Given that homeowners are seeing double digit rate increases and policies moving into government-backed Citizens Property Insurance Corp. Many lawmakers say changes are needed in Florida real estate insurance system.
But the House and Senate seem to have different positions on how far these changes should go.
A House of Representatives body took up a proposal on Wednesday that would allow citizen customers to increase their rates and further limit claims and lawsuits against property insurers. However, the move is far more modest than a Senate bill that would allow insurers to limit payments to customers who suffer roof damage and to pay fees to attorneys who represent policyholders.
The Home Insurance and Banking Subcommittee on Wednesday signed the proposal for the home, which was an amendment that scaled back a property insurance bill (HB 305) sponsored by Rep. Bob Rommel, R-Naples. For procedural reasons, the body can only vote on the revised draft law at its next meeting.
However, the changes came a day before the Senate Committee was due to pass a broader bill (SB 76) sponsored by Senate Banking and Insurance Chairman Jim Boyd, R-Bradenton. If the bill clears the committee, it would be ready to go to the entire Senate.
Given the financial troubles of private insurers, regulators approved dozen of rate increases of over 10% last year. As the market tightened, Citizens, founded as the insurer of last resort, took out more than 100,000 policies in the past year.
“It’s a crisis and we have to address it without giving the insurance company too much power,” Rommel told the House Panel. “But we have to make sure we can attract airlines to Florida state that want to do business here. And right now it is very difficult under the current legal conditions. “
The House of Representatives proposal partially changes part of state law that prevents citizens from increasing prices for individual customers by more than 10% per year. According to the proposal, this limit would increase to 11% by 2022 and continue to increase annually until it reaches 15% in 2026.
Citizens leaders claim that the government-sponsored insurer’s tariffs are lower than many private transportation companies, which is helping to boost insurance policies among citizens. Insurance regulators held a hearing on Monday on a proposal from citizens to raise rates by a total of 7.3%, although rate increases would vary widely from individual policyholders.
Among other things, the company’s proposal would also shorten the period within which customers can report claims to insurers after a loss has occurred. This period would be shortened from three to two years. Additionally, the bill would require 10 days’ notice before filing any lawsuit for insurers to make deals.
However, the House of Representatives proposal does not fit two main parts of the Senate bill. These parts deal with complaints from the insurance industry that questionable, if not fraudulent, umbrella claims and plaintiff attorney fees are driving up costs in the insurance system.
The Senate bill would allow insurers to use what is known as a “reimbursement plan” to determine how much they would pay for roof damage. For example, insurers would have to provide full replacement coverage for roofs under 10 years of age. However, they would be allowed to insure other roofs less, which would effectively result in policyholders with older roofs being able to pay more out of pocket repairs to damage.
In addition, the Senate bill would further limit the plaintiffs’ legal fees.
In Florida, plaintiffs can collect attorney’s fees when they assert cases against insurance companies. The amounts are usually determined by calculating the number of hours spent on a case and a reasonable hourly rate.
Courts can also approve so-called “contingency risk multipliers”, which increase the fees. According to the Senate’s draft law, however, contingent risk multipliers could only “be awarded in rare and exceptional cases with evidence that a competent lawyer could not be appropriately employed”.
Jim Saunders reports for the Florida News Service.