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Fla. homeowners insurance market likely needs 'more' after latest reform law


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Fla. homeowners insurance market likely needs 'more' after latest reform law

Additional changes to Florida state law may be needed to rein in excessive litigation against property and casualty insurers operating in the state even after reforms were passed in a recent legislative session.

Gov. Ron DeSantis on June 10 signed legislation that includes provisions to limit attorney fees and reduce the time limit to file damage claims from three years to two. The law also lifts the annual 10% cap on rate increases for Citizens Property Insurance Corp., the state's insurer of last resort. Starting 2022, Citizens can impose 1% rate hikes annually until the new cap of 15% is reached in 2026.

DeSantis said he thought legislators did a "pretty good job" in addressing the most pressing issues, but added that further changes will remain an issue in subsequent legislative sessions.

"We're probably going to have to do more going forward," he said.

That will likely include the elimination of attorney fee multipliers and allowing insurers to offer actual cash value on damaged roofs that are more than 10 years old. Provisions in the new law addressing those issues were eliminated from the final version of the bill after it traveled through senate and house committees.

While there was generally positive reaction to the signing, American Integrity Insurance Group LLC CEO Bob Ritchie said it was too soon to do a "victory lap" in the battle against the "litigation explosion" in the Sunshine State because the four elements in the original bill are "interdependent."

"When you start taking foundational parts away from this bill as it originated, it leaves us with a watered-down bill," Ritchie said in an interview. "Consumers are still suffering from the knocks on their doors when they sign documents they don't understand. The anti-roofer solicitation part of this bill will not stop the roofers [because] they have already created workarounds to the bill."

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The inclusion of actual cash value would allow insurers to pay policyholders for what their roof is worth, rather than foot the full bill for a replacement. Sen. Jeff Brandes, R-Fla., who serves on the banking and insurance committee, said Florida is an "outlier" in the Southeast and one of just a handful of states that does not allow for actual cash value replacements.

"I think we need to continue to explain to our [legislative] colleagues that there is a dramatic impact on rates because we aren't offering this product," he said in an interview.

Ritchie said 70% of lawsuits from "nefarious actors" are usually from policyholders who refuse to "accept a legitimate and legal denial," meaning their roofs were worn and should be replaced as a matter of their responsibility to maintain their homes.

"The best solution is to give consumers options to keep their insurance policy with actual cash value roof settlement until they upgrade their roof, which by the way, is done in 40-plus other states in the country," Ritchie said.

Changing the one-way attorney fee statute was a "major accomplishment," Ritchie said, re-balancing how attorneys are rewarded and incentivized for suing insurance companies. However, without the restoration of what he referred to as "a rare and exceptional standard for the attorney fee multiplier," he said certain lawyers can still play the "fee game."

Until the next legislative session begins Jan. 11, 2022, Brandes said the priority is to monitor the market and look at the major adjustments that need to be made.

"It's not like we don't know the solutions to these problems," Brandes said. "We just have to clearly identify the most effective solutions to the variety of problems facing the insurance market."