Will Legislature’s actions fix property insurance? There are a lot of doubts

Florida’s property insurance industry is in crisis mode, but the Legislature’s solutions passed this week in a special session and signed into law by Gov. Ron DeSantis on Thursday aren’t resonating with what residents say they need immediately.

The special session raised questions and awareness about the urgency to address the rising costs of insurance, among other issues like housing affordability.

The solutions aren’t enough, according to real estate agents, residents and property insurance lawyers. Some are worried immediate change is a distant wish.

Florida is one of the most sought-after places to live in the country, and it’s been that way for almost two years, Anthony Askowitz, a Miami real estate agent said. Yet, Florida’s inclement weather pattern with hurricanes, climate change and rising seas creates turmoil for property insurance rates and homeowners.

Lawmakers approved reviving a version of the “My Safe Florida Home” program as a solution to hopefully restrain homeowners’ insurance rates. The program was passed Wednesday, but lawmakers cautioned it wouldn’t reduce rates for at least 18 months.

The program could provide homeowners with free inspections and up to $10,000 to replace doors, windows and roofs. However, rate increases are unlikely to be affected for most Floridians. Lawmakers are giving the program 40% less money than they did in 2006, when the program had a troubled two-year run.

Sha’Ron James, a government affairs consultant, of counsel at Gunster law firm, said the bills in the special session will lead to a mixture of reform. However, nothing would lead to immediate change, and what policy holders need is immediate relief, she said.

“As a state, we’re really in a difficult position,” James said. “Our market is very delicate, and so it’s really hard to balance the immediate needs of policyholders with having a healthy insurance market.”

What about Citizens’ growing list of policies?

James said one of the significant issues that should have been brought up is Citizens Property Insurance Co., the state-run agency known as a last-resort option. A lot of policyholders are unhappy with the coverage they’ve gotten from Citizens, James said, and there needs to be reductions to its policy count so it doesn’t become a liability for the state.

“The unfortunate thing is that I don’t think consumers should have high expectations about reductions,” James said. “I think that this special session, the real purpose of this special session, was to stabilize the market, but not necessarily reduce rates.”

Citizens Insurance may be the only option for homeowners who are dropped by another insurer or who have policies with insurers who go out of business. Citizens president and CEO Barry Gilway said it had about 820,000 policies as of May and will top 1 million policies by the end of the year.

Juan Velasquez, a Miami insurance claims attorney, said a lot of his clients complain their premiums are being raised astronomically, and don’t know where they’ll be able to get affordable insurance other than Citizens. With hurricane season starting June 1, a majority of his clients are worried, he said.

Insurance companies are going bankrupt, and Velasquez said it’s a sign that they don’t want to do business in Florida anymore. Ultimately, if nothing changes, premiums will continue to rise and there will be a lot of foreclosures, he said. Additionally, the solutions that have been put forth are favoring the insurance companies and limiting the rights of policyholders.

“I think it’s only going to get stricter, since the insurance lobby has a lot of power to change the laws,” Velasquez said. “I worry because if these folks can’t shop around for something that’s reasonably priced, you’re gonna see a lot of foreclosures.”

Askowitz said something needs to change and argues that policyholders and insurance companies need to be in mutually beneficial relationships, where one isn’t gaining significantly more than the other.

“As far as change goes, we don’t have a choice,” Askowitz said. “And before it’s too late ... to point fingers, 10, 20, 30 years from now, at someone who may not even be around. It doesn’t do any good.”

Priced out of homes

Kim Rodstein, a Realtor with Keller Williams Realty in Miami Beach, has been working in the industry for about 25 years and said one of the biggest issues she’s seen is people being priced out of their homes.

“Regarding property insurance, whenever these topics are brought up at a state level, and when they go into these sessions, they make some small correction as a temporary like, ‘Look, we did something,’ but then it doesn’t necessarily stick,” Rodstein said. “It’s the people that can afford it that are paying it, and the ones that can’t afford it, they’re forced to either have to sell or, to look for other options, which is not an easy thing at the moment.”

Insurers and lawmakers have blamed roof damage claims that may be fraudulent for driving up costs for homeowners and insurance companies. Some unscrupulous roofers go door to door asking to inspect roofs for damage. The companies then say the entire roof can be replaced, paid by the homeowner’s insurance, even if it’s just a small portion that’s damaged.

Daniel Efrain Arguelles, a manufacturer and vice president of a roofing company, went to Tallahassee for the special session to speak about his experience as a roofer and provide insight for solutions he believes would bring aid.

The new legislation will stop insurers from denying coverage due to a roof’s age. If a homeowner’s roof is 15 years old or older, an inspection will be required before insurers can deny coverage.

Some of the lawmakers were visibly upset speaking about the issues, but also about the solutions that were brought forth, Arguelles said. On the contrary, he said representatives didn’t make themselves as available to hear out solutions as he had hoped.

Arguelles said he doesn’t see much change occurring, and that it’s really a vicious cycle.

“Nobody was happy about giving $2 billion to the insurance companies to help them out and just hope that they’re going to be nice and wait, possibly for 18 months to see the trickle effect that is going to produce any type of premium discounts,” Arguelles said.

The $2 billion given to insurance companies is reinsurance, which would help insurers buy insurance to protect themselves from risk and bankruptcy.