The road to reform
The compromise reached between House and Senate leaders just prior to this week’s special session seemed doubtful at times and was certainly a product of pressure put on by industry leaders and other stakeholders, an increasingly attentive news media, consumers, individual lawmakers, and the Governor, who realized the property insurance dilemma is impacting Florida’s golden goose of real estate and the state economy itself.
Joe Petrelli
Thought leader Joe Petrelli, President of Demotech, the ratings firm that provides financial analysis for many of Florida’s 52 domestic insurance carriers set the stage in March. He sent this letter to the Governor and legislative leaders calling for urgent reforms on rampant litigation and fraud and warning that a number of companies face ratings downgrades in the coming weeks and months without it. Those downgrades came to pass (with more still possible). In a recent Artemis article, Petrelli called the 2019 AOB reform a “dismal failure” and rated the 2021 Litigation & Solicitation reform (SB 76) a “D-“.
“With an open claim litigation rate on homeowners’ insurance resulting in 79% of the nation’s homeowners’ insurance lawsuits yet only 9% of the nation’s open claims, it is unequivocally clear that Florida has an unresolved litigation problem that prior reforms have failed to mitigate,” the article quotes Petrelli, adding it “has adversely influenced the operating results of insurers while exacerbating the cost of the reinsurance programs critical to carriers focused on a catastrophe prone jurisdiction.” His advice to legislators this week: “Meaningful legislative reform must move Florida toward being 9%, not 79%, of the country’s litigated HO claims.”
Senator Jeff Brandes
Matt Walsh, publisher of the Business Observer in Sarasota, put it this way in his opinion piece Biggest economic crisis in Florida history looms: “Florida’s $3.6 trillion property insurance market is in collapse. Whether Florida’s economy will be rescued will be a political duel: Gov. Ron DeSantis vs. Speaker Chris Sprowls and the state’s plaintiff attorneys.” Walsh also published an opinion piece by another long-time thought leader, Senator Jeff Brandes (R-Pinellas) who is serving his final term in the Senate. The title, State senator on insurance debacle: We need political courage says it all.
Florida’s market dilemma continues to attract national attention – and concern – through news articles outside the state. They include Property insurance market in ‘very precarious position’ as hurricane season approaches and Florida’s ‘artificial’ insurance structure is ‘untenable’ based on recent ALIRT Insurance Research, and this piece in the Washington Post. Then there’s this very comprehensive look at the historical failures in the Florida market, Florida’s Failing Insurers – Who’s Next?, by R-Street. As the saying goes, those who don’t learn from history are doomed to repeat it. (You can find all the recent news clips of interest on our Litigation & Solicitation reform webpage which includes our ongoing TV Coverage & Videos of Florida’s Property Insurance Dilemma.)
Jeny Pighetti
LMA Newsletter readers certainly answered the call to engage with their local elected representatives to make their voice heard and to share their perspective among colleagues and customers. One of those was Jeny Pighetti, Senior Forms and Compliance Manager for Cypress Property & Casualty Insurance Company. She penned this piece on this week’s special session for the Association of Insurance Compliance Professionals. As she quoted yours truly, “The special session is our best opportunity to change laws that are anti-consumer and are driving insurance premiums to levels we have never seen in our state. Property insurance is tied to our state’s economy and as the insurance market continues to fail, the eventual collapse will affect every Floridian young and old. We need those that we have elected to lead and act in our best interests.” Thank you to all our LMA Newsletter readers for reading, thinking, and acting!
LMA Newsletter of 5-23-22
