Florida Senate backs proposed property insurance changes that raise costs on insureds

Amid problems in the Florida real estate insurance market, a Senate committee backed a controversial proposal that could result in many policyholders picking up more roofers from roofers and limiting legal fees on insurance disputes.

The Senate Banking and Insurance Committee approved a bill (SB-76) that was tabled after regulators signed dozen double-digit rate increases for private insurers last year, and government-backed Citizens Property Insurance Corp. had seen a flood of new customers.

Proponents of the bill, sponsored by committee chairman Jim Boyd, R-Bradenton, say it aims to keep insurance premiums down and fight fraud and costly litigation.

“What we are seeing right now in the state of Florida is a death spiral in the property insurance world,” said Senator Jeff Brandes, a Republican from St. Petersburg, who said he recently saw his insurance rates rise by more than 20%.

However, opponents said the changes would harm consumers and limit their ability to fight insurers in court.

“Does something have to be done? Yes it does, ”said Senator Perry Thurston of D-Fort Lauderdale. “Does everything have to fall on our citizens and policyholders? I do not believe that. “

Proposed changes related to roof damage and costs

A significant part of the bill focuses on roof damage payments as insurers claim the industry is facing a barrage of questionable or fraudulent claims and systems asking homeowners to submit repairs.

Boyd’s bill would allow insurers to use what is known as a “rooftop reimbursement plan”.

According to the proposal, refunds may vary depending on the age and type of roofs. 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.

Senator Annette Taddeo, D-Miami, on Tuesday repeatedly voiced concerns that consumers would not be adequately informed of such a change and may not be able to afford additional roof repairs.

Taddeo said she was thinking of “the Abuela in my district. These are people who are not necessarily well versed in signing this [insurance] Contracts. “

However, Boyd, an insurance broker, said it was up to insurance agents to explain such changes to policyholders. He said the overall goal is to make insurance more affordable.

“Ultimately, the goal is to reduce costs for consumers,” said Boyd.

Proposed changes to time allocation for entitlements

The draft law also contains proposed amendments, such as reducing the period from three to two years that policyholders would have to assert after a claim. In addition, policyholders would have to notify insurers at least 60 days prior to filing claims.

In addition, the measure would seek to limit the fees for attorneys representing policyholders. For example, 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 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”.

Counter arguments

Opponents said the bill could make it more difficult for policyholders to find lawyers to handle claims, reducing their ability to go to court. But insurers have long accused plaintiffs’ lawyers of driving up costs in the system.

The bill was backed by plaintiffs’ insurers and lawyers on Tuesday and likely set the stage for lobbying during the legislative session that will begin March 2.

State Insurance Commissioner David Altmaier spoke to the Senate committee last month about financial problems in the private insurance market, including higher rates and a lack of availability of insurance coverage. Altmaier, for example, cited 105 tariff requests from property insurers in the first 10 months of 2020, 55 of which led to approved tariff increases of more than 10%.

The problems have helped draw many policyholders to Citizens, which was founded as an insurer of last resort but now has what Citizens President and CEO Barry Gilway calls “competitive” rates with private companies. This contradicts the longstanding efforts of heads of state to shift politics from citizens to the private market.

Jim Saunders reports for the Florida News Service.

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