“The issues in Florida’s property insurance market did not occur overnight, and they will not be solved overnight,” DeSantis mentioned.
“The historic reforms signed today create an environment which realigns Florida to best practices across the nation, adding much-needed stability to Florida’s market, promoting competition, and increasing consumer choice.”
The new laws was handed with the state’s insurance coverage market in what Senator Jim Boyd, chair of the Senate Committee on Banking and Insurance, has described as “freefall”.
“Seven carriers have gone insolvent in the past two years, reinsurance is shrinking in the global markets as costs are going up, and Citizens Property Insurance is ballooning once again, creating huge liabilities for taxpayers and the threat of assessment for all insurance policyholders,” Boyd mentioned on the Bill’s passage.
“This is an environment that cannot sustain itself.”
Gov. DeSantis Signs Hurricane Relief & Property Insurance Legislation https://t.co/utzYDdhn3y
— Ron DeSantis (@GovRonDeSantis) December 16, 2022
An insurance coverage market in “freefall”
Florida’s householders, who already pay among the highest insurance coverage premiums throughout America, have seen common price will increase of 33%, with some having been quoted a ten occasions improve, in keeping with the Insurance Information Institute (Triple-I).
Six Floridian householders’ carriers had failed within the 9 months earlier than Hurricane Ian ripped a damaging path via Florida earlier than occurring to make second US landfall in South Carolina. In the months following the class 4 hurricane, the market has seen FedNat file for chapter and loss-making UPC Insurance conform to administrative supervision because it runs off its enterprise within the state and elsewhere.
Hurricane Ian, the state’s first main storm since 2018’s Hurricane Michael, has exacerbated the stress available on the market – aggregated estimates undertaking Ian insurance coverage losses of no less than $20 billion and probably as much as $74 billion – however Florida’s insurance coverage trade has blamed the disaster on aggressive litigation and fraudulent roofing schemes. An oft cited statistic within the trade, Florida is alleged to account for 79% of US-wide householders litigation, however simply 9% of dwelling claims.
What will change below Florida’s new property insurance coverage legal guidelines?
The new laws will look to deal with this litigation problem by scrapping property insurance coverage one-way legal professional charges. It may even finish task of advantages, which successfully permit a policyholder to assign declare advantages to a 3rd get together.
Further modifications embrace a brand new $1 billion Florida Optional Reinsurance Assistance (FORA) program, on prime of the present $2 billion reinsurance help program, whereas policyholders of state insurer of final resort Citizens will likely be topic to additional necessities.
The laws was described as “historic” by Citizens’ CEO. In current months the state provider has confronted an inflow of insureds. It noticed its coverage rely swell almost 50% from January to December and had 1.14 million policyholders as of this month.
The provider is Florida’s largest householders’ insurer, and rising coverage numbers “threaten Citizens’ ability to pay claims without having to levy surcharges and assessments if it exhausts its ability to pay claims”, the organisation mentioned final week.
Over a gradual roll out below the brand new laws, Citizens insureds will likely be required to buy flood insurance coverage. To stay with the state insurer, they may even should reveal that they’re unable to get a quote from the non-public market that’s inside 20% of their quoted Citizens renewal value.
#PressRelease Citizens leaders applaud “historic” reform passage https://t.co/joEJzESVdm. “The bill provides Citizens tools to return to our residual role over time while ensuring policyholders have financially sound private market options,” mentioned Barry Gilway, Citizens President. pic.twitter.com/wzrr5VVWPu
— CitizensFla Newsroom (@citizensflanews) December 14, 2022
“For Citizens, the bill provides the tools for us to return to our residual role over time while ensuring policyholders have financially sound options in the private market,” Gilway mentioned in a press release.
No “immediate fix”
The legislative modifications could also be an “important step towards stability” for the insurance coverage market, however they don’t seem to be a right away repair, notably towards a backdrop of inflation and hovering substitute prices, in keeping with Triple-I director Mark Friedlander.
“Florida insurance premiums are not going down this year, next year, or anytime in the near future,” Friedlander mentioned.
The market stays “treacherous”, Friedlander mentioned, with insurance coverage firms persevering with to face difficulties and excessive ranges of litigation more likely to loom within the aftermath of Hurricane Ian.
“The six companies that went over this year were litigated out of business, and more companies are facing the same; companies are still struggling,” he mentioned.
“At this point, there’s just a lot of unknowns, but it’s still a very, very treacherous marketplace.”
What do you consider Florida’s newest bid to unravel its property insurance coverage challenges? Leave a remark beneath.