FLORIDA — Insurance agent Michelle Mosher, owner of South Shore Insurance, can’t think of one time in the last two years when she delivered good news to one of her clients when it comes to their policy renewal.
Property insurance this year spiked to record levels. According to the Insurance Information Institute, the average homeowner is paying $6,000 in premiums.
Century 21 Realtor Lisa Weiss is among those who said their rates have doubled in the last one to two years.
“The insurance in my house has doubled in a year it's gone it's gone from $3,100 to $6,200," Weiss said.
For years, lawmakers blamed double-digit rate hikes on frivolous lawsuits. But a new law has stopped insurers from paying plaintiffs attorney's fees.
ABC Action News asked Florida's insurance commissioner, Michael Yaworsky, why there's an estimated two-year lag between legislative reform and a price break for residents. Yaworsky said insurers who reap savings from getting rid of a large portion of litigation costs must file a rate adjustment request with the state. The Office of Insurance Regulation then reviews the request, and either approves or denies the rate change.
“The law requires us not to approve rates that are inadequate, excessive, or unfairly discriminatory," Yaworsky told ABC Action News.
It's not a fast process, so homeowners won’t see any relief until after their next renewal. While policyholders wait, debate continues over whether concerns about litigation filed against insurers were overblown. An OIR report found in 2021, Florida made up 76% of the nation's lawsuits but less than 7% of its claims.
Senator Jason Pizzo and other Democratic lawmakers question that data. Sen. Pizzo voted for a 2021 law that required insurers to turn in detailed data on claim-related lawsuits. Data that's yet to be made public.
“We should be able to see these assumptions that are being made, these numbers that are being made,” he said.
OIR fined 13 insurers during the second quarter of 2023 for failing to file litigation and claims-related reports. Commissioner Yaworsky said his office has collected extensive lawsuit data from carriers and will release it soon.
State regulators and the insurance industry also blamed the lawsuits for bankrupting more than a dozen Florida property insurers since 2018. But in a 2022 state report, litigation wasn't listed as one of the factors that put insurers out of business.
Mismanagement, inappropriate transactions with affiliates or partners, natural disasters, and the cost of reinsurance were among the leading contributors to carrier bankruptcy.
Lawmakers in both parties agree the cost of reinsurance, which is insurance for insurance companies, is a major factor in the price of property coverage. OIR estimates the cost of reinsurance makes up as much as 50% of a policyholder’s premium.
Commissioner Yaworsky said reforms were put into place to reduce litigation, and the growing number of companies who plan to start selling property policies in the Sunshine State are expected to reduce reinsurance costs. Relief won't come soon enough for Florida homeowners.