Property insurance fight continues 3 decades after Hurricane Andrew
It’s been almost 30 years since Hurricane Andrew took aim at South Florida.
The Category 5 storm hit in August 1992, disintegrating homes and wiping out entire neighborhoods. When it was all over, the storm cost more than $27 billion. Only Hurricane Katrina caused more damage in terms of insured losses.
At that time I was serving in the Florida Senate and was chairman of the Senate Insurance Committee. At the request of the Senate President our committee decided we needed to do something about property insurance before another storm came ashore.
We worked on reforms that encouraged the top 10 insurance companies to stay in Florida. I traveled the country together with the insurance commissioner and met with CEOs in their offices, and with our legislation and their cooperation we saved Florida’s insurance market for then and for the future.
But since then all the good we did was dismantled, and now it’s even more expensive to insure homes against catastrophic damages.
And catastrophic storms are not the only occurrence that has Florida’s insurance market in shambles.
That’s why Gov. Ron DeSantis is taking another shot at it. He’s called for a special session in May to work on possible solutions to the skyrocketing property insurance premiums and unavailability of homeowner’s insurance for many Floridians.
Currently, many Florida homeowners are seeing their premiums increase, sometimes by more than triple, while others are getting dropped altogether. And if you don’t carry insurance on your home, that’s an automatic default on your home mortgage and mortgage companies by law have to initiate foreclosure action against their borrowers.
A number of issues are causing this perfect storm within the industry.
Excess litigation is considered one of the biggest problems in the state. Lawsuits are running amok. Fraudulent claims specifically geared toward roofing are another obstacle.
Florida had over 95,000 lawsuits last year related to property insurance. In comparison, most other states had less than 1,000. Those who profit from filing lawsuits are knocking on doors looking for clients.
Adding to the pitfalls, the state-backed Citizens Property Insurance Corp. has been bombarded with thousands of homeowners each week seeking coverage. Citizens is considered the insurer of last resort, but as of March 31 it had more than 817,000 policies, and that number is expected to top 1 million by the end of the year.
The state is taking a huge risk underwriting these policies. Do we even have enough money in the coffers to cover the cost of catastrophic damage if a major hurricane were to hit this year?
All of these issues are expected to be addressed during the special session. And while the current future looks grim, there have been some minor steps toward reform.
Just last year SB 76 and SB 1598 were signed into law to provide more protection for consumers and discourage fraudulent activity that drives up rates. But much more needs to be done or homeowners, especially seniors on a fixed income, will be priced out of our great state.
Our efforts to revise property insurance challenges following Hurricane Andrew foolishly toppled under partisan politics.
Let’s hope this time around the laws will hold up to the winds of political challenge. The issue is too serious to crumble under political turf-guarding.
It’s not about legislators. It is about the citizens of Florida.