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5 Trends to Watch in 2023: Florida Property Insurance

  1. State-run Insurer Could See Fewer Policies, But No Rate Relief Likely for Homeowners – Provisions in the massive overhaul of the state’s insurance law passed in late December are designed to help Citizens Property Insurance shed policies in the coming months. The policy count rose nearly 50% in 2022 to 1.4 million by year end. Citizens will be allowed to raise rates 12% next year and 13% in 2023 for primary residences, but the rates on non-primary residences are not subject to the Citizens glad path and can be increased by up to 50%. To help reduce its policy count, homeowners will have to accept a takeout offer from a private insurer if the rate is no more than 20% higher than their Citizens’ rate. Lawmakers hope a more stable market will draw more insurers to Florida who will want to offer coverage and take policies out of the state-run insurer.

  2. Claims Resolution Is Changing for Homeowners – Now homeowners have one year to file a claim and 18 months to reopen an existing one. Going forward, insurers have to respond faster – acknowledging a claim in seven days and inspecting damaged properties in 30 days so they can pay a loss in 60 days. To speed the process up, an initial damage assessment with photos and videos now can be done remotely. To cut back on claims disputes getting tied up in litigation, insurers can offer policies with a binding arbitration clause – in exchange for a policy premium cut.

  3. New Insurance Law “Reins in the Incentive to Litigate” – So said Gov. DeSantis as he signed in the new measure, referring to the elimination of a provision that required property insurance companies to pay the attorney fees for homeowners who successfully litigated a claim against their insurers. Going forward, each side will pay its own legal costs. Also banned is the assignment of benefits agreements to contractors, which both insurers and lawmakers believe led to a multitude of frivolous lawsuits in Florida.

  4. More Florida Homeowners Will Be Required to Carry Flood Insurance – Homeowners who are covered by Citizens will be required to buy flood insurance via the National Flood Insurance Program. Starting in 2024, the higher-valued homes will need to have flood coverage and all properties will need to comply by 2027, even if they’re not located in a flood plain. Lawmakers believe the extra coverage for flood damage could potentially decrease the number of claims filed with Citizens after a major storm, as well as reduce litigation to decide whether damage is caused by wind and flying debris or rising flood waters.

  5. More Reinsurance Coverage for Florida Insurers – The new insurance law taps $1 billion of the state’s unprecedented surplus to create the Florida Optional Reinsurance Assistance Program (FORA) as additional support to stabilize the property insurance market. This additional reinsurance assistance program follows the setup of the Reinsurance to Assist Policyholders (RAP) established during the special legislative session in May 2022. These extra layers of reinsurance would kick in below the Florida Hurricane Catastrophe Fund.

About the Authors

Fred E. Karlinsky, who is co-chair of Greenberg Traurig’s Insurance Regulatory and Transactions Practice Group, has nearly 30 years of experience representing insurance companies, reinsurers, and a wide array of related entities on regulatory, transactional, corporate, and governmental affairs matters. He is also a recognized authority on national insurance regulatory and compliance issues.

Timothy F. Stanfield, a shareholder with the Florida Government Law & Policy Practice, represents a wide number of private and public-sector clients before the Florida legislature, cabinet, and state agencies. Tim’s practice is largely focused on regulated industries, including insurance, land use, and alcoholic beverages, including addressing ‘tied house evil’ issues. He also represents local governments, trade associations, and clients participating in Florida’s procurement process.

Christian Brito is an associate who focuses his practice on national insurance regulatory and compliance matters. He represents a wide variety of entities in the insurance industry, including insurers, reinsurers, managing general agencies, producers, third-party administrators, and claims companies, with regulatory, transactional, corporate, and governmental affairs matters.