Governor to sign insurance reform, rates still expected to rise
TALLAHASSEE, Fla. (WCTV) - The Governor has said he will put pen to paper on a new law that aims to address skyrocketing homeowners insurance rates by reducing litigation, but part of the deal also allows Florida’s insurer of last resort to raise rates year over year at a higher pace than in the past.
Citizens Insurance offers coverage to Floridians who can’t find or afford private coverage. Roughly 5,000 Floridians are flocking to Citizens each week.
“That type of growth is unsustainable,” said Michael Peltier, a spokesperson for Citizens. That’s why lawmakers decided to allow the company to go beyond its current 10 percent annual rate increase cap in this year’s insurance reform bill.
The cap on Citizens’ annual rate increases will grow by one percent each year, until reaching a max of 15 percent in 2026.
“It’s going to allow us to close that gap in some cases with private carriers so that more customers can find their insurance in the private market,” said Peltier.
The legislation also includes numerous changes to the claims process, in an effort to reduce litigation costs, which insurance companies blame from driving exorbitant rate increases. When approved by the Governor, claimants will have to pay their own attorneys fees if they settle a claim for less than 20 percent above the insurer’s initial offer.
If the settlement is between 20 and 50 percent higher the insurer will have to cover a portion of the claimant’s attorneys fees. If it’s above 50 percent, the insurer will have to pay all attorneys fees. The bill also prohibits solicitation by contractors, who have often offered gifts to homeowners in exchange for the ability to inspect roofs and make claims with insurance companies.
But even with all of the litigation reform in the bill, rates are still expected to rise in the near future for both Citizens and private policy holders. Democratic State Senator Gary Farmer argues because efforts to guarantee rate reductions in the bill were rejected, the reforms only stand to benefit insurance companies.
“All it’s going to do is enable insurance companies to be more bold and aggressive in denying and underpaying claims,” said Farmer. But State Senator Jeff Brandes, who co-sponsored the legislation, believes in the long run, the reforms in the bill will prevent what otherwise result in a catastrophe.
“In absence of this bill passing you could see rates double within the next two to three years. Rate increases of 30 or 40 percent are going to become common over the next two years if we do nothing,” said Brandes.
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