Homeowners Insurance Crisis Could Lead To FL Special Session

TAMPA, FL ? The Republican-dominated Florida Legislature wrapped up the 2022 legislative session Friday having taken up issues ranging from abortion limits and immigration to gay rights and discrimination.

But politicians from both parties say the skyrocketing cost of home insurance was ignored, and needs to be fixed.

"It was a national red meat year," said Sen. Jeff Brandes, R-St. Petersburg, referring to the Legislature addressing inflammatory issues intended to provoke the public and garner headlines.

However, lost amid the arguments over silencing the woke, women's rights and LGBTQ agendas were those issues that directly affect Floridians' wallets, Brandes said.

"We're taking on national issues ? Stop Woke, Don't Say Gay, immigration," he said. "Meanwhile, we have real problems ? skyrocketing property insurance and auto insurance rates, a lack of affordable housing and our prison system is falling apart."

Of particular concern to Brandes is the rising cost of homeowners insurance. He's among a growing number of legislators seeking a special legislative session this summer to specifically address the costly issue.

?The folks in the insurance industry tell me they are at a breaking point," said House Minority Leader Evan Jenne, D-Hollywood. "So I do think a special session is likely. It is going to be brutal for people out there unless we get back here."

"This (a property insurance reform) bill should have been worked on eight months ago. And here we are 60 days later still negotiating with the House on what the insurance industry should look like going forward," Brandes said. "I think it's been an absolute disaster of a year in the property insurance world. At the end of the day, the Legislature dropped the ball on property insurance this year. There's no doubt about it. I think we're headed toward a special session."

20-Plus Years Of Storm Hit FL Insurers

It's not the first time the insurance industry has been in crisis mode in Florida.

Between 1992 and 2018, nine hurricanes and 11 tropical storms ravaged Florida, resulting in more than $216.1 billion in damage. Unable to remain profitable under the barrage of claims, major insurance companies began pulling out of Florida, prompting the Legislature to form the nonprofit Citizens Property Insurance Corp. The nonprofit provides insurance for property owners who could no longer obtain coverage through the private marketplace.

Citizens Property Insurance was intended to be a last resort for property owners while the insurance companies and Legislature hammered out insurance reforms.

Instead, it's become the second-largest property insurer in the state. As of Jan. 31, Citizens Property Insurance had 776,790 policies, about a 75 percent increase over the past two years.

"Two years ago, Citizens Property Insurance had about 480,000 policies. In the last year and a half, it's risen to 800,000 policies," Brandes said. "We expect it to be over a million policies by the end of the year."

He said Florida continues to see a mass exodus of property insurance companies from the state due to weather-related disasters and tragedies like the collapse of the Surfside condominium tower in June, which killed 98 people.

"It's an absolute crisis on both consumers and the insurance industry," Brandes said. "Consumers are seeing a 30 percent increase in their insurance rates every year. That's a huge problem. And the insurance industry as a whole lost $1.25 billion in 2020 and $1.6 billion in 2021. This is a market that's in collapse."

In 2020, one of the most active storm seasons on record in Florida with 31 tropical or subtropical cyclones, Florida insurance carriers said they had their worst financial year in decades, underwriting $1.57 billion in claims.

As a result, three major insurers announced they were dropping or not renewing 53,000 policies just ahead of the 2021 hurricane season.

Insurance Companies Turn Away New FL Customers

Gulf Stream Property and Casualty Insurance canceled more than 20,000 policies. Southern Fidelity canceled more than 19,600 policies and Universal Insurance Company of North America canceled 13,000 policies.

Related story: Insurance Rate Hikes Of 195 Percent Requested For Homeowners

In November, United Property and Casualty Insurance Co., one of the top 10 homeowners insurers in Florida with more than 180,000 policyholders, announced it would stop writing new policies in Florida as of Jan. 1. Additionally, the insurer requested a 14.7 percent rate increase.

Shortly after, two more carriers, Florida Farm Bureau and TypTap Insurance, reported they would no longer write new fire policies for homeowners in Florida. And Progressive Insurance notified the Florida Office of Insurance Regulation that it would not renew policies for homes with shingle roofs that are 16 years old or older, impacting about 56,000 policyholders.

People?s Trust Insurance, based in Deerfield Beach, notified policyholders in February that it would no longer do business in eight south and central Florida counties, while Universal North American announced a 14.9 percent rate increase effective Feb. 22 and Orlando-based St. Johns Insurance Co. was placed into state receivership on March 7.

One of the biggest blows to Florida consumers came from Southern Fidelity Insurance Co. At a public rate hearing Jan. 21, Southern Fidelity requested and received approval from the Florida Office of Insurance Regulation to increase premiums by 195.6 percent.

Last week, Southern Fidelity Insurance policyholders throughout the state were notified of rate hikes doubling their premiums. One property owner told Patch his insurance rate went from $2,500 a year to $5,600 a year.

?All of these companies suspending writing (policies) should be the canary in the coal mine for lawmakers,? said William Stander, director of the Florida Property and Casualty Association.

FL House Speaker Says No Special Session Needed

The Senate Banking and Insurance Committee has looked at ways to mitigate the problem, among them Senate Bill 1728, which would allow carriers to only cover the cash value of roofs, not the full replacement cost. So far, none have passed muster with the full Senate and House.

The bill, sponsored by Sen. Jim Boyd, R-Bradenton, would also curb the growth of Citizens Insurance policyholders. Under the bill, 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.

With just a week left in the legislative session, Boyd presented an impassioned plea to fellow senators to take decisive action and pass SB 1728 before the end of the session.

?If we do nothing, your constituents are going to continue to suffer, the market is going to collapse,? said Boyd, an insurance agent by profession.

However, House Speaker Chris Sprowls, R-Palm Harbor, dismissed the need for urgent action, noting the Legislature just passed a "very significant insurance bill last session."

Senate Bill 76, also sponsored by Boyd, attempted to limit frivolous lawsuits by changing how attorneys' fees are awarded in property insurance litigation. It also set a two-year deadline for filing claims.

Sprowls said the insurance lobby indicated it would take 18 months to see an effect on rates from SB 76, which is less than a year old.

Boyd said waiting won't make the problem go away.

?It?s a scenario that doesn?t get better if we do nothing,? Boyd said.