Florida passes a reform to address a broken property insurance market.

Ron DeSantis and Florida Republicans have managed a rare policy feat: Constructive insurance reform. This month the Florida Governor signed legislation to prevent the state’s property insurance market from collapsing under a tidal wave of lawsuits that could blow a hole in the state budget.



Democrats call the reform a bailout for insurers that will raise homeowner premiums. The truth is that it fixes a legal racket that allowed windfalls for trial lawyers that have caused homeowner insurance premiums to spike and caused numerous insurers to become insolvent and exit the market.

Florida insurers faced more than 100,000 lawsuits last year claiming $7.8 billion in damages, while the other 49 states faced a total of 24,700 claiming $2.4 billion. Between 2016 and 2021, property insurer litigation costs doubled to more than $3 billion. Hurricane risk is partly responsible. But so are plaintiff attorneys’ fees, which account for 71% of insurer legal costs while only 8% has gone to policy holders.

The reason? Florida law has allowed policy holders who want to avoid dealing directly with their insurance companies to assign their claim benefits to contractors who work with trial lawyers. The contractors would often inflate charges, which were often rejected by insurers. Attorneys then sue insurers to obtain what they say are legitimate charges. Insurers have been required to pay the attorneys’ costs if they lose a case. As a result, insurers have been inundated with frivolous lawsuits.



Many insurers have settled and raised premiums to cover legal costs and risks. Florida’s property insurance premiums are the highest in the U.S.—$4,231 on average annually—and nearly triple the U.S. average. While the Sunshine State’s low taxes have attracted newcomers, high property premiums are making it less affordable to buy and own a home.

Insurers are also struggling to price legal risks and had underwriting losses exceeding $1 billion each of the past two years. More than a dozen insurers have failed since early 2020 while a growing number are pulling back from the market because they can’t get reinsurance.

Homeowners have increasingly turned to state-backed Citizens Property Insurance Corp., which offers below-market premiums. Citizens’ number of insured properties has doubled since September 2020 and it has become the number one property insurer in the state. One bad hurricane season could wipe out its reserves, requiring a taxpayer bailout or other insurers to cover its liabilities.

The GOP reform eliminates assignment of benefit and the requirement that insurers pay plaintiff attorney’s fees if they lose. It also sets up a $1 billion state reinsurance fund to backstop insurers. Homeowners with Citizens policies will be required to accept private coverage from an insurer that offers premiums within 20% of its rates.

Citizens would ideally be required to charge closer to market rates, and the policy goal over time should be to eliminate any state insurance backstop. But this reform makes progress that is intended to attract more private insurers by creating a stable legal environment that should lead to more insurance competition.

Insurance reform is politically difficult, as Congress repeatedly proves by failing to fix federal flood insurance. Florida’s reform shows Tallahassee can address a broken insurance market in a way that should help consumers and taxpayers..


link: https://www.wsj.com/articles/r..._opin_pos_5#cxrecs_s

Outstanding, Ron!

I guarantee you that insurance rates in Florida will not drop a penny. The insurance companies will just pocket the money and use it to prop up their losses.

My house is 3100 sq ft at 126 ft elevation. ( highest point in state is only 345 feet) and I’m 5 miles inland from the nearest body of water other than creeks and my policy went from 3k to 3500 in one year and I expect it to go up again in April at renewal. My 2 cars went from 1200 to 1700 per 6 months. Both have great records no claims driving 30+ years each and honestly 5-10k miles a year we both have no commute. All with USAA. They needed to fix the insurance problem badly. And when your carrier pulls out altogether and you can’t even get coverage what do you tell your lender who requires it ?

For Florida folks who are looking for HomeOwner insurance, a friend who is a Certified Home Inspector and is very familiar with the Florida insurance market, turned me on to Kin Insurance.

You can find them at https://www.kin.com.

My HomeOwner is up for renewal at the end of January. Current carrier wanted a $700 increase in premium.

Kin's quote came in for me with a significantly lower premium cost than any other company, including Citizens, and they are very flexible re "tuning" the coverage for what you want. They are direct sale. Their rep has been outstanding in terms of following up and giving straight, no BS, answers to all of my questions.

Unless I find something negative about the company, I am planning to go with them.

quote:

Originally posted by V-Tail:
For Florida folks who are looking for HomeOwner insurance, a friend who is a Certified Home Inspector and is very familiar with the Florida insurance market, turned me on to Kin Insurance.

You can find them at https://www.kin.com.

My HomeOwner is up for renewal at the end of January. Current carrier wanted a $700 increase in premium.

Kin's quote came in for me with a significantly lower premium cost than any other company, including Citizens, and they are very flexible re "tuning" the coverage for what you want. They are direct sale. Their rep has been outstanding in terms of following up and giving straight, no BS, answers to all of my questions.

Unless I find something negative about the company, I am planning to go with them.

V-Tail,

How do they cover true replacement cost vs assessed or appraised value?

Our premium went from $4K to $6K+ at renewal, Daughters went up $1500, we moved hers to Citizens and saved $2000.

Problem with Citizens is they will not write liability coverage over $100,000, and the trial lawyers here are over aggressive, having less than $500K is taking your financial life in your hands.

One slip fall and poof your life is gone to John Morgans boat and plane payments.

quote:

Originally posted by DC3S:

V-Tail,

How do they cover true replacement cost vs assessed or appraised value?

No idea. You could contact them and ask. I have found them to be very responsive to questions.