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Fred E. Karlinsky, Esq.
(954) 768-8278
Christian Brito, Esq.
(954) 768-8279
Timothy F. Stanfield, Esq.
(850) 222-6891


On April 26, 2022, Governor Ron DeSantis signed a proclamation calling on the Florida Legislature to convene for a special session to address the State’s property insurance market crisis. The formal call from the Governor requested that the Legislature consider critical legislation which would focus on property insurance and reinsurance, changes to the Florida building code to improve affordability of property insurance, the Florida Office of Insurance Regulation, civil remedies, and appropriations.

State of the Florida Marketplace

It is no secret that Florida’s property insurance market is in crisis.  Florida homeowners are faced with rising premiums, declining coverage, and fewer carrier alternatives.  In some of the most extreme circumstances, some policyholders have found themselves scrambling to find coverage after receiving cancellation notices from their insurance carriers.  As a result, the State’s publicly-funded insurer of last resort, Citizens Property Insurance Corporation (“Citizens”), has grown to insure 883,333 policyholders as of May 2022—an increase of 273,195 policies since May of 2021.  These figures highlight a concerning trend. Citizens’ in-force policy count is quickly and consistently rising from its recent historic low of 419,475 in-force policies in October 2019 and is inching closer to the 1,000,000+ policy count figures that were prevalent from 2006 until January 2014.  This comes as no surprise to industry experts who have watched as Citizens increasingly becomes the only choice for many Florida consumers as a result of carriers leaving the market.

It would be easy to simply blame Florida’s historically challenging property insurance market on geographic and environmental causes, but the truth is that the crisis is largely man-made.

As was widely reported last session and was quoted in a letter from Commissioner David Altmaier to Chairman Blaise Ingoglia, Florida accounted for 76% of the nation’s homeowner’s insurance lawsuits[i]. However, Florida only accounts for 8% of the nation’s homeowner’s insurance claims according to a report from the Florida Office of Insurance Regulation (“FOIR”).

The litigious environment in Florida has led to an increasing number of insolvencies in the past several years.  Since 2014 eight property insurance companies have become insolvent and placed into liquidation by FOIR. In the last four months alone, four insurance companies writing homeowners coverage in Florida have gone insolvent, while numerous others have non-renewed policies or ceased writing new business in Florida, leaving tens of thousands of policyholders seeking coverage with limited options in the marketplace.  In the last 60 days, at least one property insurer, Federated National, has gone into regulatory supervision due to an unacceptable financial stability rating, requiring them to cancel at least 70,000 policies.  With the lack of capacity in the private market Citizens has become the only option for many Floridians.

During previous market downturns, Florida carriers were supported by capital infusions from investors that were willing to continue investing in Florida despite the hardships faced by carriers in the statewide marketplace. However, with the exception of Slide Insurance Company’s assumption of St. John’s Insurance Company’s book of business, replacement capacity is not available to most struggling carriers this time around.  Many view that as a signal that the current losses are too severe for the marketplace to handle on its own and new capital will wait on the sidelines until the Legislature takes further action.

2022 Special Session 2D

Despite not tackling the issues facing Florida’s property insurance marketplace in the 2022 regular legislative session, the Legislature met on May 23 through May 25, 2022 to address Florida’s property insurance crisis. Ultimately, legislators adopted an expansive property insurance reform package which was signed into law by Governor Ron DeSantis on May 26 2022.

SB 2D seeks to provide stability to the property insurance marketplace with a reinsurance program to provide much needed capacity, antifraud measures aimed at reducing frivolous roof claims, attorney’s fee reforms intended to reduce excess litigation, and provisions to assist consumers in maintain coverage.

SB 2D created the Reinsurance to Assist Policyholders (RAP) Program.  The RAP Program is a $2 billion reimbursement layer of reinsurance for hurricane losses directly below the mandatory layer of the Florida Hurricane Catastrophe Fund (FHCF). The FHCF mandatory retention is $8.5 billion for the 2022-2023 contract year.  Any insurer that is a participating insurer in the Florida Hurricane Catastrophe Fund (FHCF) on June 1, 2022 is considered eligible for the RAP Program.  Insurers found to be in “unsound financial condition” by the Insurance Commissioner are prohibited from participation.  On June 15, 2022 the Florida Office of Insurance Regulation (“FOIR”) found no insurers to be in “unsound financial condition”. The bill provides that Citizens Property Insurance Corporation and joint underwriting associations are ineligible to participate in the RAP Program.  

The RAP program will reimburse 90 percent of each insurer’s covered losses and 10 percent of their loss adjustment expenses up to each individual insurer’s limit of coverage for the two hurricanes causing the largest losses for that insurer during the contract year.  Insurers will not be charged a premium for RAP Program coverage but must make a filing with FOIR to reflect the savings to policyholders created by the RAP coverage.  Each insurer’s limit of the $2 billion in RAP coverage is their pro-rata market share among all insurers that participate in the RAP program. For example, an insurer with five percent of the risk reinsured by RAP coverage would have a limit of coverage of $100 million.

All eligible insurers must participate in the RAP program for one year. Insurers that do not have private reinsurance within the RAP layer of coverage for the 2022-2023 contract year must participate during the 2022-2023 contract year.  An eligible insurer that has any private reinsurance that duplicates RAP coverage for the 2022-2023 contract year must notify the State Board of Administration of the private reinsurance and must defer participation in the RAP program until the 2023-2024 contract year.

Solicitation of policyholders by unscrupulous contractors to file unnecessary roof claims has been identified as a major driver of losses.  SD 2D now prohibits contractors from making written or electronic communications that encourage or induce a consumer to contact a contractor or public adjuster for the purposes of making a property insurance claim for roof damage unless the solicitation provides specified notices providing information about insurance fraud.

Litigation cost, particularly one-way attorney’s fees paid by insurers to the plaintiff’s lawyers, has been a significant driver of loss costs in the Florida marketplace.  SB 2D continued the legislature’s work of addressing attorney’s fee reform that was started in 2019 with AOB reform and in 2021 with first party claims in SB 76.  SB 2D addressed bad faith claims by requiring that a policyholder must establish a property insurer breached the insurance contract in order to prevail in a bad faith claim. 

SB 2D continued reforms related to litigation brought by vendors that have entered into an Assignment of Benefits (“AOB”) agreement with a policyholder.  The bill prohibits an AOB vendor from recovering one-way attorney fees.  Further, the bill amends the definition of “assignment agreement” to include assignments executed by a party that inspects the property and specifies that public adjuster fees are not an assignment agreement.  The bill further clarifies the requirement to provide a Notice of Intent to Initiate Litigation before filing suit related to an Assignment of Benefit (AOB).  Finally, the bill requires that a valid AOB must specify that the assignee will hold harmless the assignor from all liabilities, including attorney fees.  It is believed by many in the industry that these reforms are an important step in reducing frivolous AOB litigation and the associated loss costs. 

SB 2D also creates a new standard for the award of an attorney fee multiplier in property insurance litigation. The bill creates a presumption that in property insurance cases, attorney fee awards based on the Lodestar methodology are sufficient and reasonable.  Attorney fee multipliers may now only be awarded under rare and exceptional circumstances with evidence that competent counsel could not be hired in a reasonable manner. 

Additionally, SB 2D provides insurers recourse when a claimant fails to file a Notice of Intent to Litigate prior to filing a lawsuit against the insurer.  The bill provides that courts may now award attorney fees to an insurer when a first-party claimant’s property insurance suit is dismissed without prejudice for failure to provide a Notice of Intent to Initiate Litigation.

SB 2D contains provisions that will assist policyholders in maintaining private market property insurance coverage.  Property insurers may now offer consumers an optional separate roof deductible of up to two percent of the Coverage A limit of the policy or 50 percent of the cost to replace the roof.  Policyholders that select the roof deductible must receive a premium credit or discount.  The roof deductible will not apply to a total loss, a loss caused by a hurricane, a loss resulting from the puncture a roof deck or a roof loss requiring the repair of less than 50 percent of the roof.

Further, consumers are receiving protections from strict roof underwriting guidelines.  SB 2D prohibits insurers from canceling or non-renewing policies solely due to the roof being 15 years old or older.  In addition, if consumers with roofs that are 15 years old or older obtain an inspection from an authorized provider showing their roof has at least 5 years of life an insurer cannot cancel or non-renew their policy due solely to the age of their roofs. 

New claims handling mandates related to insurer communication have been adopted in SB 2D.  The bill provides that for claims other than those subject to a hurricane deductible, an insurer must conduct any physical inspection within 45 days after its receipt of the proof of loss statements.  Insurers must now notify policyholders of their right to receive any detailed report created by an adjuster that estimates the amount of the loss.  Further, insurers must provide a reasonable explanation of the claim decision in relation to the insurance policy, facts, and law. If the insurer makes a claim payment that is less than the amount contained in an adjuster’s estimate of the loss, the insurer must explain the discrepancy in the amounts. 

In order to assist consumers in maintaining their home in an insurable condition, SB 2D appropriates $150 million to the My Safe Florida Home Program to provide hurricane mitigation inspections and matching grants for the performance of hurricane retrofitting on homestead single family homes located in the wind-borne debris region set forth in the Florida Building Code with a value of $500,000 or less. The My Safe Florida Home Program will also provide financial incentives for Florida residents to obtain free home inspections to identify mitigation measures.

Additionally, SB 2D creates the Property Insurer Stability Unit within the Office of Insurance Regulation (OIR) to aid in the detection and prevention of insurer insolvencies in the homeowners’ and condominium unit owners’ insurance market. The unit will:

  • Provide enhanced monitoring when the OIR identifies significant concerns about the condition of the insurer;
  • Conduct targeted market conduct exams when there is reason to believe an insurer may be in an unsound financial condition;
  • Closely monitor insurer financial data;
  • Conduct annual catastrophe stress tests of domestic insurers;
  • Update wind mitigation credits;
  • Review the causes of insolvency and business practices of insurers referred to the Division of Rehabilitation and Liquidation within the Department of Financial Services; and
  • Twice annually, provide a report on the status of the homeowner and condominium unit owner insurance market.

In addition, in the event of an insolvency involving a domestic property insurer, the Department of Financial Services must:

  • Begin an analysis of the history and causes of the insolvency no later than the initiation of delinquency proceedings against the insurer;
  • Review the OIR’s regulatory oversight of the insurer;
  • Submit an initial report analyzing the history and causes of the insolvency no later than two months after the initiation of the delinquency proceeding;
  • Provide a special report within 10 days of identifying any condition or practice that may lead to insolvency in the property insurance marketplace; and
  • Submit a final report analyzing the history and causes of the insolvency and the OIR’s regulatory oversight within 30 days of the conclusion of the insolvency proceeding.

SB 4D contains provisions to address the cost of roof claims and roof replacement.  Prior to the adoption of this bill, the Florida Building Code required that not more than 25 percent of the total roof area of any existing building or structure could be repaired, replaced, or recovered in any 12-month period unless the entire existing roofing system was replaced to conform to most recent requirements of the building code.  This requirement led to the unnecessary full replacement of roofs in many instances. The bill creates an exception to this provision.  SB 4D requires that when 25 percent or more of a roofing system or roof section is being repaired, replaced, or recovered, only the portion of the roofing system or roof section undergoing such work must be constructed in accordance with the current Florida Building Code in effect at that time.  It is believed that this provision will allow for more roof repairs and fewer full roof replacements, which should ultimately reduce insurer loss cost related to roofing claims. 

What Comes Next

 The adoption of SB 2D and SB 4D are steps in the right direction. However, there is much work still ahead. Continued attorney’s fee and tort reform is critical to reinvigorating the Florida property insurance marketplace and improving the overall business environment.  Both Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund are effective and necessary facilities to support the Florida marketplace.  However, the competitive nature of Citizens’ rates belies its purpose as a market of last resort and the current reinsurance market has highlighted the need for more flexibility at the Cat Fund.  Policyholders will hopefully see the effects of the laws after it goes through the insurance policy life cycle, which takes about 18 months, but more turbulence should be expected in the interim.


[i] Commissioner David Altmaier, Office of Insurance Regulation (2021).