Agenda 06/14/2022 Item #10A (Florida Legislature Summary Report)06/14/2022
EXECUTIVE SUMMARY
Recommendation to hear a summary report on the actions of the Florida Legislature regarding SB
2-D, relating to property insurance reforms aimed to alleviate rising property insurance costs,
increase claim transparency, and to provide an assistance program to harden homes against
storms. (Sponsored by Commissioner McDaniel)
OBJECTIVE: To hear an overview of SB 2-D, relating to property insurance reforms aimed to alleviate
rising property insurance costs and to stabilize the property insurance market.
CONSIDERATIONS: By proclamation and call of the Governor, the Florida Legislature convened in
Special Session on Monday, May 23, 2022, to consider legislation related to property insurance,
reinsurance, changes to the Florida Building Code to improve the affordability of property insurance, to
address civil remedies, and make appropriations.
The culmination of this effort, SB 2-D, passed the Legislature and was signed by the Governor on May
26, 2022.
FISCAL IMPACT: None.
GROWTH MANAGEMENT IMPACT: This action will result in no growth management impact.
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney, raises no legal
issues at this time and requires majority vote for approval. -JAK
RECOMMENDATION: That the Board hear a summary report on SB 2-D, relating to property
insurance reforms aimed to alleviate rising property insurance costs and to stabilize the property insurance
market.
Prepared by: William L. McDaniel, Jr., District 5
ATTACHMENT(S)
1. Property Insurance Reforms Slideshow (PDF)
10.A
Packet Pg. 309
06/14/2022
COLLIER COUNTY
Board of County Commissioners
Item Number: 10.A
Doc ID: 22425
Item Summary: Recommendation to hear a summary report on the actions of the Florida
Legislature regarding SB 2-D, relating to property insurance reforms aimed to alleviate rising property
insurance costs, increase claim transparency, and to provide an assistance program to harden homes
against storms. (Sponsored by Commissioner McDaniel)
Meeting Date: 06/14/2022
Prepared by:
Title: Communications, Govt. & Public Affairs Director – County Manager's Office
Name: John Mullins
06/07/2022 10:19 AM
Submitted by:
Title: Communications, Govt. & Public Affairs Director – County Manager's Office
Name: John Mullins
06/07/2022 10:19 AM
Approved By:
Review:
Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 06/07/2022 10:37 AM
Office of Management and Budget Susan Usher Additional Reviewer Completed 06/07/2022 3:56 PM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 06/07/2022 4:13 PM
County Manager's Office Amy Patterson Level 4 County Manager Review Completed 06/08/2022 2:46 PM
Board of County Commissioners Geoffrey Willig Meeting Pending 06/14/2022 9:00 AM
10.A
Packet Pg. 310
Property Insurance Reforms
Senate Bill 2-D
Passed Senate:30-9Passed House:95-14
Signed by Governor DeSantis: 5/26/22
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Packet Pg. 311 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
INHOSPITABLE ENVIRONMENT
FLORIDA
PROPERTY
INSURANCE
MARKET
NON-RENEWALS
CITIZENS PROPERTY INSURANCE
HURRICANE SEASON
FRIVOLOUS LAWSUITS
RISING PREMIUMS
INSURANCE INDUSTRY LOSSES/INSOLVENCY
10.A.1
Packet Pg. 312 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
LAWSUITS
Data shows that Florida’s homeowner insurance claims accounted for 8%of the nationalhomeowner claims in 2019. Preliminary 2021 data has Florida at 7%of all opened claims.
Litigation plays a significant role in rising premiums and the cost is ultimately passed on to policy holders.
However, since 2019, each year Florida has accounted for at least 76%of all property insurance claims litigated nationally.
According to the Florida Association of Insurance Agents, between 2013 and 2020, insurance carriers in Florida paid out $15 billion in claims costs. 8%was paid to consumers while attorneys received 71%.
10.A.1
Packet Pg. 313 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
LAWSUITS
Contractors knock on doors or send mailers offering a free roof inspection due to a recent storm event…
They inform you that a new roof will be covered by your insurance…
They persuade the homeowner to sign away their rights to file the claims themselves (Assignment of Benefits (AOB))…
The contractor then files inflated, fraudulent damage claims(Some have been caught damaging the roofs themselves)…
When the insurance company denies the claim as not legitimate and/or not due to the storm, the contractor sues…
The insurance company will usually settle the disputed claim for several times the original claim –most of it going to the contractor’s lawyers in the form of a“contingency fee multiplier.”
The homeowner’s premiums will rise due to the claim being filed.
The aggregate cost of replacing thousands of roofs in a single season will raise premiums on all policyholders, even if you didn’t get a “free roof.”
Insurers often end up in financial turmoil with the amount of losses in net income.
RESULT:
CATALYST:
10.A.1
Packet Pg. 314 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
PREMIUMS
According to the Insurance Information Institute, the average homeowners’ insurance premium in the U.S.in 2019, was $1,398.
The average premium cost in Floridain 2022 is $3,585.
10.A.1
Packet Pg. 315 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
LOSSES & INSOLVENCY
According to the State, the insurance industry’s net losses have risen in each of the last five years, surpassing $1 billion in 2021.
Since 2021, eight insurance companies in Florida have gone out of business as of the start of the Special Session.
Insurance companies have sought approval of significant, wide-ranging rate increases, have chosen not to renew tens-of -thousands of policies, and have greatly tightened eligibility.
If required “reinsurance” is not purchased (international backup financing of smaller insurance companies), more local companies will become insolvent.
The Hurricane Catastrophe Fund (FHCF) exists as a backstop for insurance companies that exhaust their ability to pay claims following serious storms.
The FHCF is a tax-exempt state trust fund that provides reimbursement to residential property insurers for a portion of their Florida catastrophic hurricane losses.
It is funded primarily from actuarially-determined premiums paid by residential property insurance companies, and, in some circumstances, revenue bonds backed by emergency assessments on a variety of property and casualty insurance premiums.
10.A.1
Packet Pg. 316 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
CITIZENS PROPERTY INSURANCE
Citizens Property Insurance Corporation was created by the Legislature in 2002 as anot-for-profit, tax-exempt government entitythat serves as the public insurer of last resort in providing property insurance to eligible Florida property owners unable to find insurance coverage in the private market.
Latest:As of April 30, 2022, Citizens has issued 851,006 policies and is projected to eclipse 1 million by the end of this year.
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Packet Pg. 317 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
HURRICANE SEASON
The 2022 season is already underway and is expected to be more active than usual.
One direct hit from one of these storms couldoverwhelm the remaining market companies.
According to Deanna Criswell, Director of FEMA,Irma, Michael, and Andrew caused the state$95 billion in damage.
10.A.1
Packet Pg. 318 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
SB 2-D COMPONENTS
Reinsurance Relief My Safe Florida Home Program Roof, Roof, Roof Denial Justification Attorneys & Lawsuits
$2 billion program to provide rate relief to policyholders over the next two years; provides certainty to help stabilize the market.
$150 million to provide grants to FL homeowners for hurricane retrofitting that could lead to premium discounts for participants.
Prohibiting denying coverage solely based on the age of a roof if the roof is less than 15 years old or if the roof is determined to have at least 5 years of useful life remaining.
Requiring insurance companies to provide policyholders with a reasonable explanation if they deny or partially deny a claim; provide greater access to info during the claim adjustment process.
Creating a new standard for application of fee multipliers; limiting the assignment of fees in property insurance cases disincentivizing frivolous claims.
10.A.1
Packet Pg. 319 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
SB 2-D COMPONENTS
Reinsurance Relief
$2 billion program to
provide rate relief to
policyholders over the
next two years via
reinsurance of insurers
due to hurricane
losses.
The bill authorizes $2 billion in non-recurring General Revenue Funds for a new
Reinsurance to Assist Policyholders (RAP) program for insurers that will be
administered for the next two years by the State Board of Administration. This
reinsurance is provided at no cost to the insurer.
BUT, insurers that participate in RAP for 2022 must reduce their policyholder
rates by June 30, 2022, to “pass on the savings” from their RAP coverage.
RAP expires July 1, 2025, if no General Revenue funds have been transferred to
the program. If funds have been transferred due to a hurricane, the statute
expires on July 1, 2029, and all unencumbered funds revert to General Revenue.
10.A.1
Packet Pg. 320 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
SB 2-D COMPONENTS
My Safe Florida Home Program
$150 million to provide
grants to FL
homeowners for
hurricane retrofitting
that could lead to
premium discounts for
participants.
Effective July 1, the bill appropriates $150 million to provide hurricane
mitigation inspections and matching grants to help Floridians afford
home hardening improvements to their homesteaded, single-family
residences valued at $500,000 or less.
The grant program provides $2 for every $1 provided by the
homeowner –with exceptions made for low-income homeowners.
Grants to applicants are capped at $10,000.
This program will be administered by the Department of Financial
Services. MyFloridaCFO.com will have more information.
10.A.1
Packet Pg. 321 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
SB 2-D COMPONENTS
Roof Condition
Prohibiting insurance
companies from
denying coverage
solely based on the
age of a roof if the roof
is less than 15 years old
or if the roof is
determined to have at
least 5 years of useful
life remaining.
Insurers may not refuse to write or renew policies on homes with roofs
that are less than 15 years old solely based on the roof’s age.
If a roof is at least 15 years old, an insurer must allow a homeowner to
have a roof inspection done by an authorized inspector at the
homeowner’s expense before requiring the replacement of the roof as a
condition of issuing or renewing a policy.
If the inspection indicates that the roof has at least 5 years of useful life
remaining, the insurer may not refuse to issue or renew a policy solely
based on roof age.
10.A.1
Packet Pg. 322 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
SB 2-D COMPONENTS
Roof Deductible
Giving policyholders
the option to choose a
homeowner policy that
best suits their needs
and budget.
Allows residential property insurers to include an option for a separate
roof deductible that may not exceed the lesser of 2% of the policy limits
or 50% of the roof replacement costs.
Policyholders who select a roof deductible must receive a premium
credit or discount and, if a roof deductible is applied, no other
deductible under the policy may be applied to the loss.
A roof deductible does not apply to:
•A total loss to the primary structure caused by a covered peril…
•A loss caused by a hurricane…
•A roof loss resulting from a tree fall or other hazard that damages
the roof and punctures the roof deck…
•A roof loss requiring repair of less than 50% of the roof…
10.A.1
Packet Pg. 323 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
SB 2-D COMPONENTS
Roof Fraud
Curbing unscrupulous
roof claims and
contractor scams.
Prohibits contractors from making written or electronic communications
that encourage or induce a consumer to contact a contractor or public
adjuster for the purposes of making a property insurance claim for roof
damage unless such solicitation provides notice that:
•The consumer is responsible for the payment of any deductible…
•It is insurance fraud punishable as a third-degree felony for a
contractor to pay or rebate an insurance deductible…
•It is insurance fraud punishable as a third-degree felony to
intentionally file an insurance claim containing false, fraudulent, or
misleading information…
10.A.1
Packet Pg. 324 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
SB 2-D COMPONENTS
Denial Justification
Requiring insurance
companies to provide
policyholders with a
reasonable explanation if
they deny or partially
deny a claim; provide
greater access to info
during the claim
adjustment process, and
insurer transparency.
Requires insurers to notify policyholders that they can request a copy
of any detailed estimate of the amount of the loss determined by the
adjuster. Upon receiving the request, the insurer must send the
detailed estimate to the policyholder within 7 days.
Requires insurers to provide a reasonable explanation in writing of the
basis for the payment, denial, or partial denial of a claim.
Directs the Office of Insurance Regulation to make publicly available
data detailing the number of policies, amount of premium, number of
cancellations, and other data for each property insurer. This
information cannot be withheld as a “trade secret.”
10.A.1
Packet Pg. 325 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
SB 2-D COMPONENTS
Attorneys & Lawsuits
Creating a new
standard for
application of fee
multipliers; limiting the
assignment of fees in
property insurance
cases disincentivizing
frivolous claims.
Limits the awarding of a contingency fee multiplier (applied in complex cases) to “rare and exceptional circumstances” withevidence that competent counsel could not be retained in a reasonable manner.
Eliminates attorney fee awards in assignment of benefits (AOB) cases where a homeowner signs over the benefits of a claim to a contractor.
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Packet Pg. 326 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property
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Packet Pg. 327 Attachment: Property Insurance Reforms Slideshow (22425 : Legislative Report - Property