A special session in Florida on insurance. But will he come soon enough?

Florida’s governor said he plans to call a special legislative session for some time in May aimed at the state’s property insurance crisis. But some industry players, while welcoming the rally, said it may be too late for struggling insurers facing a June 1 reinsurance renewal deadline.

William Stander

“That’s the question, even if they do something and make the necessary changes, will it be on time?” said William Stander, director of the Florida Property and Casualty Association.

Others said any reform effort is welcome following the insolvency of six carriers over the past three years, soaring owner premiums and a continued rise in claims disputes.

Fred Karlinsky

“I commend Governor DeSantis for convening a special session to address issues in Florida’s property insurance market,” said noted defense and insurance regulatory attorney Fred Karlinsky of Greenberg Traurig. . “Reform is needed to curb the growth of fraudulent insurance claims and frivolous lawsuits, stem insurers’ financial losses, and provide relief to policyholders, who currently face higher rates and few insurance choices.”

He added: “The consequences of doing nothing would be huge for the economy and for the owners.”

The timing and content of the May session will be critical as reinsurance costs are expected to rise significantly for most insurers.

A recent report from investment analysts JMP Securities warned that the Florida reinsurance renewal on June 1 will likely be “one of the toughest in recent memory”, with reinsurance prices that will be out of reach for some companies. undercapitalized.

“The problem lies in the very structure of the Florida market,” the report notes. “Many primary insurers rely on the availability and affordability of weak layers of reinsurance protection – the same layers that have been destroyed by the recent high frequency of loss events, which has led reinsurers to flee these layers so quickly. as possible.”

Upcoming price increases will be something a number of property insurers simply cannot afford, according to the report.

To help insurers avoid the high cost of reinsurance, many industry advocates have urged lawmakers to lower the state hurricane fund retention level by $11 billion. With a lower retention or deductible and lower premiums paid to the cata fund, insurers could access the fund sooner at lower cost and buy less reinsurance.

State Sen. Jeff Brandes said earlier this year that reducing retention could save homeowners up to $1 billion a year, or about $150 a year per policy.

At that legislative committee meeting in January, the chief operating officer of the Florida Hurricane Catastrophe Fund, along with the Florida Chamber of Commerce, pushed back on rapid changes to the fund’s retention requirements.

Stander and other industry players said lawmakers are saying the cats fund retention change will be very much on the table for a special session in May.

But to save some companies, changes may need to be retroactive to cover the current contract year. Some insurers will be required to sign reinsurance policy contracts in May, although most payments are not due until August.

The special session is also expected to consider other changes requested by insurers, including the requirement for roof-only deductibles, allowing HO policies to pay the actual cash value of damaged roofs, instead of a full replacement like c This is now the case for many houses. Other ideas include reviewing ways to limit solicitation by roofers and further limiting attorney fees and litigation.

A report from CaseGlide, a dispute management software company, shows that the number of new disputed claims increased again in March. Lawsuits climbed 12% from February figures for Florida’s largest property insurers, and notices of intent to sue rose 24%.

In the meantime, in the absence of significant changes made by the Legislature earlier this year, Florida regulators have undertaken some changes themselves.

These include proposed new building codes that would help ease the roof replacement requirement; allow optional roof deductibles in policies; and allowing policy endorsements that offer arbitration instead of litigation in claims disputes.

Topics
Florida

The most important insurance news, delivered to your inbox every working day.

Receive the trusted insurance industry newsletter