July 3, 2022
  • July 3, 2022

Inside Florida’s Property Insurance Crisis

By on May 3, 2022 0

The property insurance market in Florida is struggling.

“Over the past two years, private companies operating in Florida have had a combined negative net income of $1 billion. So the market is basically closing.”

It’s bad for the owners too.

“Consumers are on life support right now. They are paying more money for less coverage.”

When a market craters like this, something fundamental has gone wrong. In Florida, it comes down to one thing: litigation.

“Florida has 8% of claims and 79% of litigation, so there’s something very, very wrong with that.

“And I don’t think anyone can logically explain that kind of differential other than statutes in Florida being abused.”

Today, About: The collapse of property insurance in Florida. Can it be repaired?

Guests

Marc Friedlander, director of corporate communications at the Insurance Information Institute, a nonpartisan, nonprofit organization. (@markfri09)

Jeff Brandes, Republican Florida State Senator since 2012. Author of Senator Jeff Brandes Calls for Special Session on Insurance. (@JeffreyBrandes)

Also Featured

Mandy Wellsa landlord in Cape Coral, FL

Joe Carluccico-owner of Brightway Insurance, an insurance agency in Jacksonville, Florida.

Transcript: Florida homeowner on Florida property insurance meltdown

MANDY WELLS: Cape Coral is like copy and paste. It’s like builders are going to build the same house over and over again.

MEGHNA CHAKRABARTI: Mandy Wells, her husband and son, moved to Cape Coral, Florida in 2017, and they live in one of these cut-and-paste houses. The three-bedroom, two-bathroom, 1,600 square foot home was modern and in great condition until October 2019, when Mandy noticed the roof was leaking. Not good.

Mandy had recalled, however, seeing a roofing ad on Facebook. It was from Fort Myers based Marlin Construction Group and their website says they are licensed and insured and a red banner at the top of the house the page says Marlin Construction Group your satisfaction is our #1 priority So Mandy called them.

WELLS: He’s coming. He makes me sign a document called a proposal contract. And then he also writes on the back of my direct authorization to pay that I have a leak in the front. It tells me a storm date, which is different from the date we meet and even different from the date I saw the water.

And he says to me, Oh, it’s coming from the strong winds. Everything is like strong winds here. So and then he sits next to me in front of the computer and helps me file an insurance claim.

CHAKRABARTI: By the way, the contractor hadn’t even gone up to the roof to inspect it, but he put December 20, 2018 on the paperwork, the same day the weather and wind hit Florida. But that was over a year before Mandy had roof issues.

And by the way, the proposal contract, which Mandy provided us, has both an Angie’s List logo and a Better Business Bureau A-plus rating logo in the upper right corner. But Mandy, of course, didn’t feel like she was getting that A-plus service. So she spends the next few weeks going back and forth with this company, trying to sort everything out.

WELLS: And that company never came back to do the job. They tried to leverage this document to get me to sign a power of attorney and assignment of benefits. This one not until February 2020, when I just asked them to cancel my file. No work had been done at my house. The company never even came to my roof. My house had been leaking all this time.

CHAKRABARTI: Assignment of benefits, also called AOB. This is very common in property insurance lawsuits in Florida. And here’s how it works. A contractor or lawyer asks the owner to sign their property insurance policy. So any money collected from an insurance claim will go directly to the lawyer or contractor, not the policyholder. It’s common and it’s legal. But here is your twist.

In Florida, attorneys often sue insurance companies for far more than the actual repair costs. And because of this AOB, they can collect the extra money. In fact, since 2013, insurance companies have made $15 billion in payments in Florida, but less than 10% of that money has gone to policyholders. More than 70% went to lawyers. Additionally, the Sunshine State stands out nationally. More than 75%, three-quarters of all property insurance disputes nationwide originate in Florida.

WELLS: Construction companies are helped by lawyers and they drag everyone into litigation. I can promise you the owner has no idea what he’s getting into. They think, you know, this is the way to, you know, I’m going to save my house. I will have a healthy place to live. You know, I have mold in my house now. I have water stains on my ceilings.

CHAKRABARTI: It’s Mandy Wells again in Cape Coral. It took more than two years of legal battles with Marlin Construction Group and its insurance company. But Mandy will finally get her roof fixed in a few weeks. Meanwhile, his insurance premium has gone up. A lot.

WELLS: It went from $800 to $2,700 a year.

CHAKRABARTI: More than tripled since 2017. In all that time, Mandy’s coverage has gone down. And on top of that, her current insurance has sent her a non-renewal letter for the coming year, which means she has to find a new policy by next month.

WELLS: Before, I had maybe three or four companies to choose from. There was a company to choose from. That was it. But, you know, it’s like paying for gas. You just put your card in the machine and you just look away and you do it, you know? So…the sting is over.

CHAKRABARTI: But if insurance premiums keep going up the way they are, Mandy doesn’t know how long she can take this sting.

WELLS: If it’s going to triple every two years, I mean, we’re practically a single income household. Because I’m a stay-at-home mom with my special-needs son, I’m homeschooling. Consideration should be given to making some sort of change.

I don’t know how long we could even afford to stay in the house. I guess maybe I’m just fixing the house so someone else can move in. It’s just amazing. It’s amazing what is happening. It’s amazing that Tallahassee can’t do more for the owners because we are the ones. … We are losing. We are losing.

Transcript: How insurance brokers are affected by Florida’s property insurance crisis

MEGHNA CHAKRABARTI: Joe Carlucci and his brother Matt own Brightway Insurance, a brokerage firm in Jacksonville. And they opened in 2013 and weathered the ups and downs in the market. But they have never seen anything like it.

JOE CARLUCCI: We have never seen the catastrophic event as it is right now. I mean, we get hundreds of phone calls and emails about rate increases, non-renewals, companies going bankrupt. So it’s really just kind of a scramble to try to keep people covered.

CHAKRABARTI: I’ve talked about these doubling and tripling premiums, but the biggest problem, Joe says, is finding insurers who are even now ready to accept new clients.

CARLUCCI: We see a lot of strict guidelines like we won’t take a roof that’s over ten years old. It’s almost becoming the norm. And that was 20 before. It’s crazy. It’s really hard for people to replace a roof that’s ten years old and that’s perfectly fine.

CHAKRABARTI: And Joe told us that some companies don’t insure customers whose homes were built before 2010, which, as you can imagine, rules out a lot of homeowners. And as a result, Joe has few options for people, which makes his job very difficult.

CARLUCCI: Whereas three years ago we were giving people three or four options. We’re like, Hey, company A is $1,000 a year, company B is $1,500, but there’s a bit of a better company. You know, people want to see what the options are. And at the moment there are practically no options. It’s like, hey, here’s your policy, here’s your quote that you have to have at the end of the day.

CHAKRABARTI: So what that means is that a lot of people end up going to another place. Because brokers like Joe Carlucci can’t find them an affordable policy. And that place is Florida’s state-run insurance company. So meet Barry Gilway, CEO and President of Citizens Property Insurance Corporation, the state-run insurance option.

BARRY GILWAY: I would say very, very few additional companies are writing cases. And, you know, we’re the only place those insurers can go. We are, frankly, for these insurers, we are really the last resort, but we are becoming the only resort.

CHAKRABARTI: Well, for Joe Carlucci and other insurance brokers like him, however, for anyone who goes to Citizens Property Insurance, that means he loses on commission.

CARLUCCI: It doesn’t really benefit the agents. This does not really benefit the customers. This does not really benefit the insurance companies. So, you know, I mean, I guess people who get paid for claims. So I think, you know, roofers are definitely making a living right now.