Florida’s Gov. DeSantis is Hopeful to Stabilize Failing Property Insurance Market

Recently, Gov. Ron DeSantis sounded hopeful that a special legislative session that he called will help stabilize Florida’s failing property insurance market that continues to flounder as another insurance company is getting ready to cancel over 68,000 policies.

“The good news is, on property insurance, I think we’re going to get really, really significant reforms,” DeSantis said during an appearance at Seminole State College of Florida.

The comments from DeSantis came after the state Office of Insurance Regulation approved an agreement that will let FedNat Insurance Co., Maison Insurance Co. and Monarch National Insurance Co. cancel 68,200 policies, giving policyholders 45 days’ notice. These three insurance companies are part of the same holding company.

According to the agreement, which is known as a consent order, the early cancellation of policies is an “extraordinary statutory remedy reserved to address insurers which are or may be in hazardous financial condition without the cancellation of some or all of its policies.”

“After review of the information filed in support of this request, and considering all of the attendant facts and circumstances, the office finds that approval of the early cancellation plan filed by the companies is necessary to protect the best interests of its policyholders and the public,” continued the agreement.

While DeSantis did not go into details of changes he expects to be passed during the special session, he did indicate that he expects lawmakers to work on curbing the number of insurance related lawsuits in the state which insurers have long claimed lead to financial losses that are unsustainable. 

Other issues that may be addressed are looking at ways to make reinsurance more affordable for insurance companies. Reinsurance is the insurance that insurance companies buy to make sure they can cover claims after a massive storm or other natural disaster. The cost of reinsurance has a major impact on the cost of homeowners insurance in the state. 

Since February, three Florida homeowner insurers have gone under. Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co. have all been declared insolvent and are now in receivership.

The Office of Insurance Regulation will hold hearings this month to consider rate increases by First Floridian Auto and Home Insurance Co., Kin Interinsurance Network and Florida Farm Bureau General Insurance Co. and Florida Farm Bureau Casualty Insurance Co. All the requests are asking for rate increases that exceed 20 percent, in one case, an insurer is asking for a 49 percent increase in rates.

As private market insurers go under or stop writing policies in the state, many homeowners have no option but to purchase a policy through Citizens Property Insurance Corp which is the state backed insurer of last resort. 

As more customers have been forced to move, Citizens has seen their policy count grow from 589,000 policies in force to 851,000 policies and most experts expect it to cross the 1 million policy threshold by the end of the year.
Homeowners who are part of the 69,000 customers who will see their policies cancelled by FedNat will receive a letter in the mail giving them 45 days to find a new policy. Experts recommend shopping for a new policy as soon as they are notified as in most cases homeowners will need a four-point inspection and a wind mitigation inspection before they can get a new policy which can take a while, particularly as inspectors get backed up by the thousands of homeowners who will be shopping for new coverage.