Florida’s lawmakers will come back to the table to discuss urgent reforms for the state’s dysfunctional property insurance market before the end of the year, with the Governor of Florida Ron DeSantis saying he is planning a Special Session for December.
The focus is likely to once again be a mix of the affordability of property insurance for citizens of Florida, as well as reforms to stem litigation and fraud in the claims process.
DeSantis said that he is working with the Florida Legislature to call a Special Session in December, with that month being chosen as it is after the US elections.
The upcoming Special Session in Florida is expected to “address solutions to stabilize Florida’s property insurance market that will introduce more competition and policies that will lower prices for consumers,” DeSantis explained.
This will be the second attempt this year to reform Florida’s property insurance market, after efforts in May failed to go far enough, in many people’s view.
As we explained at the time, the May Special Session was an “opportunity lost”, with reforms not substantial or far-reaching enough to really bring prices down, or to bring the confidence of the reinsurance industry back for Florida.
Now, in the wake of major hurricane Ian, the expectation is that Florida’s domestic property insurers may struggle even more, while reinsurance pricing is expected to harden again, making doing business there even more challenging for carriers.
At the same time, with little done to really stop fraud and litigation, with reports widely heard since hurricane Ian of bad adjuster practices and fraudulent attempts by contractors, the urgency has risen significantly, with a solution needing to be found.
As we reported yesterday, Florida’s Chief Financial Officer (CFO) Jimmy Patronis wants to significantly tighten up and introduce new rules, to combat insurance fraud in the wake of major hurricane Ian.
One of the possible legislative measures. he discussed is an all-out ban of Assignment of Benefits (AOB), a key issue that was not sufficiently addressed in May.
Now, at the December Special Session, Patronis and others may get their chance to properly reform Florida’s property insurance market, which if done correctly and aggressively enough, could bring reinsurance confidence back to the state before the all-important 2023 renewals.
Rates are likely to rise at June 2023’s reinsurance renewals, but an aggressive stance on fraud and litigation before the end of this year, could help to make the market less hard than it would otherwise have been next year.
Given the critical state of Florida’s property insurance market is now only set to become even more acute after hurricane Ian, it’s safe to say that this Special Session of the Legislature could be a “last chance saloon” for Florida’s lawmakers to get a grip on insurance fraud and provide real benefits to policyholders and carriers.
Failure to get a grip on Florida’s property insurance market and meaningfully reform it at this Special Session will guarantee additional significant pressures for insurance carriers, much (much) higher reinsurance pricing (it’s going to be high anyway, but absent reform it will be higher), a lack of capital markets appetite for Florida property risks, plus inevitably much higher insurance prices for Florida’s communities.
Lawmakers, this is likely the last chance to act before 2023’s reinsurance renewals. Failure to adequately do so could plunge Florida’s insurance market into even deeper crisis, with inevitably significant ramifications for the state.