January 6, 2022
  • January 6, 2022

Cause of Florida property insurance mess left unaddressed, lawmaker says – WFTV

By on October 19, 2021 0

ORLANDO, Florida – Despite massive price increases for homeowners over the past decades, the 52 property insurance companies serving Florida are bleeding money, regulators and lobbyists have said.

The claims have caused lawmakers to consider yet another round of changes to support the struggling industry as consumers complain that insurance is hard to get and expensive to keep.

“Their problem is very, very simple,” a regulator told a Senate committee on Tuesday. “Either they raise rates or these companies go bankrupt. “

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Property insurance is not required by Florida law, but it is required by mortgage lenders. This means that for most homeowners in the state, it is a necessary expense.

Renters are also affected as many landlords pass on property insurance costs through rental contracts.

According to LendingTree, Florida property insurance costs have increased three times faster than the national average between 2016 and today. The report says Florida’s largest company increased rates by 183% during that time.

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Florida rates were generally expected to be higher than those in other states due to hurricanes and other severe weather events, but companies complained that their profits were being affected by unnecessary lawsuits and delays. roof replacement requests pouring in from door-to-door companies. for damages.

The challenge is so great that some companies are trying to exit the market, getting rid of their customers to improve their bottom line.

“Old houses have big problems [acquiring insurance] unless they are completely renovated, ”noted an agent. “The problem is, we have bad apples.”

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The rapid increase has put an already costly necessity out of reach for many. The Florida government offers assistance in the form of Citizens Property Insurance Corporation, a state-backed company that offers below-market rates to people who cannot afford private insurance.

Representative Anna Eskamani (D-Orlando) said lobbyists were pushing the state to push citizens to raise prices and cut advertising to attract more customers to their offers, after reports showed the company had added 200,000 new customers in the past year.

“They want Floridians not to know Citizens, and I think that’s a big mistake,” she said.

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Eskamani said the Florida government had already tried this approach the last time industry lobbyists came for help, with little to no improvement. She said the best solution would be to fund improvements to homes to make them more storm resistant, which would reduce premiums and claims.

Additionally, she suggested opening Citizens to compete with private companies, allowing anyone to sign up for the cheapest prices the company offers. Citizens can undermine the private market because other companies have their own insurance policies, the costs of which are passed on to consumers, she explained.

“If you allow citizens to be available to a diverse community of consumers, there will be people at different levels of risk so that they can support each other so that a hurricane does not affect the claims of everyone, ”she said, noting that previous proposals to make these have received bipartisan support.

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These proposals were opposed by insurance companies who did not want competition, she said.

Eskamani accused fellow lawmakers, especially the heads of committees that regulate insurance companies, of being financially tied to the industry. Insurance companies are among the biggest donors to Florida politicians, spending more than hundreds of thousands of dollars on high profile individual races in the Sunshine State, election documents show.

Eskamani said politicians have been subjected to the vagaries of the industry for too long, focusing on maintaining their cash flow instead of finding ways to cut costs for consumers.

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“I don’t think we can have a legitimate conversation about property insurance when the leaders who have chaired these committees are swimming in the money of insurance and reinsurance companies,” she said. “We need to take a leadership role in holding these companies to account, but also in creating a more equitable system where people can actually access property insurance. “

When asked why she supports government involvement, rather than the free market deciding what rates should be, she pointed out that the free market is collapsing.

“I think it’s pretty clear that the market can’t provide fair access to something that is needed,” she said.

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