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Florida Senate OKs insurance bail-out with no promises for policyholders

Orlando Sentinel logoOrlando Sentinel 12/13/2022 Jeffrey Schweers, Orlando Sentinel

TALLAHASSEE — The Florida Senate on Tuesday rammed through an industry-friendly insurance reform bill in just two days that supporters said would stabilize an ailing market but opponents argued would rob homeowners of their right to sue over claims disputes and broken contracts.

Orlando Democrat Linda Stewart voted with the majority of Republicans in the 24-13 vote, while Republicans Ileana Garcia of Miami and Erin Grall of Vero Beach voted no.

“I don’t love it. Plenty of people here don’t like it, but it’s a necessary bill,” Stewart said toward the end of a long day of debate and wrangling over amendments by Democrats that were shot down. “We have to stem the crisis.”

Garcia wondered where the protections are for the consumers. “I keep hearing of the consequences of lack of profitability for these companies, but what about the person faced with the inevitable sale of their home because they can’t afford it?” she asked.

The vote on the insurance bill, along with bills to provide property tax refunds for homes damaged by hurricanes and a one-year discount on tolls for heavy commuters, wraps up the Senate’s work for the special session. The House will take up nearly identical versions of those bills on Wednesday.

The full Senate vote came the same day that members of a House committee heard from people who have spent years in legal tangles with their insurance carriers over claims disputes.

Dressed in pink with her long hair done up in a braid, Vanessa Albaugh told legislators what life has been like since Hurricane Michael destroyed her family’s home on Mexico Beach in the Panhandle four years ago.

She was 12 when the storm struck, celebrated her 13th birthday with a maple-glazed doughnut and commuted four hours a day to a private Christian school in Alabama. Her family has lived in an RV camper while her parents battle their insurance company over their settlement amount.

“I and my siblings are without a home because a bunch of adults don’t want to honor their contract with my parents,” Albaugh told members of the House Commerce Committee.

“Mexico Beach is often called the Forgotten Coast,” Albaugh said. “I do feel forgotten. I feel forgotten by my insurance company. I feel forgotten by my neighbors, and now I feel forgotten by my state.”

Her father, Jon Albaugh, said he didn’t understand why lawmakers blamed litigation.

“It feels like you’re blaming me, the consumer,” Albaugh said, adding that he didn’t want to be in a legal battle, but the insurance company forced him to it, likening his ordeal to David and Goliath.

“This effectively gives Goliath a better helmet,” he said.

The committee approved the bill 12-7 along party lines.

The bills before the Legislature would do away with a law that requires insurance companies to pay the homeowner’s legal fees regardless of the outcome of a claims dispute and another that allows policyholders to assign benefits directly to their contractors.

The insurance industry, which pumped more than $15.5 million into the 2022 campaign cycle, according to Department of State records, has lobbied the Legislature to pass both things for years.

“You’re making it easier for them,” Sen. Jason Pizzo, D-North Miami Beach. “The one industry that is premised on risk, you’re taking it away from them.”

Republican sponsors of the bill say those measures, along with increasing the rates for the Citizens Property Insurance and giving the Office of Insurance Regulation more authority to investigate bad actors in the insurance industry, will help stabilize the market.

Democrats criticized the measure as being completely one-sided with no guarantees that consumers will see lower premiums any time soon. They also said the bill takes away the only leverage homeowners have against unscrupulous insurers that don’t honor their policies when it’s time to pay out. It also cuts the time in half they can file new claims from two years to one.

“This bill does nothing to help stabilize the market,” said Rep. Hillary Cassel, D-Dania Beach. “When you go home and your constituents say to you, ‘When you passed that bill, will I see money in my pocket?’ The answer is ‘No.’ When your constituents ask you, ‘Am I still protected from big insurance?’ the answer is ‘No.’

Democrats also criticized the lack of data to support the assertions that these measures to curb litigation would actually reduce rates, and that the bill has no guarantees that rates would be reduced or mandates to state regulators to crack down on bad actors in the insurance industry.

Republicans responded that the bill has $1.7 million for OIR to beef up its investigations, but Sen. Jason Pizzo, D-Miami, said that comes after years of staffing cuts at the state insurance regulatory agency.

Republicans said the bill builds on the previous legislation taken over the past few years to shore up the failing property insurance market, including a special session in May that pruned back lawyer fees. But even Republicans said those measures amounted to no more than nibbling around the edges.

The measures also pumped another $1 billion in taxpayer money for insurers to buy reinsurance, something they get to protect them from hurricanes and other catastrophes. That’s on top of the $2 billion that lawmaker put into reinsurance in May.

The special session was called at the urging of Gov. Ron DeSantis after Hurricane Ian devastated Southwest Florida, resulting in hundreds of thousands of claims since it made landfall Sept. 28.

It also comes after a seventh insurer went out of business in the last two years and Demotech, the state’s insurance rating agency of last resort, announced it would not rate any newcomers to Florida.

OIR Commissioner David Altmaier expressed confidence the reforms would work eventually.

“The provisions in this bill are going to go a long way in stabilizing the marketplace, and that, in the long run, will mitigate rate increases consumers have been seeing,” he said.

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