Florida Governor signs property insurance reform legislation
In addition to addressing rising costs and claims transparency, the reforms also tackle condo and co-op safety.
Calling it the most significant reforms to the state’s home insurance market in generations, Florida Gov. Ron DeSantis signed a bill that lawmakers hope will alleviate the state’s rising insurance costs, improve transparency in the claims process and reduce “frivolous,” lawsuits, according to a release from the governor’s office.
DeSantis also signed a second bill that changes structural inspections and financial reserve requirements for condominium associations.
“These bills will help stabilize a problematic market, help Floridians harden their homes through the My Safe Florida Home Program and pave the way for more choices for homeowners,” DeSantis said in a release.
The legislation was produced during a special legislative session convened earlier this week at DeSantis’ behest. It also comes a few weeks after the state’s Office of Insurance Regulation approved an agreement that will lead to FedNat Insurance Co., Maison Insurance Co. and Monarch National Insurance Co. canceling 68,200 policies, with 45 days’ notice to policyholders. The three insurers are part of the same holding company.
What reforms were enacted
“Across the state, Floridians are feeling the burden of skyrocketing property insurance premiums. To provide relief as quickly as possible, this legislation enhances insurer access to reinsurance, and insurers who participate in the program in 2022 are required to pass the savings onto consumers in a rate filing by June 30,” Senate President Wilton Simpson said in a release.
Senate Bill 2D includes “pro-consumer” measures, according to the governor’s office, which released the following specifics:
- $2 billion in reinsurance relief through the Reinsurance to Assist Policy program to benefit policyholders during the next two years. Insurance companies will also be required to file a supplemental rate filing once enrolled in the program to provide relief to policyholders.
- $150 million for the My Safe Florida Home Program to provide grants to Florida homeowners for hurricane retrofitting, making homes safer and more resistant to hurricane damage, which can result in premium discounts for those who participate in the program.
- Prohibiting insurance companies from denying coverage solely based on the age of a roof if the roof is less than 15 years old or if the roof is determined to have at least five years of useful life remaining.
- Requiring insurance companies to provide policyholders with a reasonable explanation if they deny or partially deny a claim and provides consumers with greater access to information during the claim adjustment process.
- Creating a new standard for the application of attorney fee multipliers which have been liberally applied, resulting in increased costs to consumers.
- Limiting the assignment of attorney’s fees in property insurance cases to discourage frivolous claims.
Mark Wilson, president & CEO of the Florida Chamber of Commerce noted litigation is a major driver of losses, which in turn drive rate increases.
“With Florida accounting for 79% of the nation’s homeowners’ insurance lawsuits over claims filed, while making up only 9% of the nation’s homeowners insurance claims, it is clear Florida has a litigation problem that is costing Florida ratepayers when they can least afford it,” Wilson said in a release.
State CFO Jimmy Patronis had previously expressed hope that the reforms would include more support for the home-hardening program.
“While Florida’s hardening insurance market faces challenges from a number of issues like inflation, fraud and Mother Nature, the most important thing members can do this session is put policyholders first,” Patronis said in a release.
Condo inspections reforms
DeSantis also signed Senate Bill 4D, which requires condos and cooperative association buildings that are three or more stories high to have structural integrity inspections performed by an architect or engineer when the building becomes 30 years old. Inspections must then be performed every 10 years thereafter. However, for buildings within three miles of a coastline, an inspection must be performed 25 years after the structure is erected and then every 10 years.
Inspection reports must be provided to local building officials, associations and unit owners. If structural issues are uncovered, subsequent 10-year inspections will be more rigorous.
Other provisions in Senate Bill 4D include:
- Requiring condos and co-ops to conduct structural integrity reserve studies for buildings three stories or higher to ensure the funding necessary for future structural repairs is available and prohibits waiver of funding for certain structural reserves.
- Increasing transparency by requiring all structural inspection reports and reserve studies to be part of the associations’ official records and must be provided to potential purchasers of a unit.
Calling Florida’s insurance market one of the world’s most complex, Florida Insurance Commissioner David Altmaier in a release said: “This legislation strengthens protections for Florida insurance consumers, provides greater tools to hold insurance companies accountable and promotes the long-term stability of our market.”
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