Jacob Ogles | March 14, 2022
With industry voices claiming a crisis, some lawmakers say a return is inevitable.
Insurance reform is dead for the 2022 Legislative Session, confirmed Sen. Jim Boyd.
Unlike in 2022, when a bill made it across the finish line as the last bill of Session, that’s not happening this time. There are already rumblings a Special Session could lie in the immediate future.
“It’s pretty likely,” said Sen. Jeffrey Brandes, a St. Petersburg Republican, about chances of a Special Session. “Say it’s 70%-30% that it happens. We just have to see if additional companies fail.”
For the second year in a row, industry changes desired by the Senate could not find traction in the House. The Legislature closed business on Friday, the last scheduled day of Session, passing no legislation. While lawmakers will reconvene Monday to vote on a budget, no other bills will be considered.
The Senate passed a bill earlier in Session (SB 1728), but critics always opposed it on grounds it would reduce responsibilities for insurance providers while boosting costs to homeowners. But Speaker Chris Sprowls afterward expressed skepticism about anything that needed to happen on the homeowner insurance front this year.
“If what has been told to me in the eight years I’ve been here from the insurance lobby is true, which is that it takes 18 months to see an impact on rates — which is what I’ve been told over and over and over again — then I don’t think we are yet seeing the impact we are having in rates by the bill we passed last year,” Sprowls said last week.
Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, recognizes that point to an extent. But he said that doesn’t account for the level of compromise in 2021 legislation, or the fact things have become markedly worse in the last year as far as rates and carriers refusing to write Florida policies.
“You’re taking two steps forward when you need to take six, and then you say let’s see how this is working while there’s a five-alarm fire,” Carlson said. “We brought a garden hose in while a fire is raging when we have a fire truck in the driveway. It’s time for the firetruck.”
Boyd, a Bradenton Republican and insurance agent by trade, sponsored the main reform legislation on homeowners’ insurance in both the 2021 and 2022 Sessions. He left the Capitol this year flummoxed they could make no progress.
“We had a chance, I believe, once again to battle the rising costs of homeowners’ insurance keeps the market stable,” he said.
Failure to pass a fresh round of reforms comes after insurance companies operating in the state of Florida suffered a collective $1.5 billion loss in 2021. Progressive reports being $250 million in the red.
This year, the House would not act on the Senate’s property insurance reform proposals despite some members expressing urgency on the topic. Heading into the last week of Session, multiple lawmakers told Florida Politics the measurewas critical to complete this year, with one saying a special session dealing just with insurance would be warranted if nothing could make it through both chambers before the end of Friday. But some House members working on insurance legislation declined to comment.
The Legislature in 2021 passed an insurance bill just before gaveling out. But at the time, many voices within the industry questioned if changes aimed at stopping rapid increases in insurance premiums and renewal costs would help long term. The House did not take up a change in roofing policy regulations that would allow companies to cover the depreciated value of a roof instead of full replacement costs. This year, banners flew over the Capitol in the last days of Session with messages like “There is no such thing as a free roof.”
The bill last year also included restrictions on solicitation that later were tossed out by the courts on free speech grounds.
Boyd came back to Session this year hoping to address a range of issues. He still wanted to deal with solicitation, but do it in a way that didn’t hinder any legitimate advertisement of services. His legislation looked at similar solutions on roof repairs, like allowing customers to insure a depreciated or real cash value of a roof, but was willing to talk to the House about compromises like establishing a deductible for roof insurance.
“It wouldn’t have fixed all the problems but would have moved the needle in a positive direction,” he said.
Brandes said it’s what has happened in the meantime that left him angered by a lack of action. He said during the 60-day Legislative Session, seven additional insurance carriers announced they would stop writing policies in Florida. Two companies providing insurance failed and went under.
Meanwhile, the number of homeowners on the state-managed Citizens Property Insurance has ballooned to over 800,000, with another 600 signing up per week. That’s in large part because the schedule for Citizens keeps rates artificially low by state law. As the gap with free-market pricing grows, Brandes said there’s an increasing number of incentives for agents to put customers on the cheaper state-run policies.
Logan McFaddin, the American Property Casualty Insurance Association’s vice president of state government relations, said Florida’s problems become worse by the day.
“In recent weeks, several insurers have faced insolvency and Citizens’ policy count has continued to grow at a rapid pace — all while homeowners face higher costs and less choice in the marketplace,” McFaddin said. “Without action on common-sense reforms to address roofing repair scams, these alarming trends are likely to continue.
He thanked Boyd for work on reform but said without solutions presented in statute, matters could get worse.
“Given the magnitude of the crisis in Florida’s property insurance market, it is extremely disappointing the legislature adjourned without passing critical reforms, especially related to roofing repair scams, to help bring stability to the market and ultimately lower costs for consumers,” McFaddin said. “Roofing repair scams and its corresponding wave of litigation are driving up the cost of homeowners insurance in Florida and are a key reason the market has become so volatile.”
Obviously, not everyone feels the same or considers insurance companies victims in the issue. Sen. Gary Farmer, a Lighthouse Point Democrat, has argued fiercely against the notion in the Senate as the issue repeatedly arises.
“It’s always a different excuse for the insurance industry,” Farmer said about the Senate-passed bills. “You’re talking about people’s biggest investment in their lives.”
He offered amendments that failed on the Senate floor that would have done away with language about attorneys fees and any changes to roof insurance rules. Groups like the Florida Justice Association have argued those changes will ultimately blindside consumers struck by disasters who then get hit by costs when they anticipated insurance helping in the aftermath.
Still, even some lawmakers who greeted the specific reforms along the way with skepticism said lawmakers need to return to Tallahassee on the important issue.
“This is a crisis in our state and we wasted so much time on culture wars this session,” said Sen. Tina Polsky, a Boca Raton Democrat. “Let’s put our best minds on this important issue and try to fix it. We are one hurricane away from an insurance disaster.”
Brandes said lawmakers ultimately must address a litigiousness problem in the Florida market. Florida, the third most populous state in the union, represents 82% of property litigation in the state.
“The leadership of the House is asleep at the wheel,” he said. “This is an all-hands-on-deck situation, and these guys are below deck sleeping. It’s going to take the Governor to wake everybody up.”