- Will the Legislature take on more reforms as insurance policyholders find little recourse to insurer decisions? Democrats say yes and Republicans are sending mixed messages.
This story was updated to correct a typographical error.
To a storm-rattled state — particularly for victims of hurricanes Helene and Milton waiting to see whether insurers pay to fix the damage — the words of Republican Senate President Ben Albritton might sound reassuring.
Addressing Florida’s senators who met Nov. 19 to set the stage for March’s legislative session, Albritton alluded to how the 2022 tort reform was needed to stabilize the state’s insurance market and how those reforms hobbled Floridians’ ability to sue their insurer if they disagree with a settlement.
A test lies ahead since this is the first year the reforms have been in force while hundreds of thousands of claims have been filed to fix the damage left in the wake of nature’s fury.
“I want to make sure that impacted Floridians and insurance companies hear me loudly and clearly — we are watching,” said Albritton, who represents Southwest Florida, which has been particularly hard hit by storms in recent years.
“The proof will be in the results,” Albritton continued. “I’m not going to sit idly by if legitimate claims get denied while rates continue to rise. Period.”
How did we get here?
The tort reform was spurred, in part, by the belief that the laws that allowed insurance plaintiffs to recover attorney fees as part of the settlement were driving premiums higher because it also spawned frivolous lawsuits. As the insurance market wobbled in 2022, lawmakers were called into a special session to bring the state’s laws governing lawsuits more in line with most other states even though Florida’s unique peninsular shape often lies in the path of dangerous storms.
After those strong words, Albritton did not, however, appear poised to shake up the status quo when he spoke to the media following his speech. So far, the reforms are working and working well, he said.
“Due to the tort reforms and the insurer accountability measures we passed, what’s fascinating is the reinsurance markets have an invigorated view now of Florida and there’s new companies entering the market,” Albritton said.
Reinsurance, which is what the state’s insurance companies rely on to help them shoulder the risk of catastrophic loss, is widely viewed as part of the perfect storm of circumstances that have propelled Floridians’ insurance rates to two and three times more than the average premium in other states. The state’s vulnerability to hurricanes and the greater number of lawsuits against insurers compared to other states are also part of the equation.
Healing signs: Insurance lawsuits dropping
Since the reforms passed, a number of things have happened: 1) the number of lawsuits has dropped; 2) the average rate increase approved has been less than 4% for the longest stretch in years; 3) insurance companies reported a profit for the first time in 10 years; 4) new insurance companies are opening shop in the state after nine of them folded and others scaled back their Florida operations between 2021 and 2023.
Another sign that the insurance market could be healing is that the number of policyholders getting coverage from the state’s insurer of last resort, Citizens Property Insurance Corp., has dropped to its lowest level since September 2022. Now at 1 million policyholders as of the end of October, Citizens’ officials say they expect the nonprofit will have 907,000 policyholders by the end of 2024, after reaching its highest level of 1.4 million policyholders in September 2023.
Some lawmakers believe more fixes are needed
Still, Democratic Rep. Hillary Cassel of Hollywood said the improvement is an illusory one, a repeat of a continuing cycle that will soon lead to increased premiums and start-up insurance companies going out of business. The insolvencies cost all Floridians because the unpaid claims must be bailed out by the Florida Insurance Guaranty Association, which, in turn, slaps assessments on all the state’s policyholders’ premiums. FIGA is a legislatively created entity specifically set up to handle the claims of insolvent property insurance companies.
“All we’re doing is repeating history, allowing these insurance companies, these fly-by-night insurance companies, to come to the state and depopulate Citizens,” Cassell said. “We have not actually reformed the marketplace.”
These undercapitalized companies rely heavily on the reinsurance market, Cassel explained. While the cost of reinsurance capital dropped this year — reacting to the prospect of fewer policyholders taking their insurer to court — that outlook could get grimmer soon, possibly because of the one-two punch of hurricanes Helene and Milton within two weeks in September and October.
The verdict is expected to arrive sometime between six and eight months from now.
“Any slight increase in the reinsurance market is an automatic increase to the cost of premiums in the state of Florida for consumers,” Cassel said, noting that securing reserve money in case of catastrophe comprises 40% to 50% of windstorm premiums.
Spread the catastrophic risk around?
Cassel is planning to introduce a bill like the one she championed last year that would take catastrophic risk out of the private market and spread it evenly over the state, similar to California’s earthquake insurance fund and Texas’ coastal wind fund. House Bill 1213 died without making it out of one committee, but it did attract bipartisan support, with Republican Rep. Spencer Roach co-sponsoring. It did not draw a Senate sponsor, however.
“At a certain point there needs to be an understanding that the private marketplace cannot meet the public need,” said Cassel, an insurance attorney. “And the reality is, we have data that shows that these types of programs that spread the risks work.”
She pointed to Monroe County, for example, where Citizens insures most of the property with wind-only policies. Despite the risk, even in years when hurricanes hit, Citizens has been profitable there while private insurers write for other perils, such as fire, theft and lightning, she said.
The way things are now, Citizens is still insuring Florida’s riskiest properties and the state’s policyholders are on the hook if reserves get too thin.
“The riskiest policies, the coastal policies, the policies that aren’t in the greatest zip codes, the older homes, the condominiums — those are the highest risks that are still on the backs of Floridians … those risks are still being carried by Citizens,” Cassel said.
Cassel said in her work representing insurance policyholders, she’s already hearing from many dissatisfied with their company’s insurance offer for fixing the latest hurricane damage. But this year’s storm victims are facing a new reality. It’s likely most of these cases don’t involve money which makes suing worthwhile since the legislation ended the right to reasonable attorney fees as part of the settlement. Avenues of appealing an insurer’s decision are much more limited than in previous catastrophes.
House Speaker Daniel Perez acknowledges more work ahead
So, Republican Speaker Daniel Perez’s opening speech at the House’s organizational meeting gave Cassel more hope that the other side of the aisle is beginning to understand that Florida needs a more complex solution than the tort reforms offer. She said part of the Democrats’ plank is to convene a commission to make recommendations like the Marjory Stoneman Douglas High School Public Safety Commission did to improve school safety after the 2018 tragedy at the Parkland school, the state’s deadliest school shooting.
Addressing insurance, Perez had the assembled representatives on their feet, applauding.
“(Floridians) understand that in a state battered by hurricanes, insurance will be a challenge, but they don’t want our state’s insurance laws to be written by insurance companies,” he said.
Attorney Joe Ligman, who has offices in West Palm Beach, Fort Myers and Miami specializing in insurance claims, said the Republican-dominated Legislature “is owned by insurance companies.”
“Maybe after this last set of hurricanes, maybe consumers will start figuring it out, ‘Hey, look, we’re not being treated fairly,’” Ligman said, noting that the Florida Association of Public Insurance Adjusters, which represents policyholders with a gripe, has three full-time lobbyists representing them, compared with more than 100 representing insurance companies’ interests.
Perez, asked to explain what he meant further at an eight-minute press availability, said property insurance fits under the umbrella of rising living costs he wants to address during his term as speaker of the state House.
“Do we have we have a perfect solution for it? No,” Perez said. “But are we going to discuss it and continue to try and find a solution that can better that problem? Absolutely.”
Perez couldn’t be reached for further comment.
Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com.Help support our journalism. Subscribe today