By Anita Byer, Setnor Byer Insurance & Risk

Florida lawmakers just passed sweeping property insurance reforms to repair the state’s crumbling property insurance market. The Florida Legislature convened a second special legislative session in mid-December to address the current property insurance crisis. While significant reforms were passed during the first special session, they aren’t nearly as bold or consequential as the reform bill passed during the second, which was promptly approved by Governor DeSantis.

The bill contains comprehensive reforms intended to ensure Floridians have access to quality, affordable private market property insurance. The reforms, like the problems that prompted them, are wide-ranging and far-reaching. Many are significant. Some are unprecedented. Let’s review some of the bill’s key provisions.

Claims filing deadline. The bill reduces the amount of time policyholders have to file or reopen a property insurance claim from two years to one year. The time to file a supplemental claim is reduced from three years to 18 months.

Prompt pay laws. The bill amends Florida’s prompt pay laws to encourage the prompt payment of claims by:

  • reducing the time for insurers to pay or deny a claim from 90 to 60 days;
  • reducing the time for insurers to review and acknowledge claim communications from 14 to 7 days;
  • reducing the time for insurers to begin an investigation from 14 to 7 days;
  • reducing the time to conduct physical inspections from 45 to 30 days;
  • permitting insurers to use electronic methods to investigate losses and communicate with policyholders; and
  • requiring insurers to send an adjuster’s loss estimate to policyholders within 7 days after it is created.

Awards of attorney fees in litigation involving property insurance policies. The bill seeks to reduce frivolous litigation arising from residential and commercial property insurance policies by:

  • eliminating various one-way attorney fee provisions throughout the insurance code for suits arising from property insurance policies;
  • making the civil offer of judgment statute applicable to suits arising from property insurance policies;
  • allowing joint offers of settlement that are contingent on acceptance of all joint offerees; and
  • removing provisions regarding attorney fees relative to the alternative procedure for resolution of disputed sinkhole insurance claims.

Assignments of benefits (AOBs). The bill prohibits any assignment of any post-loss insurance benefit under any residential or commercial property insurance policy issued on or after January 1, 2023.

Bad faith failure to settle actions against property insurers. The bill provides that bad faith litigation for failure to settle a property insurance claim may not be filed until after the insured has established through adverse adjudication by a court that the insurer breached the insurance contract and a final judgment or decree has been rendered against the insurer.

Flood insurance notice. The bill amends the mandatory flood insurance notice by requiring it to be part of the declarations page and makes revisions to the content of notice to encourage purchase of flood insurance.

Arbitration. The bill allows insurers to offer (but not require) policies that include a mandatory binding arbitration clause. Insurers must also provide an appropriate premium discount in exchange for the rights given up by the policyholder.

Citizens Property Insurance Corporation (Citizens). The bill:

  • Increases Citizens’ renewal eligibility threshold for personal lines policyholders to make them ineligible for renewal with Citizens upon receiving an offer of comparable coverage from an authorized insurer for a premium that is not more than 20 percent greater than Citizens’ renewal premium.
  • Increases Citizens’ eligibility threshold for new commercial residential policies from 15 to 20 percent.
  • Requires that rates charged by Citizens be actuarially sound and non-competitive with the approved rates charged in the admitted market.
  • Increases the potential rates charged for property that is not a primary residence.
  • Repeals language allowing policyholders to return to Citizens as a renewal if the take-out carrier increases their rates above the Citizens’ glidepath.
  • Requires personal lines residential policyholders to have qualifying flood insurance to be eligible for coverage.

These, and other provisions within the bill, can fairly be described as the most significant property insurance reforms in recent history, but their effectiveness remains to be seen. Will they strengthen Florida’s property insurance market? Will Floridians soon see more options and lower prices? We certainly hope so, but only time will tell. In the meantime, our team is available to discuss how these reforms may affect your personal and commercial property insurance coverages.

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