Urgent work won’t solve the insurance crisis, but it’s a start
In less than 72 hours, the legislature this week rushed through a property insurance bill. Urgent business is never perfect, and this bill is very far from perfect.
It’s probably based on false assumptions about prosecution. In typical Tallahassee fashion, he does more to help insurance companies than consumers. It is doing too little to alleviate the property insurance crisis. But the right vote was yes.
This bill does three main things. It provides an additional $2 billion in subsidized reinsurance – insurance for insurance companies. It also limits the ability of policyholders to sue insurers in the event of litigation. It creates a new deductible option for roof covering.
In our view, the Legislature should have doubled down on this new reinsurance and done more to ensure customers would benefit if fewer claims went to court. We believe the rooftop deductible will encourage policyholders to choose lower up-front costs, but make them more vulnerable to higher replacement costs in the event of a storm.
The special session was scripted by Governor Ron DeSantis and Republican leaders. The Democrats had to accept what the Republicans offered. “The process led to a very flawed bill,” said Sen. Tina Polsky, D-Boca Raton.
Polsky noted that she initially opposed last year’s property insurance bill, which lawmakers passed in the regular session. The debate, however, produced changes that, according to Polsky, “led me to yes.”
Representative Joe Geller, D-Dania Beach, expressed similar frustration. After Republicans rejected a series of Democratic amendments to help consumers, Geller asked, “Why don’t we legislate anymore?”
True bipartisanship is essentially dead in Tallahassee because Republicans have too much power. They had total control for 24 years, and it shows. Over the past two years, as DeSantis has positioned himself for a run at the White House, partisan issues have mattered more than pocketbook issues.
Politics produced this week’s special three-day session. As businesses went bankrupt and bonuses soared in an election year, Republicans had to act. But they hesitated. Consumers, rushing for costly replacement policies after being dropped, had to wait for lawmakers to pass DeSantis’ gerrymandered Congressional card and bless his revenge on Disney, which employs 80,000 people in Florida.
A serious look at property insurance would have meant thoroughly verifying the industry’s claim that Florida generates 8% of claims nationwide, but more than 70% of claims-related lawsuits.
Republicans did not demand that state insurance regulator David Altmeier testify about that number. Even some Republicans have acknowledged it may be flawed because it doesn’t include all states, including New York. Republicans also did not compel reinsurance industry experts to testify. This component is critical because insurers need to buy enough reinsurance to cover their losses in a bad storm year.
If reinsurance – global and unregulated – costs more, policies will cost more. This is why Florida offers its own reinsurance pool, known as the Hurricane Catastrophe Fund or “cat” fund.
Private reinsurance companies thus compete with the State. If the state pool reduces costs for insurers, the state should expand it. Lawmakers should know much more about the role of reinsurance.
Indeed, this legislature is blindly stealing on property insurance, to a large extent. It’s the fault of state officials, not Tallahassee’s usual suspects — the attorneys and public experts, who take on the landlords’ claims.
Example: The Tampa Bay Times reported that although Florida requires financial autopsies of defaulting insurers, no one sees these reports. They could offer valuable advice. Some reports showed that executives had drained cash from insurers. Others transferred money between affiliates. A closer look might reveal that the companies failed due to poor financial management or worse – no lawsuits.
Then there is the question of how much these lawsuits pay. Again, lawmakers don’t know.
“It’s been a constant source of frustration,” said House Speaker Chris Sprows, R-Palm Harbor. “It is very difficult for us to do anything in any policy area without information.”
As weak as this bill is (SB 2D), not approving it would have meant more disruption in a crisis-ridden insurance market. Lawmakers had hoped they could wait and judge the effects of last year’s bill, but political reality and the proximity of an election doomed that strategy.
The legislature and governor should make insurance an annual bipartisan priority. A new Speaker of the Senate and a new Speaker of the House will take over after the November election, so now is the time.
Consider what else happened: Despite pleas from engineering and building trades groups, lawmakers did nothing during the regular session and all three special sessions in response to the appalling collapse of a Surfside condo last year that killed 98 people.
Because Senate Democrats kept pushing, the legislature added that issue to the session and approved a bill that the Senate passed earlier but the House rejected. Polsky praised it much better than the insurance bill: “It will help people.”
There is no promise of lower insurance rates starting this session. But Tallahassee could promise to do better in the future. That would be the right kind of rush job.
The Sun Sentinel Editorial Board is made up of Editorial Page Editor Steve Bousquet, Editorial Page Associate Editor Dan Sweeney, and Managing Editor Julie Anderson. Editorials are the opinion of the Board of Directors and written by one of its members or a designated person. To contact us, write to [email protected].