FORT LAUDERDALE, Fla. — Here’s what Florida insurance officials want the Legislature to do next year about the state’s troubled property insurance market:
Nothing.
Major litigation reforms enacted in 2022 and 2023 are strengthening the industry by reducing lawsuits, which has helped private market companies return to profitability following five straight years of underwriting losses, said Virginia Christy, deputy commissioner of property and casualty with Florida Office of Insurance Regulation, at this week’s Florida Chamber Annual Insurance Summit in Orlando.
The renewed financial health has encouraged reinsurers and catastrophe bond markets to back more risk at lower rates, encouraged new companies to open up shop in the state, and stabilized or reduced premiums for homeowners, Christy said.
Insurance Commissioner Michael Yaworsky doesn’t want lawmakers to introduce further reforms before the state can better analyze effects of the previous round, she said. “Until that data comes through, we don’t want to have any other tweaks that would set us back from this path that we’re on, which is a good path to reform.”
Christy said Yaworsky, who oversees the Office of Insurance Regulation, is encouraging lawmakers to avoid enacting any major new property insurance reforms during the next legislative session that begins in March.
Lawmakers seem to be listening. Only a handful of bills have been filed in the House or Senate containing the term “insurance.”
Yaworsky and the office want “status quo for now,” Christy said.
Industry leaders want to see whether last fall’s hurricanes Helene and Milton generate fewer litigated claims, and reduced costs, compared to Hurricane Ian in 2022 and Hurricane Irma in 2017. The data will reveal whether the reforms set up the industry for long-term stability, she said.
“Commissioner Yaworsky did a good job in letting the Legislature know that these reforms are going to take time,” Christy said. “It may be up to 18 months before we see good data that will truly let everybody kind of settle down. It will also let us see data that … might identify a need for (further reforms),” she said.
The reforms, enacted in a series of bills between 2022 and 2023:
• Prohibited contractors from requiring that customers sign over the benefits of their claims.
• Barred plaintiffs attorneys from collecting legal fees from insurers if they prevail in litigation.
• Restricted when attorneys could file suits accusing insurers of “bad faith.”
• Barred roofing companies from offering homeowners incentives to allow inspections.
• Tightened eligibility to obtain coverage from Citizens.
Christy rattled off several encouraging signs that occurred in 2024, including commitments to staying in the Florida market by national carriers State Farm Florida, Progressive and USAA.
Some companies are again offering to cover homes in areas of the state where they had stopped writing new policies a few years ago, she said.
Four reciprocal insurers formed during the year, she said.
Fifteen companies insuring 1.5 million homes filed for rate decreases during the year, while 29 filed to keep rates unchanged, she said.
Over the past 30 days, companies filed for an average rate increase of 1.6% compared to 7% during the same period last year, she said.
State-owned Citizens Property Insurance Corp. has seen its depopulation program drive its policy count below 1 million for the first time since 2022, aided by a new law that prevents policyholders selected for “takeout” by private insurers from remaining in Citizens if any offer comes within 20% of Citizens’ premium cost.
Private companies are even depopulating condominium policies, she said, and removed $15 billion in condominium risk exposure from Citizens last year.
The positive trends have convinced reinsurers – who provide insurance to insurance companies – to increase availability and reduce rates, she said. Most companies paid less for reinsurance in 2024 than they paid in 2023, she said. Experts say lower reinsurance rates help reduce or stabilize premiums for homeowners.
Don Matz, CEO of newly formed Orange Insurance Exchange, said the reforms were an “extremely significant” factor in investors’ decision to launch the company in 2023.
He mentioned a reform requiring insurers to file an “Intent to Litigate” notice before actually filing suit. That has enabled insurers to reduce costs by giving them more time to reach more pre-suit settlements, he said.
Even as Yaworsky wants to see more data, many of the speakers during the summit’s first day said they were very encouraged by what they’ve seen happen in the insurance market so far.
Justin O’Keefe, chief underwriting officer for Renaissance Re, a Bermuda-based reinsurer, noted that fewer than 5% of homeowners who have filed claims after Hurricane Milton struck the west coast of Florida last October were represented by a public adjuster and less than 1% were represented by an attorney.
Two years ago, after Hurricane Ian, 10% to 20% were represented by a public adjuster and 5% to 10% were represented by an attorney, he said.
Plaintiffs’ attorneys have argued since the reforms were enacted that they hurt homeowners by making it harder to find attorneys willing to take their claims. And that emboldens insurers to deny claims payments, they say.
And homeowners aren’t yet seeing their premiums fall after the reforms, said State Sen. Blaise Ingoglia, chairman of the Senate Banking and Insurance Committee.
“They’re getting hit from all sides,” Ingoglia said. “They getting hit by inflation at the grocery store. They’re getting hit by rising property taxes and rising insurance premiums.”
The Legislature can play a role, he said, in removing abusive behavior “when it comes to the marketplace.”
That abusive behavior, he said, comes from trial attorneys, contractors, adjusters, and “quite frankly, it’s going to come from insurance companies that just refuse to pay out on legitimate claims.”
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