Was Florida’s Insurance Overhaul a Bailout?

Aron Solomon

Two Florida Senate bills, SB-2D and SB-4D passed the Florida legislature and were signed into law by Governor DeSantis in May.

What the far more controversial SB-2D is about is $2 billion of taxpayer money being used for reinsurance relief through the Reinsurance to Assist Policy (RAP), a program designed to benefit policyholders over the next two years.

As is the case with so much in the world of lawmaking, the issue here is whether, as Republicans say, this is a reasonable way to help the insurance industry and homeowners in a particularly trying time, or, as the Democrats say, this is simply an insurance industry bailout.

Sen. Janet Cruz, (D - Hillsborough), for one, called the $2 billion appropriation to aid insurers over the next two years “a tax giveaway” for insurers at taxpayer expense. While it’s clear that the goal of the bills and the work of the Florida legislature was to keep insurance companies afloat,

I spoke with John Lawlor, a Fort Lauderdale lawyer, about the new laws and his perspective as to what they’re really all about:

A close reading of SB-2D and an analysis of the legislative process that created it shows that at every turn, Democratic Amendments to assist homeowners didn’t make it through. SB-2D is now a law that’s difficult to read as anything but an industry bailout.

Before being immediately signed into law by Governor DeSantis, SB- 2D passed the Florida Senate 30-9 and then passed the House by a 95-14 vote. Quoted in the Florida Phoenix, Rep. Patricia Williams, (D - Broward) argued that this is a deeply one-sided law, not the bipartisan effort that the Florida GOP is trying to spin it to be:

Twenty-seven amendments from the Democrats and not one was accepted to assist homeowners. There’s good in the bill but not enough.

While Governor DeSants called the reform package “the most significant reforms to Florida’s homeowners insurance market in a generation,” the reality is that the laundry list of failed amendments of SB-2D reveals a much deeper fissure when it comes to the Florida insurance industry and the best interests of regular people.

As noted in Florida Politics:

Not all Republicans are satisfied with the bill, however. Sen. Jeff Brandes, a St. Petersburg Republican, also voted for SB 2D but grew frustrated with the requirement that companies cover homes with roofs younger than 15 years old. He called it a “failsafe” for companies being shut out of the reinsurance market, which is overly concerned with the age of roofs on insurers’ books. The rest of the bill doesn’t go far enough to limit costs for insurers, he said.

“I see this as an industry that essentially has Stage 4 cancer and is failing. The solutions here are as if we’re treating it with Stage 1 cancer,” Brandes said. “If we agree that the patient has cancer then the 15-year (roof) provision is like sticking a cigarette in their mouth and sticking them under a heat lamp.

This observations resonates with John Lawlor, who adds:

The idea in some circles that the Florida insurance landscape is a battle between trial lawyers and insurance companies missed the mark. It’s about homeowners who can’t get the relief they need from legislators who use tax dollars as an industry bailout.

With Florida insurance rates on the rise, and with no immediate relief from these new laws, some Florida homeowners will have to bear planned increases while others are talking about dropping their insurance policies and simply self-insuring.

For those looking for a quick glimpse into how bad things have become in the world of Florida insurance, the Florida Phoenix article sums it up perfectly:

Meanwhile, lawmakers made clear that the property insurance crisis is far from over, with three double-digit rate hikes as high as 49 percent already in the works, new policy cancellations issued last week, and more insurance companies expected to go bust after June 1 because they cannot secure reinsurance coverage.

The state-run insurer of last resort, Citizens Property Insurance Corp., has doubled in volume in the last 18 months to absorb newly uninsured homeowners, causing lawmakers to fear triggering of hefty assessments on all types of insurance policies statewide.

Citizens has now announced a rate increase of 6.4% for multi-peril policies, the most common kind in the state. While Citizen had requested an increase of 10.7%, according to WPTV, many homeowners will not be able to bear that additional monthly premium. If some of the astronomical premium increases are approved, Florida legislators will find themselves with a new set of problems created at least in part by these new laws not doing enough for consumers.

About Aron Solomon

A Pulitzer Prize-nominated writer, Aron Solomon, JD, is the chief legal analyst for Esquire Digital. He has taught entrepreneurship at McGill University and the University of Pennsylvania and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world. Aron has been featured in Forbes, CBS News, Crunchbase, Variety, CNBC, USA Today, ESPN, TechCrunch, The Hill, BuzzFeed, Fortune, Venture Beat, The Independent, Fortune China, Yahoo!, ABA Journal, Law.com, The Boston Globe, NewsBreak, and many other leading publications.

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Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital, who has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world.

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