Florida legislature to tackle homeowners insurance crisis in special session

Republican leaders called in the Florida legislature for a December session in an urgent effort to prop up the state’s homeowners insurance industry.

Senate President Kathleen Passidomo and House Speaker Paul Renner officially announced the session last week, calling legislators to Tallahassee for the week beginning Monday, Palm Beach Daily News reported. This is the first opportunity for the state’s newly elected Republican supermajority to flex its legislating muscles on an issue critical to Florida real estate.

Florida has suffered with an unstable homeowners insurance market for decades, despite the industry’s crucial role in supporting a state prone to natural disasters. Amid climate change, hurricanes and tropical storms are growing in severity and frequency. The result is more damages, and insurers are left with a steep bill and thinning profit margins.

September’s Category 4 Hurricane Ian is a prime example of Florida’s conundrum.

The state held a session in May to act on the crisis, and allocated $2 billion of taxpayer dollars into a reinsurance fund for insurers, according to the Palm Beach Daily News. The reinsurance pot, known as the Florida Hurricane Catastrophe Fund, held $12.7 billion prior to Ian, but total damages are estimated at more than $40 billion, the publication reported.

To boot, policyholders in Florida are disproportionately litigious. The James Madison Institute, a conservative think tank headquartered in Tallahassee, released a report recently that found Florida insurers receive 9 percent of all claims filed in the U.S., but face 80 percent of all insurance lawsuits.

It’s a less than appealing market for private insurers, and many have already bid Florida adieu. This year, nine homeowners insurance providers have left the Florida market, according to Insurance.com.

With costs for insurers rising and fewer providers in the market, prices are skyrocketing. According to the Insurance Information Institute, Floridians pay the highest premiums of any state and face annual rate hikes of 33 percent, compared to the national 9 percent average.

With this call to the Capitol in Tallahassee, Florida lawmakers are hoping to stanch the bleeding. Republicans are aimed at reigning in costs for insurers by cracking down on consumers’ ability to sue, according to the Palm Beach Daily News.

“You’re looking to incentivize new company formation or [to keep] the companies that actually are here,” Dr. Chuck Nyce, a Florida State University professor of insurance and risk management, told the outlet. “That won’t work until you show companies and their investors that litigation has been reduced substantially.”

— Kate Hinsche