Florida Lawmakers Split on Property Insurance Changes

The House late Wednesday approved a proposal that includes major differences from a Senate plan, as lawmakers face a Friday deadline to finish most of the work in this year’s legislative session.

“This is a crisis that many of our constituents are facing now,” Rep. Angie Nixon, D-Jacksonville, said before the House voted 94-23 to approve its proposal.

Private insurers have sought large rate increases and dumped policies as they try to stem financial losses in Florida. In the latest signs of problems in the market, the Florida Department of Financial Services during the past two weeks went to court to be appointed a receiver for St. Johns Insurance Co. and Avatar Property & Casualty Insurance Co., describing the insurers as “insolvent.”

Part of the fallout of the problems in the private market has been a flood of policies into the state-backed Citizens Property Insurance Corp., which was created as an insurer of last resort. As of Jan. 31, Citizens had 776,790 policies, about a 75 percent increase over the past two years.

The House and Senate have disagreed throughout the legislative session about how far to go in making changes in the industry, with the Senate being more aggressive in trying to bolster private insurers. Senate President Wilton Simpson, R-Trilby, said Wednesday that negotiations continued.

A major disagreement has focused on roof-damage claims, as insurers blame questionable, if not fraudulent, claims for driving up costs. Under the Senate plan (SB 1728), homeowners could face new deductibles for roof-damage claims.

The deductibles would be up to 2 percent of overall policy limits. As an example, a homeowner with $300,000 in overall coverage could face a $6,000 deductible to replace a damaged roof.

Senate Banking and Insurance Chairman Jim Boyd, R-Bradenton, said last week that requiring deductibles could help deter “bad actors.”

“I do believe this will help,” he said. “It will put some skin in the game.”

Under the Senate plan, deductibles would not apply if roofs are damaged in named hurricanes, if homes are total losses or if roofs can be repaired without being replaced. But in other circumstances, deductibles would add out-of-pocket costs for homeowners who need replacement of damaged roofs.

The House has shunned the Senate proposal and refused to take up Boyd’s bill this week. Instead, the House grafted its insurance proposals onto another Senate measure (SB 468), which was sent back to the Senate. As of mid-day Thursday, the bill remained pending.

Part of the trickiness of addressing the issues is that many proposed changes, such as roof deductibles, would lead to homeowners facing additional costs — as many already struggle to pay premiums and deal with high housing costs.

State leaders have long sought to shift policies from Citizens Property Insurance Corp. into the private market, at least in part to curb financial risks if a major hurricane or multiple hurricanes hit the state. Citizens leaders contend that they often charge lower rates than private insurers, creating a disincentive for homeowners to get coverage in the private market.

The Senate and House plans would take steps to try to address the growth in Citizens, but they differ on how to do it.

As an example, both bills would address situations in which homeowners receive coverage offers from private insurers. Under the Senate plan, such customers would not be eligible for renewal with Citizens unless the private insurers’ premiums are more than 20 percent higher than what Citizens would charge.

The House plan also includes such a 20 percent threshold, though it would be phased in and wouldn’t fully take effect until 2027.

But homeowners in many parts of the state, including in South Florida, rely heavily on Citizens for coverage. That makes some lawmakers reluctant to make Citizens-related changes that could lead to higher premiums for their constituents.

“It’s already through the roof now,” Rep. Matt Willhite, D-Wellington, said Wednesday night. “Now you’re going to go tell them they could pay up to 20 percent more? Now, it (the House proposal) is over a period of years, I get that. It’s a process, and I don’t want government being big government. … But then again, if Citizens is the only option, we’re telling people to pay 20 percent more, then I don’t know that this is the answer. Actually, I know it’s not the answer because I don’t want people to have to pay more. They can’t buy houses in Palm Beach County now.”

But Rep. Tom Fabricio, R-Miramar, said the House plan would take steps to address the insurance crisis. He said the state needs to work to attract more private insurers to help stabilize premiums.

“We cannot rely on Citizens as our insurance carrier of first resort,” Fabricio said. “It was never intended to be that. It was intended to be the insurance carrier of last resort. Litigation (about insurance claims) has gotten out of hand, unfortunately, in Florida. We need to be able to get things to right the ship and to get Florida back on the right path. This bill begins to take us there in a limited way, and we need to keep working on it in the years to come.”