Ten Big Issues in Insurance Overhaul

Ten Big Issues in Insurance Overhaul

By Jim Saunders, The News Service of Florida

TALLAHASSEE — Florida lawmakers this week held a special session and passed a 105-page bill aimed at stabilizing the state’s troubled property-insurance system. The bill (SB 2-A) deals with numerous issues, including lawsuits, the state-backed Citizens Property Insurance Corp. and critical reinsurance coverage. Here are 10 key issues that lawmakers addressed:

— FIGHTING FEES: Property insurers have long blamed lawsuits for driving up costs and contended that what are known as “one-way attorney fees” encourage litigation. The bill eliminates one-way attorney fees, which have required insurers to pay the attorney fees of policyholders who successfully file lawsuits. Critics say the change will hurt the ability of homeowners to fight insurers in claims disputes.

— LOOK ELSEWHERE: As private insurers have dropped policies and raised rates, the number of Citizens Property Insurance customers has ballooned. The bill tries to stem that trend, preventing Citizens policyholders from being able to renew coverage if they receive policy offers from private insurers that are within 20 percent of the cost of the Citizens premiums. The change could lead to higher rates for homeowners shifted to private companies.

— BIG BUCKS: The Florida market has been hammered by higher costs and lack of availability of reinsurance, which is vital backup coverage for insurers. The bill creates a program that seeks to temporarily help insurers obtain adequate reinsurance. It would effectively offer additional levels, known as “layers,” of reinsurance funded through $1 billion in state tax dollars and premiums paid by insurers.

— ADIOS AOB: Like one-way attorney fees, insurers have long argued that a practice known as “assignment of benefits” drives up costs and leads to litigation. Assignment of benefits, or AOB, involves policyholders signing over claims to contractors, who then pursue payment from insurers. The bill bars AOB for property-insurance claims. Contractors contend AOB helps homeowners, who need damage repaired and do not have experience dealing with insurers.

— FLOOD OF COVERAGE: As many homeowners learned the hard way in Hurricane Ian, typical insurance policies do not provide flood coverage. The bill includes a phased-in requirement for Citizens customers to buy flood insurance. People who live in designated flood zones and have mortgages are required by lenders to have flood insurance. But the new requirement will mean extra costs for Citizens customers who don’t currently have the coverage.https://9af46bbd8c07b9e7aaea69c126ca2288.safeframe.googlesyndication.com/safeframe/1-0-40/html/container.html

— SPEED IT UP: Disputes about property-insurance claims can sometimes drag out over years. But the bill takes a series of steps to try to make insurers respond faster and to shorten the time for reporting claims. For example, the bill reduces the time from 90 days to 60 days for insurers to pay or deny claims, with exceptions for certain circumstances. Meanwhile, it reduces the time from two years to one year to file notices of claims with insurers.

— HEADING TO ARBITRATION: Trying to keep disputes out of courtrooms, the bill offers a tradeoff to property owners: Agree to take cases to binding arbitration and get a break on your insurance premiums. Regulators had already started allowing such arrangements, but the bill makes clear that insurers can sell policies that include the arbitration option. Critics, however, say insurers will have the upper hand in arbitration proceedings.

— NO DAY AT THE BEACH: In the insurance world, it is known as the “glidepath.” State law restricts annual rate increases that can be passed along to Citizens customers. In 2023, for example, the limit is 12 percent, and in 2024 it is 13 percent. While the bill keeps the glidepath in place for primary residences, it removes the limits for second homes. Supporters say Citizens shouldn’t give breaks to people such as out-of-state owners of beach houses.

— ALL ABOUT FAITH: The words “bad faith” make the insurance industry wince. Lawsuits alleging bad faith — such as allegations that insurers did not properly settle claims — can be expensive and have long been a target of insurers and their lobbyists. The bill includes changes that could help shield insurers from at least some bad-faith cases. It prevents bad-faith lawsuits from moving forward until courts have ruled that insurers have breached contracts.

— ELEPHANT IN THE ROOM: While it tips the scale at 105 pages, the bill does not include what many homeowners want: immediate rate reductions. Republican leaders said it will take time for the changes, such as reducing litigation costs, to filter through the system and ultimately help curb rates. But Democrats, who unsuccessfully proposed numerous amendments during the three-day special session, criticized the absence of rate relief.

7 Responses to "Ten Big Issues in Insurance Overhaul"

  1. I seriously feel like Wells Fargo is a vulture circling overhead, gleefully waiting for me not to be able to afford home insurance so it can foreclose.
    Then the house will be sold to a foreign investor / slum landlord gobbling up properties.

  2. John, I totally love what you said.

    The Rich get richer, with insurance CEOS/execs getting millions upon millions even while their companies raise rates, cut the number of policies, and fold. See this article:

    “Excessive payouts to insurers’ affiliate companies have been repeatedly cited for insolvencies in the past…
    Florida-based insurance companies have been going out of business the last few years or raising rates by double-digits. Industry groups and Gov. Ron DeSantis have blamed excessive litigation…
    But state lawmakers have largely ignored an issue that has been directly blamed for numerous past company failures — and allowed some executives to make eye-popping sums of money…
    Between 2014 and 2018, the CEO for Fort Lauderdale-based Universal Insurance Holdings made between $14 million and $25 million each year, corporate filings show. The company has reduced its policies in Florida over the last year.”

    I think insurance issues are part of a plan to drive up foreclosures so foreign investors can own and control ever more American soil.

    We don’t see our elected Federal representatives passing laws to prevent foreclosures when homeowners can’t find insurance. Florida GOP definately isnt protecting us from this emerging crisis at tis rate.

    Heck, it sure resembles trickle down economics, which one of the GOP’s favorite scams: give a billion of the taxpayers dollars to insurance companies for their reinsurance, while promising SOME DAY, maybe, rates might come down.

  3. Robert

    Could you please provide reference or link for your ” 70% of claims expenses…..”
    statement. I would like to study the info.

  4. This legislation is a great start. You cannot expect anyone to want to own a business that cannot make a profit. The insurance companies are leaving our state due to the inability to make a profit. The six companies that left each had more lawsuits filed against them than were filed in the entire state of California last year, something had to be done. 70% of claims expenses over the last decade went to attorneys and related costs, not to fix your homes or buildings.
    We need to curb the baseless lawsuits while still protecting consumers , like John, ability to sue.
    I am not an insurance employee nor an attorney, just a Florida business owner and employer for 40 years.

  5. Some times you have to Sue the Insurance Company because they are trying to screw you over. I had to and I will do it again if I have to,

    I am surprised that the Insurance Companies has thought about paying off the Claims of Houses on the beach and taking ownership of the Property so another Structure wouldn’t get built and then selling the Properties to to the State to be turned into a Public Park.

  6. Every legislator should have had to wear a jacket indicating how much $ they received from insurance companies, their employees and lobbyists for their election campaigns, PACs, etc. so the Public will know who these prostitutes really represent cuz it isn’t the actual low and middle class homeowners.

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