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Property Insurance Reforms Fall Far Short of What is Needed

Dennis “Mitch” Maley•Sunday, Jun 05, 2022

The Florida Legislature convened for a special session just ahead of Memorial Day to address the deepening crisis in our state’s property insurance industry. However, the modest “reforms” passed during the three-day session will not meaningfully strengthen a system on the brink of collapse. 
The idea that a three-day session would produce some sort of silver-bullet solution to a complex crisis didn’t inspire much confidence, especially given the fact that lawmakers got nowhere on the issue in their 60-day annual session, despite it being the top concern of many of their constituents.
Conspicuously absent during the session was any sort of deep dive into hard data regarding problems in the industry or expert testimony from a panel of industry professionals and regulators. The Department of Financial Services, Florida’s consumer advocate for the industry, and the Office of Insurance Regulation itself were nowhere to be found for most of the proceedings, frustrating many lawmakers who wanted to better understand the crisis and options for reform.
During one awkward moment, a senator asked whether anyone from the Office of Insurance Regulation was even in attendance. Insurance Commissioner David Altmaier was in the back of the room and raised his hand. It was telling that the state’s insurance guy, who’d normally be front and center during such a session, ready to answer questions, seemed to be avoiding the role.
Lawmakers ultimately passed the near-identical legislation released by each chamber just ahead of the session. 
In the new legislation, insurers will be prevented from declining to cover some homes solely based on an aging roof. 
The new legislation will also restore a 2006 program that offers homeowners up to $10,000 to storm-harden their houses. The program, which is called My Safe Florida Home, was plagued by incompetence and fraud in the past, however, and no accountability measures to prevent further issues were discussed. It was also funded with only $150 million, some 40 percent less than the $250 million the state committed in 2006.
On the industry side, the legislation provides a $2 billion reimbursement pool of reinsurance for hurricane losses directly below the mandatory layer of the Florida Hurricane Catastrophe Fund, requiring eligible insurers to participate in the program. It also limits the amount of money attorneys can collect in lawsuits against insurance companies, which is already being contested in a lawsuit.
It’s notable that no analysis of how the legislation will affect homeowners’ rates has been done, with state officials predicting it will be at least 18 months before consumers might see price drops—if they see reductions in their rates at all. 
The State of Florida is experiencing record growth, providing for an ocean of real-estate and development-related cash that has produced a record budget. But without a viable, let alone healthy property insurance market, that golden goose won’t last long. 
The measures rushed through ahead of the holiday simply won’t cut it. Our own Senator and local insurance magnate Jim Boyd (R-Bradenton) is the Senate’s point man on insurance reform. Boyd has said he has asked Senate leadership to hold a summer workshop to further explore the issue. Great, maybe they’ll actually dig into the meat of the issue, but the next hurricane season will be upon us long before that amounts to reform.
Florida lawmakers squandered much of this year’s session appeasing Governor Ron DeSantis’s appeals for culture war legislation, almost all of which fails to solve any real issue facing a sizable population of citizens, although it helps DeSantis raise tens of millions and elevate his profile ahead of the 2024 presidential primaries. 
When it comes to useless red meat to throw at the mob, Florida lawmakers are among the best in the business. When it comes to rolling up their sleeves and doing the actual hard work of running a massively populated state in the 21st century, however, they simply don’t have the resolve that’s needed. This crisis, like most, will likely have to become a full-on catastrophe before serious efforts are mounted, at which point, it will likely be too late. 
Click here to see a thorough review of what is included in the new legislation.

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