At last week’s special session of the Legislature, state lawmakers adopted a menu of changes to Florida’s property insurance statutes that supporters believe are first steps toward rescuing Florida’s collapsing property insurance industry.
The session’s detractors — mostly lawmaker lawyers who side with Florida’s trial bar — say the legislation does little for Florida consumers and a lot to help what they term greedy insurers.
We’ll address the specific changes in a future edition. But the following are the closing remarks of Sen. Jeff Brandes, R-St. Petersburg, on the Senate floor during the special session.
Brandes, a lumber company owner, is regarded as one of the most knowledgeable legislators on the subject of property insurance and as the
Senate’s most independent voice and thinker. His comments provide a clear summary of the bill on which lawmakers were about to vote and ultimately pass:
By Florida Sen. Jeff Brandes | District 24
Thank you, Mr. President. Senators, This is not the first time the legislature has ever met in special session on property insurance it met in after Hurricane Andrew.
A very large storm that affected the southeast portion of Florida. It met after the 2005 and 2006 multiple storm events, which devastated many portions of Florida. And it’s meeting today. Not because of a storm, though. But because of a manmade disaster.
That manmade disaster is the litigation that is destroying the property insurance market of the state of Florida. That has caused 79% of the litigation in the property insurance industry in the country to happen in our backyards. That manmade disaster is what this bill seeks to begin to go after.
This bill is necessary, but not sufficient. More has to happen for us to move the needle on this legislation and on rates. We talked to Senator (Jim) Boyd (R-District 21) earlier and you heard and I believe companies will fail June 1. You will see multiple companies potentially lose their ratings because they cannot complete the reinsurance treaties June 1.
The RAP (Reinsurance to Assist Policyholders) program is necessary not sufficient. The litigation reforms here are necessary but not sufficient. When you’re ready to really get into the reform world and to do the deep dive that has to happen, get rid of one-way attorneys fees, get rid of assignment of benefits like North Carolina and Texas have done. You do those two things on the on the litigation side, the world will change overnight. Florida will become a competitive market again, and we will end the scourge of litigation and actually imagine go back to the natural the actual national average.
We should have Florida at less than 1,000 lawsuits a year, not 107,000 lawsuits like we had last year. Imagine what rates would be in that world versus the world that we’re in.
And finally do one more thing, move to actual cash value on roofs. We could talk about deductibles all day long. We can talk about changing the structure all day long. Treat adults like adults.
You know what, if you get into an accident, your 2010 Toyota Corolla today, you know what’s not gonna happen? Your car insurance company isn’t gonna buy your brand new car. They’re not gonna buy a 2022 Toyota Corolla, they’re gonna give you the cash for the 2010 Toyota Corolla.
But you know what, you have a hailstorm a roof on a roof that’s 20 years old. You know what we tell these property insurance companies you must provide a brand new 2022 state-of-the art roof. With all the bells and whistles and all the features, all upgraded to the current code.
Listen, the individuals that are homeowners are adults, they chose to purchase a home. I believe that they can work with their agent and read an insurance policy. I believe they can negotiate on their insurance policy and figure out whether they want replacement cost, actual cash value, higher deductible. These individuals are adults they have made adult decisions throughout their entire lives. They buy policies on all kinds of things. They can actually and we should trust them to buy a homeowner’s insurance policy that they want.
Let the market be the market. For the last 10 years I’ve tried to be the free market person as much as I can be, the libertarian voice of this chamber. There are pieces of this legislation that I really like and I think are libertarian.
There are pieces that I don’t think are the, 15-year provision we don’t find it any other piece of the country or any other state in the country. I think that is big government and I’ll call it that.
I understand that that’s not a senate provision or a governor’s provision also. And I’ll call that out too. But listen, anytime you have a special session, you open Pandora’s box and you don’t know what’s coming out.
And there are pieces of this legislation that I don’t think will ultimately be helpful to the market, like that provision, but you have no choice but to take to get the deal done. So that’s where we are today.
We potentially could be back here in three weeks. I don’t say that because I, flippantly or like I don’t have something to do this summer. I say that because this market could be in a very different position in three weeks if a number of these companies lose their ratings and can’t write insurance.
We have to figure out how to get people to invest in the Florida market. We have to figure out how to get rates down because ultimately, this isn’t about the companies, they’re adults. They’re big boys and girls in these companies. They can make their own decisions whether to invest or come into it or not.
But ultimately it is our friends and neighbors who are hurting. It is our friends and neighbors who are opening up their bills and falling out of their chairs because they don’t know where they’re going to get the money to pay for their home. And having done nothing, we would find ourselves in a few years with many of our friends and neighbors paying more on their property insurance than they are on their mortgage.
Real estate insurance and property insurance is the Achilles heel of the Florida real estate market. And Florida is a state built on growth. Some people will say because we’re the Freedom State. I will argue it’s probably a combination of the Freedom State, Sunshine, sunshine, air conditioning, mosquito control. But all of this to say there is more work that needs to be done.
We are leaving it in your hands. Many of us in this room won’t be back or at least not anytime soon. But we trust that you’ll get it done. We have to build, we have to bend the curve, first.
But we know what the best practices are. We can look around the country and see what other states are doing but like those other states, we have to do everything they did.
Let me close with this, you could you can add in, you can make a cake by just following the ingredients.
But if you follow six of the 10 ingredients and you add four that aren’t in there, you’re not going to get the same product. We can claim we follow Texas legislation and we did for six of the 10 ingredients but we don’t get the same results.
Friends, this is all about us helping our friends and neighbors.
This is the pocketbook issue of Florida today.
There will be others tomorrow.
But this is the one today. You should support this bill. Not because it’s perfect, it isn’t. Not because we’re going to see massive changes right away, we aren’t, but because it begins to move the needle. It focuses our minds around this conversation and I guarantee you, you know 10 times more about property insurance after this session than you did in the previous five. You should support this legislation.