Florida governor Ron DeSantis has called for a special session to consider legislation to improve the affordability of property insurance within the state.
In a proclamation, DeSantis has called for the special session to tackle a number of issues within the state’s insurance market. DeSantis is widely considered a frontrunner for the Republican nomination for US president in 2024.
The issues outlined by the DeSantis administration include thousands of ‘frivolous’ lawsuits, Florida accounting for 79% of the nation’s homeowners insurance lawsuits over claims filed while making up only 9% of the nation’s homeowners insurance claims, rising premiums from increased litigation, two years of net underwriting losses exceeding $2bn, the insolvency of four insurance companies writing homeowner coverage, and whether it is necessary for the state government to step in and help stabilise the market.
The special session is set to commence on 23 May, running until 27 May.
Assured Research supplied some feedback and comment on the governor’s proclamation.
It wrote: “The order doesn’t mention the possible downgrade of ‘a number of companies’ as dominant FL HO rater Demotech wrote in its letter to the Governor back in March. But we suspect the downward spiral of the publicly traded parent of FedNat Insurance Company following its April downgrade to ‘S’ (Substantial) from ‘A’ (Exceptional) grabbed the attention of all legislators in the state. In the week following its downgrade the company has become a penny-stock having issued a ‘going concern warning’ citing, among other business challenges, its ability to secure adequate reinsurance at the upcoming renewals.”
Assured Research reference a conference held in Florida in recent weeks. It said it was writing its note to convey the depth of market disarray in Florida, which it called the worst it had seen in the industry in decades, and that a real estate and political crisis is likely to hit at some near point.
Regarding the second point, Assured Research wrote: “If a substantial hurricane makes landfall in FL this season the problems could be worse, though we suppose the state could leverage its public finance mechanisms (e.g., a bond issuance or tapping the FHCF in creative ways) to make homeowner’s whole – it is an election year for the FL Governor, after all.”
The only way to ensure progress, said Assured Research, would be for reinsurers to pull capacity from the state.
It added: “The capacity shortfall, rating downgrades, and flood of business into Citizens that would follow could not be ignored or papered over with tweaks to the current property insurance statues fueling the runaway litigation (e.g., rules governing AOBs, the 1-way attorney fees, or the statute of limitations, among others).”
