Fla. Legislature and Property Ins.: What Changed?
Lawmakers finalized three bills that, among other things, eliminate one-way attorney fees, nix assignment-of-benefit options and further depopulate Citizens Ins.
TALLAHASSEE, Fla. – The Florida Legislature wrapped up their special session on Wednesday after passing three bills.
“If you had to sum up the major outcomes of the insurance reform bill in a single sentence, it would indicate that the bill will curb the massive amounts of lawsuits that are driving up premiums, stabilize reinsurance coverage and shrink the state-backed Citizens Property Insurance Corp.,” Florida Realtors® Vice President of Public Policy Andy Gonzalez said after the session ended.
In addition to a sweeping property insurance bill, two other bills passed by lawmakers focused on disaster relief and another regarding toll relief for heavy users of Florida’s toll roads. All bills have been signed by Gov. Ron DeSantis and are now law.
Property insurance reforms
Senate Bill 2A: Gonzalez calls the reform in 2A “a huge win for the state of Florida and absolutely essential steps Florida needs to take to attract insurance and reinsurance capital back to the state.” They “tackle the root causes driving insurers away”:
- Elimination of one-way attorney fees: Insurance industry experts have long blamed lawsuits for driving up costs that lead to financial losses and higher homeowner premiums. The chief driver of the lawsuits is a provision known as “one-way” attorney fees in property-insurance cases. One-way attorney fees allow the plaintiff (policyholder) to recover attorney fees, but not the defendant (insurer). The practice incentivized unwarranted litigation.
- Elimination of Assignment of Benefits: AOB was another litigation-related cost-driver for insurers that pushed policy rates higher. Under AOB, homeowners who suffered a loss “assign” insurance benefits to a contractor that then deals directly with their insurance company.
- New temporary reinsurance program: The cost for reinsurance – essentially insurance for insurers that kicks into gear following major post-disaster losses – has risen, and those higher costs are baked into the rates homeowners pay. Property insurers generally buy reinsurance coverage on the private market and from the Florida Hurricane Catastrophe Fund, a state program. The bill adds additional levels, known as “layers,” of reinsurance funded through $1 billion from the state and premiums paid by insurers.
- Efforts to depopulate Citizens: Citizens Property Insurance – the Florida-operated “insurance of last resort” – more than doubled in size during the past two years and now has about 1.13 million policies. The larger the number of policies, the greater the risk faced by Florida taxpayers after a disaster. The bill includes new or boosted ways to move homeowners with Citizens policies back into the private market. For example, Citizens policyholders now can’t renew their coverage if they receive private-insurer coverage offers within 20% of Citizens premium costs. The bill also phases in a requirement that Citizens customers buy flood insurance, which is not included in other homeowners’ policies.
- Shortened claims filing: To reduce the number of frivolous lawsuits, the bill reduces the deadline for policyholders to report a claim under their policy from 2 years to 1 year for a new or reopened claim, and from 3 years to 18 months for a supplemental claim.
- Accelerating claims payment: Among other things, the bill amends the prompt pay laws to encourage faster claims payments. It reduces the time for insurers to 1) pay or deny the claim from 90 to 60 days, 2) review and acknowledge a claim communication from 14 days to 7 days, 3) begin an investigation from 14 days to 7 days, and 4) conduct a physical inspection from 45 days to 30 days.
- More funding for the Office of Insurance Regulation: The bill allocates $1.7 million for Florida’s Office of Insurance Regulation to investigate bad faith carriers and hire and retain the staff they need to properly regulate the industry.
For complete information, check the Florida Senate analysis posted online.
Leaders of the insurance reform efforts acknowledge that the bill likely won’t lead to immediate rate reductions for homeowners. They say it is designed, at least in part, to draw investments in the insurance market and spur competition.
Senate Bill 4A: Lawmakers passed a number of disaster relief efforts after two hurricane strikes in 2022. The bill provides:
- Tax relief for residential property rendered uninhabitable for at least 30 days through property tax refunds. It also extends property tax deadlines and discounts for owners of property destroyed or rendered uninhabitable due to Hurricane Ian or Nicole.
- $150 million for affordable-housing hurricane relief efforts. Of that money, $60 million will go to local governments to help with the repair or replacement of housing, relocation costs, housing reentry assistance and insurance deductibles; $90 million will fund the Rental Recovery Loan Program to promote development and rehabilitation of affordable housing in affected areas.
- $350 million needed to secure funding from FEMA Public Assistance Grants – the entire amount required for a one-half local match.
- $100 million to supplement the existing Beach Management Funding Assistance Program and $50 million to create the Hurricane Restoration Reimbursement Grant Program.
- $100 million to create the Hurricane Stormwater and Wastewater Assistance Grant Program to provide financial assistance to local governments.
- The bill also creates the Florida Emergency Management Assistance Foundation to provide assistance, funding, and support to the Department of Management services.
For a full analysis, refer to the Senate staff analysis of the bill posted online.
Senate Bill 6A: The bill directs the Florida Turnpike Enterprise (FTE) to establish a toll relief program that will be effective for one entire calendar year (Jan. 1 to Dec. 31, 2023) for all Florida toll facilities that use a Florida-issued transponder or are interoperable with the Florida Department of Transportation’s (FDOT’s) prepaid electronic transponder toll system (SunPass). The bill will:
- Provide a 50% account credit to Florida residents with an electronic prepaid toll program account, such as SunPass, who record 35 or more transactions a month.
- Appropriate $500 million to reimburse toll facilities for issuing these credits.
- Require Florida drivers using the prepaid toll program to have an account in good stating, with the account credit posted the month after the credit is earned.
The full Senate staff analysis of the bill can be found here.
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