Much like a slow-moving hurricane, Florida’s property-insurance crisis has been a disaster easily seen approaching.
One expert after another warned lawmakers that problems were intensifying. But the politicians did little to address the looming storm, choosing instead to wage culture wars and rail against “woke” corporations.
As a result, Floridians got hosed.
Rates skyrocketed. Policies were canceled. Taxpayers took on more liability as homeowners who were out of options flocked to the state-run insurer of last resort, Citizens Insurance.
Rates in Florida were already astronomical — more than double the national average — with the average premium here running $3,600 compared to a national average of $1,398, as the Sentinel recently reported.
And they’re still going higher with more insurers fleeing the state.
So now, even the red-meat Floridians who laughed and cheered as GOP politicians railed against Disney and transgender athletes stopped chuckling when their policies were canceled. It’s all fun and games trying to own the libs until you lose your insurance or can’t pay your bills.
That’s why Gov. Ron DeSantis and legislators are about to convene a special session on insurance reform — because they know everyone’s ticked off. They also know they didn’t do their jobs the first time.
The concern, though, is that when Tallahassee politicians start talking about “reform,” citizens usually lose. Especially on complex issues, since Florida politicians don’t handle complexities very well.
Some politicians rage against trial lawyers. Others against insurers.
People who truly understand the issue say reform is needed on multiple fronts: shady contractors, excessive litigation and support for insurers, who are reporting massive losses.
“It’s not just one industry,” said Barry Gilway, the long-time CEO of Citizens, who said he’d like to get all the players together. I like that idea more than simply demonizing one or another
Some want to blame everything on the insurance industry itself, which admittedly comes with unclean hands: A history of denying legitimate claims, paying out hearty dividends to stockholders during good years without saving enough for leaner years and setting up creative accounting profits that siphon profits out of Florida to make their financial health look worse here.
But there’s no denying the problems insurers are now facing are real. If they weren’t, you wouldn’t see so many companies folding and leaving the state. “It’s truly a crisis at this point,” Gilway said, noting six companies have fled Florida or become insolvent within the last 18 months.
Chris Gardner, a former chairman of Citizens who’s also the CEO of Hub International insurance brokers in Winter Park, says the problems festered “like an algae bloom” and now come down to basic math: “The cost of loss is outpacing what carriers can charge,” he said. In other words, insurance companies are spending more than they are taking in.
A big part of the problem is that Florida has become the land of lawsuits. More than 75% of all the homeowners’ suits filed in America were filed in Florida. That’s a staggering statistic created by a cottage industry of roofers, contractors and attorneys who built careers out of collaborating to file questionable claims.
But phrases like “stop frivolous lawsuits” sound best when you say them fast. We all like the idea. But the devil’s in the details. Most people don’t want to make it tougher for homeowners to appeal valid claims that get denied.
We also often hear Florida politicians talk about rampant fraud. OK, then crack down on that fraud. Beef up enforcement. If Florida had a rash of burglaries, you’d want to arrest the burglars, not just pass new burglary laws.
“Reform shouldn’t target consumers, curtailing their right to get insurers to pay,” said Chris Cury, president of the Florida Association of Public Insurance Adjusters. “Especially if there’s no guaranteed rate reduction.”
Boy, do I agree with that last sentiment. Too often, the politicians who serve as errand boys and girls for Big Business pass laws that help corporations save money under the theory that those savings will trickle down to consumers. Often they do not.
So, yes, look at curbing frivolous lawsuits, especially through arbitration. And arrest the fraudsters instead of just bellyaching about them. (With beefed-up enforcement agencies that actually have enough staff and funding to do so.)
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Another possible solution includes beefing up the Florida Hurricane Catastrophe Fund to lessen risks for insurers.
I don’t claim to have all the solutions. Every smart person I interviewed agreed there isn’t just one. They all also agreed homeowners are the ones who suffer most.
I’d urge lawmakers to do what Gilway suggested and listen to all the players involved — the insurers, the lawyers, the adjusters and the contractors. The reality is that the right solutions will probably cause everybody a little pain.
Most importantly, remember the homeowners — the people who have faithfully paid their ever-increasing premiums and are stuck in the middle.
But for any of these meaningful solutions to take place, the governor and legislators are going to have to take a time-out from their culture-warring to actually do their jobs.
And if they try to slip any other hot-button into this special session or the events around it — whether about guns, abortion, “woke” corporations or anything else — you’ll know they’re just trying to distract you. Again.