Florida Lawmakers Overhaul Property Insurance Law (12/12/2022)

Major legislation was passed by the Florida House of Representatives and Senate (SB 2-A) to revamp the Florida property insurance system. The new law creates a $1 billion reinsurance fund to provide critical support for carriers, many of whom have suffered in the violent storm seasons the past two years.  The session comes after Hurricane Ian smashed into the southwest coast in late September and caused an estimated $40 billion to $70 billion in insured losses.  Insurers have dropped hundreds of thousands of policies, and six insurers have been deemed insolvent this year.  Home purchasers are finding it difficult to find insurance, and when they do the insurance cost may exceed their mortgage payment.  This is having a chilling effect on home sellers, home buyers, home owners and home builders.  This new support from the legislature is a step that should have an immediate positive impact on the availability of insurance.


Florida is an excessively litigious state, a spokesman for the Insurance Information Institute has said (referring to insurance claims litigation).  The new law also takes steps to reduce litigation which is blamed for boosting insurance rates. According to the Florida Office of Insurance Regulation, Florida accounts for only 9% of homeowners insurance claims nationwide but 76% of homeowners insurance lawsuits. Among other things, the new law eliminates what has been called “one-way” attorney fees (where insurers bear the brunt of add-on attorney fees as a multiplier on claims costs).  The new law also creates prohibitions on assignment of benefits, which was previously a protected right of insureds that caused a high frequency of claims being litigated, and which, prior to this law, caused those added attorney fees to be borne by solely by insurers. Florida Governor DeSantis said “this bill reins in the incentive to litigate.”


The law also forces people insured with Citizens Property Insurance (the state-run insurance plan) to pay for flood insurance, and in some instances compels Citizen insureds to secure insurance from private insurers by preventing the Citizens policyholders from renewing coverage if they receive policy offers from private insurers that are within 20 percent of the cost of the Citizens premiums.


These changes should slow the frequency of insurer insolvencies, and over time reduce the cost of insurance or slow pace of insurance rate increases in this inflationary economy. This landmark legislation for the Florida insurance market is most likely the final major accomplishment for Florida Insurance Commissioner David Altmaier, who submitted his resignation on December 15 (effective December 28, 2022).