SB 76 is a step in stabilizing property insurance rates.

“Ultimately,” he said, “the goal is to lower costs to consumers.”

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