Ten Reforms to Fix Florida’s Homeowners Insurance Market

Florida Homeowners Insurance Claims and Litigation Handbook


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The James Madison Institute and the R Street Institute issued a detailed report outlining ten ways to help Florida’s property insurance market without raising rates.  The full report is here:

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In this comprehensive report, the institutes suggest ten critical changes to allow insurers to succeed in Florida.  PropertyCasualty360’s article provides the following breakdown:

1.     Implement the Hager incremental Cat Fund reduction plan

2.     Establish requirements for “assignment of benefits” provisions

3.     Implement incremental Citizens eligibility reform with a “circuit breaker”

4.     Allow excess and surplus lines carriers to do voluntary take-outs from Citizens

5.     Remove non-primary residences from Citizens and continue reduction of Citizens’ maximum coverage

6.     Expand 2013’s coastal preservation concept to bar other state programs from providing coastal subsidizes

7.     Implement tough, new Citizens and Cat Fund conflict-of-interest policies and make protecting taxpayers a focus of both entities

8.     Create an expert panel to advise the state on the use of RESTORE Act funds

9.     Establish fair settlement procedures

10.   Require an annual report on the combined post-storm bonding capacity of Citizens, the Cat Fund and the Florida Insurance Guaranty Association

You will need quite a bit of time to review the report.  I found two of the recommendations intriguing and worth mentioning:

First, once again you see a group identifying the assignment of benefits claims as a main concern for property insurers.  As you might recall, the Policyholders Bill of Rights Working Group also made several recommendations for addressing the concerns posed by the assignment of benefits/ water damage claims and the associated litigation.  Similarly, the institutes recommend requiring assignment of benefits contractors to comply with the insurance policy conditions that homeowners have to comply with, rather than being shielded by the general rule that policy conditions do not flow to the contractors.  In addition, the institutes suggest allowing homeowners a brief window to opt out of the assignment of benefits agreements to protect the homeowners’ interests.  Overall, it seems that everyone is seriously trying to resolve the substantial burdens imposed by these claims.  I am sure insurers anxiously await to see how and when these efforts will materialize into solutions.

The institutes also recommend Citizens continue to limit its overall exposure, and they single out vacation homes as a coverage risk Citizens should avoid.  There are arguments on both sides here because Floridians obviously welcome the economic benefits of temporary residents; however, if Floridians have the burden associated with a catastrophe, the legislature should pay close attention to the overall economic impact of assuming these risks.  Ultimately, this issue is up for debate and I would love to hear feedback on the benefits of Citizens ensuring these secondary residences.  This recommendation was part of the larger conclusion that we have all heard: Citizens should continue to reduce its inventory.  We all know Citizens is vehemently trying to achieve that result.

The institutes’ report is a highly detailed perspective on the Florida property insurance industry and one certainly worth reading.  It is good to know that, despite the absence of any catastrophes, Floridians are still working on hard on trying to improve this market and prepare it for the worst.


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