Property Insurance Reform in Florida Sets Out to Stabilize Market

Governor DeSantis signed two new bills which support disaster relief and overhauls Florida’s home insurance, for which rates have risen to the highest in the nation, with $4,232 as the average Florida premium- nearly triple the nationwide average.  The bill to support disaster relief provided an additional $750 million to Floridians in the form of tax relief following Hurricanes Ian and Nicole. 

The insurance reform bill would add $1 billion to backup coverage which would be available for insurers to add onto their other reinsurance and would be in addition to the state’s Florida Hurricane Catastrophe Fund. This bill would also controversially change the current policy in which insurers pay the plaintiff’s lawyer fees if the plaintiff wins a dispute, a provision most other states in the country don’t have. Florida takes up 80% of the nation’s insurance lawsuits while only representing just under 10% of the claims, an astoundingly off-kilter number. 

This bill also would eradicate the ‘assignment of benefits’ where third parties such as contractors are compensated directly by the insurance company. It also strengthens state regulation of property insurers and requires insurers to investigate and pay valid claims more promptly. At the same time, it shortens the deadline for property claims to be filed.

These rising insurance rates have buyers concerned about affordability and home value.  While Florida’s weather has always impacted insurance rates, an increase in climate-related claims has contributed to most of the large national insurance carriers slowly pulling out of the state.  This leaves smaller, local private carriers to shoulder the masses thus driving prices up even more.  13% of Florida homeowners as a result do not carry insurance- a very risky choice but to some, not a choice at all with prices at the level they are.

These two bills will make it possible for more carriers to find incentives to offer coverage in Florida, giving the consumer more choices thereby hopefully enticing them to opt into coverage. This is the largest insurance reform in history which looks to stabilize the Florida market.