The Florida legislative session kicked off on March 4, with state leaders outlining their priorities and addressing key issues facing the Sunshine State. A major topic of discussion is the ongoing property insurance crisis.
Governor Ron DeSantis focused on past reforms related to property insurance in his address. The legislative session comes after a report on the state’s insurance crisis, which suggested that executives may have diverted hundreds of millions of dollars to shareholders and billions to affiliate companies between 2017 and 2019. This allegedly weakened insurers financially, leaving some unable to pay claims.
A report commissioned by the Florida Office of Insurance Regulation (OIR) in 2022 was not given to legislators, according to The Tampa Bay Times, because it wasn’t considered a “formal examination report.” The report was drafted months before emergency legislative sessions in 2022 but remained unfinished.
House Speaker Danny Perez announced that the Insurance & Banking Subcommittee would investigate the matter.
“They (the subcommittee) will have access to the full range of tools — including issuing subpoenas, putting witnesses under oath, and hiring outside experts,” Perez said.
Insurance companies in Florida are subject to profit regulations, which are capped at about 4.5%. This limit sometimes makes them less enticing to investors, especially given the risk of hurricanes. However, as reported by The Tampa Bay Times, insurance executives use financial workarounds to reward themselves and investors. Although executive compensation and profits of the insurance company may be capped, the profits of affiliate and parent companies are not.
Governor DeSantis did not mention the 2022 report during his address. Instead, he highlighted previous legislation which reformed property insurance. This included eliminating one-way attorney fees associated with assignment of benefits and ending incentives for attorneys to mislead claimants. The legislation also prohibited roofers from paying or absorbing insurance deductibles. Another bill tightened eligibility for those insured through Citizens Property Insurance Corp., encouraging policyholders to move to private carriers if comparable policies were available.
“The fact is that the Legislature has devoted more time and effort to address insurance reforms over the past few years than at any other time in the history of Florida,” DeSantis said.
Senate President Ben Albritton stated that the Senate will hold insurance companies accountable for rates and services provided after disasters. “They aren’t going to manipulate the system. And, neither is any other industry,” he said.
State insurance regulators recently approved an average 6.6% rate increase for Citizens policyholders with multi-peril coverage, to take effect on June 1. Citizens has to charge actuarially sound rates which aren’t competitive with the private market. The insurer is also required to comply with a glide path that only allows annual rate increases of 1%; in 2025, that cap was 14%.
Bills filed by state Senator Ana Maria Rodriguez and Representative Jim Mooney would allow rate increases not exceeding 10% in areas like the Florida Keys, where competition among insurers is limited. According to Fair Insurance Rates for Monroe (FIRM), 95% of Monroe County’s wind policies are insured by Citizens. The county has 15,000 wind-only policies with the insurer, second only to Miami-Dade. FIRM has long lobbied to get Monroe County to a 10% cap.
“Monroe’s strict building codes and past loss history support this,” FIRM stated.
