Peter Schorsch | March 8, 2022
The House says last year’s reforms need time to take root, but time is not on homeowners’ side.
The House continues to drag its feet on addressing property insurance reforms by refusing to act on the Senate’s property insurance reform package (SB 1728), effectively killing it.
This inaction comes as end-of-year financials roll in showing homeowner insurance companies lost another $1.5 billion in 2021, with Progressive leading the pack $250 million in the red.
Notably, the overall total doesn’t include losses from St. Johns Insurance and Avatar Insurance, both of which went belly up last month. The losses will no doubt be significant, as St. Johns was the eighth-largest homeowners’ insurance company and served 170,000 policyholders, and Avatar underwrote thousands more.
For consumers, mounting losses mean one thing: rate increases.
Those have become the norm as the property insurance market continues its downward spiral. Earlier this month, the Florida Insurance Guaranty Association approved a $190 million assessment that will be paid by homeowners through their property insurance bills.
It came less than six months after FIGA’s approval of a separate, $168 million assessment. The Florida Office of Insurance Regulation must grant final approval on the assessments, and it already has for the one greenlit in September.
Despite the dire circumstances, the House has maintained that reforms passed in the 2021 Legislative Session need more time to fully take root — 18 months from the July 2021 effective date — and that it will not consider further attempts to stabilize the market until then.
Time, however, is not on homeowners’ side. The state-backed Citizens Property Insurance Corp. passed 800,000 policyholders this week and litigation — cited by insurers as the key driver of market woes — spiked by 17% last month after rising 37% in January.
The 2021 reforms have had little if any effect. With a few weeks left in the first quarter of this year, litigation volume has already surpassed levels recorded in the second quarter of 2021, which was the last full quarter before last year’s reforms went into place.
Even with six months of reforms in 2021, Florida ended the year with 117,000 litigated claims against property insurance companies. National data shows that every across all other states is around 900 litigated claims.
Carriers say roof claims, in particular, are behind the explosion of lawsuits. Homeowners are bearing the consequences, with many being dropped by their insurer once their roofs are 10 years old because they are seen as uninsurable.
The Senate’s property insurance bill contains a slew of changes aimed at reducing lawsuits and limiting costs related to roof damage claims. The most debated provision would allow insurers to limit coverage to the “stated value” of a roof, rather than on a depreciating scale over time and allows insurers to require a special roof deductible of up to 2% of the coverage limits.
The concept is seemingly a nonstarter for House Speaker Chris Sprowls, who has said he worries low- and fixed-income homeowners would be unable to afford to fix their roofs if they had such a policy.