Related story: Along the Coast: Condo reserve rules, inspections become law
By Charles Elmore
Days before the June 1 start to hurricane season, Gov. Ron DeSantis signed what he called the “most significant reforms to Florida’s homeowners insurance market in a generation” as home and condo owners struggled with dropped policies and runaway rates rising sometimes 30% or more.
But legislators in southeastern Palm Beach County questioned how well the plan’s touted consumer benefits stand up to scrutiny, from rate relief to roof rules.
Insurers are getting access to a new $2 billion taxpayer fund to help them cover claims, but GOP legislators rejected amendments from Democrats to tie that to a rate freeze or cut.
“We are giving $2 billion in general revenue, so it’s basically a corporate bailout,” said Sen. Lori Berman, D-Boynton Beach and an attorney. She called it “reasonable” to make sure customers get something out of it.
The companies taking advantage of the temporary state reinsurance layer must refile rates to reflect that during one of the next two years. Bill backers said they could not provide any average or projected savings for consumers, and cautioned that at any given insurer, overall premiums could still rise, though perhaps less than they might have otherwise. They said it may take time, but the important thing is to stabilize the market.
“I think we can say we did everything we could to drive down rates,” said sponsor Sen. Jim Boyd, R-Bradenton, who owns an insurance agency.
Also in the package: a provision that insurers cannot drop policies just because a home’s roof is 15 years old or older. Supporters cited that as an example of how the insurance industry was giving up something in a balanced approach to legislation.
At first glance, “it looks good,” said Sen. Tina Polsky, D-Boca Raton, a mediator and lawyer.
But she asked Boyd during late May’s special session: Can’t insurers simply cite another reason, such as they think they have too much concentration of risk in a certain area, and not renew the policy anyway?
Boyd did not deny it.
“Insurance companies have marketing and underwriting guidelines they employ all the time,” he said.
Polsky said that sounded like a rule with “no teeth.”
On the other hand, she said, insurers were getting a wide array of things they wanted in the bill, such as measures making it harder to sue them for acting in “bad faith.”
Industry officials have blamed what they call abusive lawsuits for driving up costs. A string of companies have gone out of business or are in danger of losing financial ratings in a crisis that has accelerated this year.
But Sen. Gary Farmer, D-Fort Lauderdale, said a big problem lies in state regulations, which allow owners to divert money to affiliated companies and maintain low capital requirements, $15 million. He called that a “joke.” His amendment to double that to $30 million was defeated.
Another rejected proposal: Consider allowing last-resort insurer Citizens Property Insurance Corp. to insure homes worth more than $700,000. That matters in a market like Palm Beach County, where home values have been soaring, particularly near the coast. If state-run Citizens is shut out from a growing share of the market, that can leave homeowners with few options aside from “surplus lines” companies, whose rates are not regulated by the state.
The package revives a safe home program that offers grants up to $10,000 for measures to retrofit homes against hurricanes. It pays $2 for every dollar the homeowner spends for approved purchases. Palm Beach County is within the geographic area eligible for the program, but it is only available for homes with insured value up to $500,000 and the program was not ready to take applications at the time the bill passed.
One option that could lower premiums is a new roof deductible, but it comes with some risk. If the roof does need fixing under certain conditions, the consumer could be on the hook for an amount equal to 2% of the policy dwelling limits or 50% of roof replacement costs. For a $400,000 home, that could mean $8,000 out of pocket.
In the end, legislators labored for assurances the package would help their constituents.
“What is the guarantee I can take back to Palm Beach County that we are going to decrease their premium at all?” said Sen. Bobby Powell, D-West Palm Beach.
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