Florida House, Senate seek to address state's troubled homeowners insurance market

Article Courtesy of The News Service of Florida

By Jin Saunders

Published February 9, 2022


TALLAHASSEE — With premiums soaring and homeowners flooding into the state-backed Citizens Property Insurance Corp., Florida Senate and House members started moving forward Wednesday with proposals to address the troubled insurance market.

But in the coming weeks, the Senate and House will have to bridge differences about how far they will go in making changes — especially when the changes could affect homeowners’ pocketbooks.

The Senate Banking and Insurance Committee and the House Insurance & Banking Subcommittee on Wednesday approved bills (SB 1728 and HB 1307) that include steps aimed at shifting policies from Citizens Property Insurance to private insurers.

While lawmakers would ultimately need to reach agreement on those steps, a thornier divide could focus on part of the Senate bill that would lead to reduced coverage for roof damage for many homeowners throughout the state.

Insurance industry officials have blamed roof-damage claims — including claims involving allegedly unscrupulous contractors — for playing a key role in driving up premiums. The Senate bill would allow insurers to sell policies that would not offer replacement coverage for roofs when the roofs are at least 10 years old.

Instead, such policies would reimburse homeowners for roof damage based on depreciated values or the “actual cash” values of roofs. An exception would be that insurers would have to pay replacement costs when roofs are damaged in named hurricanes.

Opponents of the proposal contended Wednesday it would hurt low-income residents, who could get stuck with higher costs for fixing roofs without replacement coverage.

“Considering that lower-income families are more likely to own older homes, won’t this bill as currently written disproportionately affect lower-income homeowners, including some of our seniors and veterans on fixed incomes?” asked Sen. Darryl Rouson, D-St. Petersburg.

Senate Banking and Insurance Chairman Jim Boyd, a Bradenton Republican who is sponsoring the bill, said the change would apply broadly and wouldn’t just affect low-income families.

“If you have an older home with an older roof, regardless of the value of the home, it’s still a problem,” Boyd said, adding that “after 15, 20, 25 years, most people have to replace their roof. And that’s something that’s just sadly a cost of homeownership.”

Other supporters of the Senate bill pointed to what they described as a crisis in the property-insurance market, which they also said affects home sales.

“We are going to have to fix this problem,” Sen. Kelli Stargel, R-Lakeland, said. “It’s not even a matter of the cost of insurance. You’re not going to be able to get insurance. That’s an even bigger problem.”

Lawmakers have approved measures during the past few years to try to address issues such as reducing lawsuits over property-insurance claims. But insurers have continued to face financial troubles, which has led to seeking hefty rate increases and dropping customers.

That has resulted in a surge of homeowners seeking coverage from Citizens, which was created as an insurer of last resort. As of Dec. 31, Citizens had 759,305 policies, up from 542,739 a year earlier. Citizens officials said the insurer could grow to more than 1 million policies.

State leaders have long sought to move policies out of Citizens into the private market, at least in part because of financial risks if major hurricanes or multiple hurricanes hit Florida. If Citizens runs a deficit in paying claims, it could lead to homeowners throughout the state getting hit with charges to cover the tab.

The Senate and House bills include changes to try to push policies out of Citizens, with the House bill focusing only on Citizens-related issues.

For example, the Senate bill would address situations in which homeowners would receive coverage offers from private insurers. Under the bill, 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 bill also would include such a 20 percent threshold, but the change would be phased in over four years.

Rep. Matt Willhite, D-Wellington, questioned the proposal as it could eventually lead to Citizens customers paying as much as 19 percent more for coverage if they are picked up by private insurers.

“We’re still going to tell Floridians they are going to have to pay 19 percent more just to get it from another company than one (policy) that we could offer and save them money on?” Willhite asked.

House sponsor Tommy Gregory, R-Sarasota, said the goal is not to increase homeowners’ costs but to bring more into the private market.

“I think what the message to Floridians is, is the government is not here to subsidize your insurance,” Gregory said. “I mean, if we wanted to subsidize everybody’s insurance, we could certainly do so. We could drive everybody’s insurance rate down by 19 percent. Of course, we’d have to apply a tax to all Floridians to come up with that 19 percent.