Borrowing a line from the late Judge Gideon J. Tucker who in 1866, opined: “No man’s life, liberty or property are safe while the Legislature is in session.” This quote is as appropriate today as it was when it was first written, especially as we examine legislators’ failure to protect Florida residents earlier this year in January’s session. Discernably, legislators went home in January as Florida's property insurance market got worse while millions of residents faced soaring property insurance rate increases among other life/safety issues that failed to make it across the finish line in January’s session. Finally, on April 26, 2022, the Governor was unable to ignore the calls from the media, lobbyists and concerned legislators and finally issued a proclamation for a special session to target and fix a myriad of issues causing this year’s “insurance crisis” which is set to begin on May 23, 2022 where the legislature must fix the crisis in 5-days!

As bad as the current situation may sound, it used to be worse. Florida's home insurance marketplace has been extremely challenging for consumers and public officials since Hurricane Andrew in 1992, despite a slew of legislative and regulatory measures. This year’s crisis is not a surprise. In fact, the historical sociology concerning Florida Facing Crisis in Insurance published in the New York Times on April 25, 1996, offers some of the same arguments that you hear today. More recently, is the Winning Work of investigative reporter, Ms. Paige St. John who earned a Pulitzer Prize covering the insurance crisis in 2011.

One thing we all agree on is that something must be done.

Every year, the insurance lobby tells us insurance companies are losing money, yet lawmakers pass laws and reforms stripping consumers' rights, permitting insurers to delay legitimate claims, and implementing preferred contractor network repair programs that enrich contractors working for insurance companies, rather than insurers indemnifying homeowners for their claims. Additionally, there has not been any real and demonstrative evidence lawmakers can show to support how laws and reforms enacted last year have been protective.  All things considered; I am not seeing any financial relief forthcoming for homeowners, especially given the many proposed expansions to the upcoming special legislative session. 

As a licensed Public Insurance Adjuster and former President of the Windstorm Insurance Network, who has represented policyholders for 17 years, I believe there is much more to what is causing this “insurance crisis.”  It is something our firm’s clients and public adjusters deal with every single day and a story worth telling.

To get a deeper perspective of the “insurance crisis” and peel back another layer of the onion, our lawmakers really need to consider the stories of homeowner’s who can tell them what really happens with some of these claims and why the process is broken. After all, these folks paid their insurance premiums, suffered property damage, and to put it mildly, have been through the wringer dealing with questionable claim practices from their insurance carriers. For example: I have one client who suffered a fire over a year ago, the preferred contractor sent by their homeowner’s insurance company made away with nearly $74K which included money for a tarp that’s blown off 5x since April 5, 2021. Even worse, the insurance company paid another $70K to a preferred contractor, unbeknownst to anyone.  Oddly, everyone working on this claim is now gone to different companies, the client has had difficulty recovering their personal belongings with sensitive records left strewn about in their yard and there’s not enough money left in the policy to properly fix the damage. Is this how we service policyholders?   

Here's an excerpt (with permission) from a communication sent by this client: “I suppose this is just their word against mine, but when my insurance carrier’s restoration company had me sign this on his 3 inch cell phone, in the dark a few hours after my house burned down, the only thing discussed verbally was that they were there to board up the door and windows for theft and liability reasons. Shame on me for signing something without thoroughly reading and understanding it, but I think most anyone would have done the same under the circumstances. It was only after getting advice from other people over the next few days that I started to read up on the insurance claim process, public adjusters, etc. and by then they had already cleaned out my house (without even telling me where they were taking my stuff). It’s pretty clear the whole system is designed to steamroll the poor guy whose house just burned down before he realizes his insurance company is not actually there to help him.”

If the Florida legislature and regulators truly wish to solve Florida's “insurance crisis,” below are some clear and reasonable starting points:  

1. Always act with unwavering commitment to protect the best interests of homeowner policyholder rights:
   • Lawmakers should not be recommending nor supporting sweeping reforms that will continue to limit coverage and access to representation. If it doesn’t help policyholders, ask why.
   • Rather than further limiting consumers' legal rights, hold insurers accountable for unfair claim practices. An unbiased taskforce should take a complete and honest look at insurer profitability and base their decisions on premiums collected, investment income earned, payments to subsidiaries and actual claim payouts. 
2. Make protection of consumers a priority:
   • Changing the Florida Building Code and the 25% Roof Repair/Replacement Rule to improve the affordability of property insurance have been discussed.  Legislators need to ask: “Who is this benefitting?” Weakening building codes will weaken new buildings, lead to more damage and increased claims. Rather, building codes should be enforced and further hardened, especially in consideration of stronger storms forecast in the future. It’s inexcusable for state lawmakers to risk putting thousands of lives in danger and no different than the Champlain Towers Condominium collapse last year.  
3. Legislators almost never ask to be educated: Lawmakers could really benefit by learning from Property & Casualty experts who can clarify ‘boots on the ground’ issues that need to be addressed and help them understand the full gravity of any disaster situation.
4. Enforce enacted reforms i.e., fraudulent claims: Ask legislators to identify who they believe the bad actors are and they most likely not have an answer or cast a large net. Legislators need a better mechanism to identify bad actors on both sides. Then we can separate the issue from licensed and regulated individuals who are upholding the law and trying to aid homeowners.
5. Take a hard look at so-called Preferred Contractor Managed Repair Network Programs: These are a schemes that represent a conflict of interest and we have seen preferred contractors that don’t have an active general contractor’s license. The programs are designed to enrich the contractor instead of properly repair damages. Again, the legislators could really benefit by learning from homeowners who have had to deal with these issues. I know my clients would be delighted if someone cared to listen and learn more. 
6.  Global Re-Insurance Markets: ARTEMIS Re-insurance published an article just days ago on May 4, 2022 reporting good overall news for Florida.
   • Another question that begs to be answered is why Tampa's Lighthouse Property Insurance Corp. went into a receivership on April 22, 2022. Lighthouse had almost 29,000 residential property insurance policies in force in the State, according to the Florida Office of Insurance Regulators.
   • Fascinating given just 3-months ago, Lighthouse received a $65 Million capital raise on December 31, 2021 to grow their insurance company. Legislators should ask, “who benefited?” Surely, my homeowner client in Clearwater, FL would like to know after waiting for their claim payment since 2019.
   • Where is it written that insurance companies are guaranteed profits and success. Like other businesses, they take risks (and are supposed to be experts in risk assessment) and if they can’t properly manage those risks they suffer the consequences and others with better business models will come in and take their place.
7. Citizens Property Insurance Role:
   • Citizens should be permitted to provide the best and cheapest protection without artificial limits on their ability to compete with private companies. After all, they must take on all comers and unlike private companies, they cannot pull-out and come back as they please. But they must also “act” like a real responsible insurer or be subject to the same laws and consequences if they act in bad faith.
   • Citizens should not be offering ‘Free’ Dry-Out Services for Water Damage claims. There is no such thing as free! Everything comes with a cost and in this case it’s the homeowners who suffer.
8. The Florida Hurricane Catastrophe Fund: This is a critical lifeline that allows homeowners the ability to afford to protect their assets. I do encourage those interested to listen to the January 27, 2022 debate in the Senate Committee on Appropriations. (Start at 41:00).  

If Legislators really have the desire to find ways to fix our “insurance crisis,” they need to empower all the players in the claims process to do their jobs on behalf of the policyholder.  I believe that to be the ultimate solution that will stabilize the marketplace. If not, homeowners will remain marginalized, keep suffering frustrating claims processes, and continue paying higher prices for less coverage! What a bargain!

It took years of special interest coddling to create the mess we find ourselves in today. Fixing the property insurance market should not mean making the insurance carriers more profitable at the expense of the policyholder. There is a happy medium that needs to be restored so that an insurance contract serves the policyholders who pay their premiums every year.

Let’s hope the legislature stays on topic, avoids surprise quick fixes or bully tactics and utilizes the 2022 the property insurance special session to keep the best interests of Florida’s policyholders first and foremost.  Now that’s a guiding principle to a real solution. 

Send us your thoughts.