Homeowners Insurance is the top issue for Florida voters in 2024.

How We Got Here

Legislative Actions

In an effort to avoid the collapse of the insurance industry in Florida, the Florida Legislature passed a series of reform laws. Those reform laws were based on the reports from the insurance companies that the risk to write policies in Florida was too high and the fraud and frivolous lawsuits were too costly. Unfortunately, the reform laws benefited the insurance companies greatly, but at the expense of homeowners.

Here’s what happened:

To combat fraud and frivolous lawsuits, the legislature ended the transferability of the Assignment of Benefits and determined that One-way attorney Fees do not apply to homeowners insurance. What this means to you is that under the circumstances that you need to file a claim, big or small, if your insurance company does not pay your claim in full for the work done by your contractor (plumber, roofer, electrician, etc), you will be responsible for filing a lawsuit against your insurance company.

It was not always like this. Prior to ending the transferability of the Assignment of Benefits, the homeowner could step out of the lawsuit portion and turn that over to their contractor. The Assignment of Benefits is essentially a document that states who will get paid for what work. If the homeowner transferred that to the contractor, the contractor could sue the insurance company on behalf of the homeowner. That is no longer possible.

The determination that One-Way Attorney Fees do not apply to homeowners insurance means that, when a homeowner hires an attorney to file a suit against the insurance company, even if they win, the homeowner is likely going to have to pay the legal fees for their own lawyer. Since lawsuits against insurance companies are pretty costly, homeowners are not very likely to sue because they cannot afford it.

This situation makes it very easy for insurance companies to not pay claims in full because the likelihood of being sued is very low. Since this law has passed, the number of lawsuits has declined. It is unclear if it is a reduction in frivolous lawsuits or legitimate lawsuits.

The legislature passed other laws, too. These new laws reduce the likelihood of true competition in the insurance industry. One of these laws allows for the same parent company to own numerous subsidiary insurance companies. This is a recipe for price-fixing.

There are no restrictions for opening a brand new insurance company by a CEO of a failed (bankrupt) insurance company.

If an insurance company does go bankrupt and cannot pay out the open claims of their policyholders, those claims are transferred to the Florida Insurance Guaranty Association (FIGA), which is tax-payer funded, to be paid-out; usually after an extended time period.

Overall, these new laws helped the new, smaller insurance companies enter the state and write policies for homeowners with very high premiums with less coverage and less protection for homeowners.

Climate Change

Regardless of one’s personal opinions about the validity of climate change or man’s responsibility in its escalation, we can all agree that Florida is at significant risk for extreme weather conditions.

The bigger insurance companies, the ones with tv commercials and a lot of name-recognition, have fled the state because the risk is so great and the state government is generally not taking severe weather very seriously. This year, the words “Climate Change” were removed from some laws.

Efforts to improve our ability to withstand worsening hurricanes, thunderstorms, hailstorms, fires, and floods have been lackluster. The majority of effort is happening at the local level. The state legislature has passed several laws to erode the authority of local governments to make those decisions.

Reckless Development

Florida has natural barriers and an environment meant to withstand its natural weather. However, for decades, developers and municipalities have built homes, businesses, resorts, etc. on these natural barriers. This development has resulted in compromising the integrity of those barriers and creating potential damaging debris in the event of a major storm or weather event.

Revise the current laws to protect homeowners and create a truly competitive environment for insurance companies.

• Allow homeowners to shop for contractors, find the best option for them, and then communicate with insurance adjustors to agree upon a claim amount.

• Restore the transferability of the Assignment of Benefits for agreed upon claims.

• Restore the One-Way Attorney Fees but limit the escalator fees attached by attorneys that make legal fees more profitable.

• Limit the number of subsidiary insurance companies that one business can have. Require that “preferred vendors” lists include restoration and repair contractors that are not owned by the parent company of those insurance companies.

To give immediate relief, the state should consider possibly alternatives to private, for-profit insurance companies providing windstorm coverage. This is the most expensive portion of any homeowner insurance policy. By removing this portion and allowing windstorm coverage to be provided in an non-profit environment (through Citizens Insurance or a competitive procurement for non-profit companies), the profit margin is removed from the premium, immediately reducing premiums for homeowners. This will also encourage homeowners who have dropped their windstorm coverage due to its expense to seek coverage, further protecting them and their neighbors.

The state should also consider developing a new Catastrophe Fund that helps homeowners. The current fund is designed to assist insurance companies after a catastrophic hurricane. By either expanding that fund to include homeowners and municipalities, or creating a separate fund specifically for homeowners and municipalities, Floridians can help each other as they are known to do after any storm.

Transparency from insurance companies and the Office of Insurance Regulation (OIR) should be drastically increased so homeowners can research potential carriers before they buy. Possible improvements include:

• Solvency of an insurance company (actual capital and reinsurance capital versus policy commitments)

• Group insurance companies by the parent company

• Report the number of claims filed, including how many were closed unpaid, what percentage of the claim was paid (adjusted claim amount versus actual payment amount), and percentage of claims that resulted in a lawsuit.

Floridians know where they live. They know the risks of living here. As long as we are willing to accept that risk, and folks are going to move here understanding that risk, we must prepare for a future with more severe weather.

We can begin by returning the words “Climate Change” to laws from which they were removed. That is a clear message to big insurance companies that we are not turning a blind eye to our biggest risk.

Following any storm or severe weather event, evaluation of the affected area must be completed to determine what can be done to improve and harden the area, what new technologies can be used to make that area safer, and what actions can be taken to protect life and property. Those findings should be shared statewide and steps to implement improvements should be enacted in unaffected areas.

The state should encourage climate change mitigation and protection research and development in the state. Either through tax incentives or state funding, Florida is the perfect location for companies and scientists to develop new technologies to protect life and property.

No one should lose their home or business to the anticipation of disaster, however, following a weather event that is so destructive that it deems a structure condemned or irreparable, the local municipality should have the option to buy the land at a rate slightly below fair market value. By acquiring the land, the local government should then zone that land for preservation for future generations.

Building codes and development laws should restrict building of any kind on land that is a natural barrier or otherwise protects life and property from extreme weather.