As Florida concludes another year, the state finds itself in the grip of an ongoing home insurance crisis, with costs soaring and the outcome of recent reforms uncertain, potentially taking a year to yield results.
State legislators have endeavored to curb costs for insurance companies by implementing measures that make it more challenging to sue them, with the expectation that these savings would be passed on to consumers.
Florida CFO Jimmy Patronis remarked, “The laws that we changed dramatically changed the litigation environment we had in the state.”
However, skepticism surrounds the impact of lawsuits on insurance rates, with some lawmakers and consumer groups asserting that Governor Ron DeSantis and legislative leaders may have overstated this influence.
Consumer advocate Birny Birnbaum, leading the Center for Economic Justice, argued, “The cost of the so-called frivolous litigation is a few pennies on the premium dollar – nothing close to what’s driving the premium increases we are seeing.”
A significant factor contributing to the insurance predicament is the soaring costs of reinsurance, driven partly by risk models factoring in the escalating risks of climate change. In a state exposed to hurricane risks due to its coastal nature, these reinsurance costs in Florida are disproportionately on the rise.
While Florida has committed billions in state funds to insurance companies for cheaper state-backed reinsurance, only a handful have accessed it. Critics suggest that this may be due to the fund falling short of meeting all the requirements necessary for insurers to cover most homes in Florida.
This has prompted proposals to lower the attachment point, making it easier for insurance companies to access funds in the state-backed catastrophe fund.
Hurricane victims, facing stalled and underpaid claims, have prompted increased enforcement and fines on insurance companies by the state. Florida House Speaker Paul Renner stated, “It’s a strong accountability bill that says you have to pay claims faster, and if you don’t do what you’re supposed to do, the penalties will be higher.”
Consumer watchdogs advocate for greater transparency, pushing for requirements that demand insurance companies disclose profits, executive payouts, and payments to sister companies.
Simultaneously, the state has implemented changes to make it more difficult to obtain or maintain state-run Citizens’ Insurance. Consumer advocate Birnbaum suggests an alternative approach—making it easier to join Citizens—arguing that if Citizens assumes less risky policies, it could enhance financial stability and reduce surcharges as private companies withdraw from the market.
Bipartisan lawmakers stress the need to fortify communities and homes to reduce damage from wind and water. The replenishment of the MySafe Florida home program in a special session reflects this commitment, with ongoing discussions about providing homeowners rebates and incentives to fortify their homes.
