Property insurance revamp clears first House committee

A House Panel passed a committee replacement for a bill (HB 305) Revision of property insurance laws in the state, including changes to the guidelines for state property insurance for citizens.

The Home Insurance and Banking Subcommittee voted 12-2 in favor of advancing the legislation.

The bill’s sponsor, Naples Rep. Bob RommelHe explained problems with the Florida property insurance market, saying prices are rising for consumers, citizens are growing “at an alarming rate” and property owners do not have enough options for insurance.

“We cannot lure insurance carriers into the state of Florida,” said Rommel.

Rommel acknowledged that solving the hurricane-hit state’s property insurance problems is a difficult balance.

“It seems that none of the stakeholders are extremely satisfied with the bill,” said Rommel.

Citizens was founded by Florida Legislature in 2002 as a not-for-profit, tax-exempt government agency to provide property insurance to eligible Florida property owners who cannot find coverage in the private market.

Under the law, citizens would start implementing rate increases from 2022 and then continue to increase rates every year thereafter.

In addition, the eligibility for citizens would change. Currently, property owners are entitled to citizen coverage if private insurers ‘tariffs are 15% higher than citizens’. According to the law, the disparity requirement would be 20% higher than the citizen quota.

When asked why he wanted to balance the difference between property insurance rates in the private market and those of the citizens, Rommel relied on ideology.

“I don’t think it is the job of a state or a quasi-state to supplement the market because we cannot win legitimate private companies for us,” said Rommel.

The bill would also cut the time it takes homeowners to file a property insurance claim to two years. Currently homeowners have three or five years depending on other circumstances.

Those opposed to the bill said it could take a long time to file claims, and this new law would make it harder for homeowners to get paid by insurance companies.

The bill would also allow for damage payments for roofing policies based on the life of the roof.

The bill would allow the Insurance Regulations Office to monitor data submitted by insurers on litigation related to property insurance claims.

The draft law makes it clear that the Insurance Regulation Office has the same authority to examine executive general agents as insurers. A managing general agent is a specialized type of insurance agent or broker who has the authority to sign for an insurer.

The bill also aims to lower property insurance rates in an indirect way by lowering legal fees. The bill increases the requirements for using multipliers when calculating legal fees. Current Florida law allows a contingency risk multiplier that is one to two and a half times the Lodestar amount. The Lodestar amount is considered an objective basis for the amount of the lawyers’ fees. The calculation is based on the number of hours appropriately devoted to the case multiplied by the appropriate hourly rate. The contingency risk multiplier is based on the risk appetite of the case.

The bill can also reduce the incentive for lawyers to sue property insurance cases. This could lead to fewer property insurance cases being processed, which could further reduce property insurance rates. However, this could have the unintended consequence of making it more difficult to obtain an attorney for a property insurance case, leading to the applicability of the contingent risk multiplier when litigation is going on. According to the law, a risk multiplier would only be allowed under “rare and exceptional circumstances”.

A Florida Justice Association representative pushed that section of the bill back, saying the multiplier was necessary because of the complexity of property insurance cases.

The bill now goes to the Subcommittee on Civil Justice and Property Rights, the second of three assigned committee stops.

An accompanying law of the Senate (SB 212) did not move.

A second accompanying draft by the Senate (SB 76) will be heard in the regulatory committee on Thursday.

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