Florida lawmakers, too busy with culture wars, missed a real crisis
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Florida is facing a property insurance crisis so dire that Governor Ron DeSantis (R) has ordered state lawmakers to bring it back in a special session next week to fix it. That’s because the Republican-run legislature spent weeks of the regular session trying to control what teachers and corporations can say and do, instead of addressing a mess that plagues millions of Floridians: home Slowdown in the insurance market.
Yes, Florida is vulnerable to hurricane damage, but so are other Gulf Coast states, and their property insurance markets are not in disarray. That’s because this crisis is man-made, which has less to do with devastating hurricanes than two of Florida’s other trademarks: greed and deceit.
But first, let’s look at what Floridians face: property insurance premiums skyrocketing, an average of 25 percent from 2020 to 2021, but in some cases tripling a year, according to the Insurance Information Institute, a nonpartisan, nonprofit The trade group that monitors industry trends.
The average cost of homeowners insurance in Florida was $3,600 in 2021, more than twice the rate in the rest of the country.
That is, if you can also get insurance. According to the institute, over the past 12 months, more than 400,000 Florida domestic policies have been removed, most of which last 90 days.
An insurance holding company announced 68,200 cancellations this week. Three other companies have been declared bankrupt this year. Florida Insurance underwriting loss is projected to exceed $1.6 billion for 2021.
“This is the most volatile property insurance market in the country, and it is headed for a collapse,” says Mark Friedlander, spokesman for the institute. Refer to the special session.
The problem begins with dishonest roofers. They show up at the door uninvited (my doorbell rang last month) and offer a pitch to the owners: If a roof is 25 percent damaged—that’s when Florida coverage begins—they’ll ask your insurance company. Can give a free roof, even if a storm was not the cause.
A homeowner needs to sign a permit allowing contractors to collect collections directly from the insurance company. This allows corrupt roofers to overcharge companies for a roof that is being replaced unnecessarily. Roofers pocket extra money, and homeowners get a new roof.
Then, if a claim is denied or disputed, a runaway lawsuit occurs. Florida accounts for 9 percent of the nation’s property claims, but it accounts for nearly 80 percent of the nation’s property insurance lawsuits, according to the Office of Insurance Regulation.
Why? Because Florida law allows plaintiff attorneys to be awarded 2 to 2½ times their typical hourly rate for property insurance lawsuits. Talk about plum incentives for lawyers—it gives a whole new meaning to hanging on to a shingle.
Property insurers in Florida paid $15 billion in claims costs between 2013 and 2020. Eight percent of the money went to consumers, and 71 percent went to lawyers.
Primarily, attorneys can’t file claims against insurance companies fast enough to deny homeowners payments or short-balling payments.
This contingency fee multiplier rate is considered a rarely used tool, but a 2017 Florida Supreme Court decision made it regular. Now insurance companies often settle instead of taking the potentially more costly risk of going to court.
All this chaos has made private insurers reluctant to take on new customers. Many homeowners have no choice but to enroll with Citizens, Florida’s state-run, nonprofit insurer.
Funded by premiums and taxpayers, Citizens was designed to be a last-ditch insurer, yet it is now the largest in Florida. Its policies more than doubled to 420,000 in October 2019. According to the insurance institute soon it will be above 1 million. If a major hurricane strikes Florida, citizens will quickly deplete their reserves — $166 million in underwriting losses last year — and taxpayers will have to make up the difference.
Furthermore, citizens are limited: it only insures homes valued at less than $700,000, or $1 million in Miami-Dade and the Florida Keys.
Those who have private insurance are often faced with new, arbitrary rules – such as requiring roofers to be under 15 years old – or loosening risk, even as Progressive and other large insurers do. .
The rising cost of property insurance has made Florida one of the most expensive housing markets in the country, making it even more inaccessible, especially for first-time and middle-class buyers.
“It’s a completely unsustainable trajectory,” state Sen. Jeff Brands, a Republican leading the special legislative session, told me.
If the adamant legislature wants to stem the storm of its own creation of the state, lawmakers need to take meaningful action now. But first Republican House Speaker Chris Sprouls, who decided not to move forward on the issue, should make it a priority. Brands said the House’s reluctance is easy to explain: Legislators — many of them lawyers themselves — don’t want to upset trial attorney donors.
The legislature needs to find a way to prevent a tsunami of baseless lawsuits and regular roofing scams. Or it may once again do nothing, just in time for the start of hurricane season on June 1.
