Florida property insurance needs more reforms

As chairman of the Florida Senate Insurance Committee, I was heavily involved in the insurance crisis that followed Hurricane Andrew more than 30 years ago. Unfortunately, once again, we are in an eerily similar situation, with homeowners and insurers alike suffering.

Recently, the market took another hit when Farmers Insurance became the fourth insurance company to leave the state within the past year. Then AAA piled on and said it would issue some nonrenewals on a small percentage of its business within Florida. Both Farmers and AAA indicate their changes are because it’s become increasingly difficult to manage risk exposure in Florida.

This is underscored by Hurricane Ian’s devastation on the Gulf Coast, rebuilding and recovery costs, leading to an unprecedented rise in reinsurance rates. Those increases, escalating housing prices, and inflation rates are creating the perfect storm for homeowners, especially our seniors who are on fixed incomes.

According to the Insurance Information Institute, the average annual property insurance premium in Florida is more than triple the national average. If homeowners haven’t lost their insurance, they’re likely to face rate increases. If they lose their insurance and can’t find a replacement, then they face foreclosure because most banks require proof of insurance to write loans on mortgages.

Thankfully, two special sessions on insurance in recent years led to revisions in the state’s legal infrastructure, specifically limiting the number of lawsuits that can be filed against insurance companies. Gov. Ron DeSantis and the Legislature also made it possible to provide financial incentives to insurance companies in an effort to entice them to stay.

It has been made clear that the significant gains and momentum from the previous sessions will take some time to benefit both insurance companies and consumers. The speaker of the House recently said that it will take a “couple of years before it levels out.” We, especially seniors, cannot wait that long.

It’s important that politicians on both sides of the aisle not rest on the anticipated progress and call another special session on insurance to work on additional reform that can provide additional insurance relief. The Legislature has made improvements, but they can do better.

For instance, include cash-value coverage in homeowner’s policies, which is now prohibited in Florida but allowed in more than 40 other states. Dishonest roofers will no longer have an incentive to push homeowners to file total-loss roof claims and consumers will save because they have a choice on the type of coverage they prefer. Also, encourage more private insurers to enter the Florida market to foster more competition leading to more affordable options.

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In addition, build up the talent and salaries for Florida’s fraud unit and reevaluate the state-led Citizens Property Insurance. It is supposed to be the insurance of last resort. But it is projected to reach 1.7 million policies, or nearly four times its size in 2020. We need additional reform now! Citizens has added some 4,000 new policies within the past month. Change is necessary to help policyholders, make sure more insurers don’t leave our state and give our residents more cost-effective options.

Clearly, this is a complicated issue that impacts almost everyone in the state, and this crisis is going to take a collective effort to solve. To be successful, we need our national and state-based insurers to continue their commitment to Floridians. The issue is not an insurance one alone. It affects the entire state economy. The time for the governor and the Legislature to act is now!

John Grant is president and CEO of Seniors Across America.