Next week, Florida lawmakers will try to fix the state’s broken property insurance market outside the regular 60-day legislative session for the second time this year.
“I just don’t know that they legislature is going to be able to tackle all of these things in one week in the way that they need to. It’s just so much,” said former Republican state Sen. Jeff Brandes of St. Petersburg. Brandes was a long-time champion for property insurance reform before his term expired in November. “This is the challenge. This patient is very sick and needs multiple surgeries to survive.”
Six property insurance companies in the state have gone bust so far this year. And more than a couple dozen are on the brink of running out of enough money to pay off debts, according to the Office of Insurance Regulation. Meanwhile, the state’s residents are paying increasingly higher rates for coverage in case their home gets destroyed by a hurricane or other natural disaster.
On Tuesday, Senate President Kathleen Passidomo (R-Naples) and House Speaker Paul Renner (R-Palm Coast) issued a formal proclamation stating the legislature will convene Dec. 12 – 16. They also included a list of proposals aimed at reducing rates and keeping insurance companies from dropping policies.
Renner recently told reporters that anything lawmakers accomplish on property insurance next week won’t reduce rates for at least a couple of years.
“Once we do all that I expect we’re going to do in this special session, I do believe we will see some downward pressure on rates but don’t expect it overnight.”
The proclamation lists several measures lawmakers plan to consider, including reducing excessive litigation costs, increasing the availability of reinsurance for insurance companies, reining in the growing policy count of Citizens Property Insurance Corporation, the state-backed insurer of last resort, along with other regulatory changes.
“We’re going to look at the kitchen sink, frankly, of options,” Renner said. He told reporters that ending one-way attorney’s fees, which insurance companies are required to pay if they lose a claims dispute in court, is in the “sink” of things they’ll consider, though there are no guarantees.
The proclamation didn’t provide details on how lawmakers plan to go about reducing litigation costs. Legislative leaders say more information about policies they’ll consider is forthcoming.
Property insurance isn’t the only issue legislative leaders included on the agenda. Lawmakers will also consider allocating funding for tax relief and other financial assistance for residents recovering from Hurricanes Ian and Nicole. They’ll also consider providing additional support for the Division of Emergency Management’s response, recovery and relief efforts following a natural disaster.
Also on the list is a proposal to set up a statewide toll credit program for frequent commuters.
Democrats in the minority say they want ‘balanced’ approach
The upcoming special lawmaking session will be the first time the legislature convenes under the newly elected Republican supermajority. Democrats now make up less than 30% of the legislature, giving them little policy-making leverage, if any.
On the issue of property insurance, bipartisan cooperation appears likely. House Minority Leader Rep. Fentrice Driskell (D-Tampa) explained to reporters during a press call on Tuesday that the caucus would support measures that benefit consumers and correct the market.
“We want to provide balanced solutions that certainly protect the homeowner, but also allow us to have a competitive market so that the insurance companies can compete,” Driskell. “They provide a service that we very much need. So what can we do to make corrections in the market to help everybody all around?”
One change the insurance industry has called for is an end to one-way attorney’s fees, which are seen as an incentive to file lawsuits against property insurance companies.
Florida had 116,000 lawsuits filed against insurers last year, and there were 130,000 projected for this year before Hurricane Ian, according to the Insurance Information Institute’s Spokesperson Mark Friedlander.
The state has 8% of all insurance claims across the U.S., yet 76% of the nation’s lawsuits against insurers.
Republicans could consider ending one-way attorney’s fees and limiting assignment of benefits, both of which are credited with driving up the number of lawsuits.
Democrats might not be willing to support measures that “go too far” on those issues, Driskell explained.
“If you go too far with attorney’s fees and assignment of benefits, you do run the risk of cutting off consumers’ access to the courts.”
Democrats, however, do want lawmakers to take significant steps to make sure wider availability of reinsurance, which insurance companies rely on to cover losses incurred by their policyholders after a disaster hits. “Our caucus believes those changes need to be robust.”
The high cost of reinsurance has driven up costs for insurance companies, which are ultimately passed down to the consumer through rate increases.
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