TALLAHASSEE, Fla. (WFLA) — The proposed overhaul for Florida’s property insurance market passed both chambers of the state legislature during its special session. Now, SB 2A is on its way to Gov. Ron DeSantis to sign.
According to the legislation’s text, the bill creates the Florida Optional Reinsurance Assistance Program, administered by the State Board of Administration, to allow insurers to purchase coverage for reimbursement contracts, assigns limits to insurer selections, and requires certain qualifications for companies in the state. The FORA section also sets premium levels and puts limits on them, as well as adding rules for paying claims.
Additionally, 2A includes reimbursement provisions regarding insolvency for insurance companies. It says if an unsound insurer is reimbursed via a FORA contract, the State Board of Administration will be able to apply the insurer’s reimbursement contract to cover policies and treat Citizens Property Insurance, or the authorized insurer, as if they were the unsound company for the remainder of the contract term.
On top of the restrictions and new rules, 2A creates penalties for violating the new provisions, including allowing the SBA to “take any action necessary” to ensure the rules are enforced under the new guidelines. SBA will also be able to adopt rules for implementation.
In the event of a covered event, the SBA will have to submit written notice to the governor’s office within 60 days if it finds that FORA funds would be needed to cover insured losses. Additionally, transfers authorized under this provision cannot exceed $1 billion, when drawing funds from the state’s General Revenue Fund. $2 million was also set aside for the purposes of implementation and administration of the FORA rules, to be used by the Chief Financial Officer.
FORA will be set to expire on July 1, 2026, if no funds have been transferred under the new provisions by June 30, 2026. However, if funds are transferred to FORA before June 30, 2026, FORA would instead expire on July 1, 2030, and unencumbered funds would be sent back to the General Revenue Fund.
The law also sets guidelines for property insurance transactions and companies, and examinations of those companies following events such as a hurricane. IF actions are taken against an insurer, there are now remedial actions allowed for civil court to request damages.
There are also new rules for types of damage, and what types of damage in certain parts of Florida, are eligible for both compensation and coverage, depending on need. For commercial residential policies, this includes wind-only damage and “multiperil coverage” from authorized insurers.
Bill 2A includes multiple other provisions involving how insurers operate in Florida, and options for residents and the state to work during damage recovery. It also provides purchase tiers for the Florida Hurricane Catastrophe Fund, allows insurance providers to receive free Reinsurance to Assist Policyholders, and maintains the RAP for policyholders that were unable to participate in the 2022-2023 year.
Separately, policyholders now have less time to file a claim for insurance damage, shrinking the time from two years to one year for a new or reopened claim, and going from three years to 18 months for a supplemental claim, according to legislative analysis by the state. The bill also adds “prompt pay laws” and additional regulation options to Florida’s Office of Insurance Regulation, as well as requiring a quicker response to claims by companies.
One-way attorney fees are also now awarded under Property Insurance Contracts, and civil judgement offers are now allowed in joint settlement offers. Bad faith litigation on insurance claims will not be allowed until after an insured Floridian establishes “through adverse adjudication by a court” that their insurer breached their contract, and a judgment has been rendered against the insurer.
In terms of appropriations for the bill, legislative analysis lists the following costs:
- For 2022-2023 fiscal year, appropriates $1,757,982 in recurring funds from the Insurance Regulatory Trust Fund to the OIR with an associated salary rate of $844,464.
- Allocates the funds as follows: $1,356,615 for Salaries and Benefits, $400,000 for Other Personal Services Category, and $1,367 to DMS. Funds also will be used for recruitment and retention of personnel within the OIR.
- Authorizes cumulative transfers from general revenue not to exceed $1 billion from the General Revenue Fund to the Florida Optional Reinsurance Assistance (FORA) Program for the 2022-23 contract term beginning June 1, 2023.
- Authorizes up to $6 million in transfers from general revenue to the State Board of Administration to administer the FORA program.
While the bill that passed makes changes to the insurance market, it does not have any provisions to directly impact consumer premiums.
“This Special Session was all about relief,” Florida House Speaker Paul Renner (R-Palm Coast) said after the bill’s passage. “I am proud of the work the House did striking a difficult but careful balance to stabilize Florida’s property insurance market and the growth of Citizens Insurance.”
He said the legislation will create more competition in the insurance market for Florida and provide “significant measures to reduce frivolous lawsuits, all while holding insurers accountable to consumers.”
While the House Speaker and other Republican lawmakers released statements praising the reform legislation as a big step, Florida Democrats released their own, criticizing how the legislation does not guarantee relief to consumers when it comes to rising insurance prices.
“This is our second time convening a special session to address the property insurance crisis in our state. People need relief and legislative leadership is continuing to prioritize the insurance industry over everyday Floridians,” Rep. Michele Rayner-Goolsby (D-St. Petersburg) said in a statement. “We know this bill will not provide relief. Leader Driskell and the Democratic Caucus filed a bill and offered amendments to guarantee real relief and none were accepted.”
Rayner-Goolsby said the rates will continue to increase.