Many Floridians doubtlessly breathed a sigh of relief late last month after Idalia, the year’s first major hurricane to make landfall in the U.S., swept through the state, leaving extremely serious—but not quite apocalyptic—damage in its wake. Idalia hit the Gulf Coast as a “high end” Category 3 storm with sustained winds near 125 mph, but its rapid course spared the state from the severe outcome many had predicted.
Unfortunately, Idalia was the merely first in what will be a long season of hurricanes targeting the Florida coast this year, and there is obviously no way to predict exactly how severe the next one will be—or the one after that.
The well-documented exodus of big-name property insurers from Florida and other areas subject to the severe weather events exacerbated by human-induced climate change, has left many with limited recourse to recover their losses after a hurricane hits. To avoid the fate of insurers that have simply liquidated their assets through bankruptcy, these companies have made the logical business decision: The cost of insuring homes and businesses located in in areas most likely to sustain environmental damage is no longer commensurate with the risk.
Consequently, many Floridians have either been priced out of the insurance market or compelled to seek insurance through Florida Citizens Property Insurance Corp, a state-backed entity whose home insurance rolls jumped to a record 2 million policies in 2023.
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Now the state’s largest home insurer, covering 18% of all policies written in Florida, is Citizens. The company’s premiums are still affordable for most homeowners (though up to four times the national average), although the premiums’ costs have increased. Nonetheless the nonprofit Citizens had been viewed as the insurer of last resort in a state where one out of every 10 homeowners has no property insurance (the national average is one out of 20).
Citizens has now, however, become the “only” resort for many property owners unable to find insurance on the open market. As Daily Kos Community Contributor SemDem wrote in November, in the wake of the catastrophic Hurricane Ian:
I was fortunate this year in that my house barely survived [Hurricane Ian], but none of my neighbors were so lucky. They are terrified because they know the insurers they have been forced to use don’t have a lot of capital.
To be clear, we live inland near Orlando. However, understand that we subsidize those who choose to live on the coast. Under Jeb Bush, the legislature created the Florida Citizens Property Insurance Corporation, which provides low-cost property and hurricane insurance to anyone who can’t find an insurance company. It has over a million users, and this hurricane is expected to double that number.
The reason it is cheap is because if the company doesn’t have enough to pay the claims, all Floridians are levied a surcharge on our policies to help pay for their losses. Even if I don’t live in a danger zone or have any damage, I am forced to pay. Granted, there are people on it who need it who can’t get any other insurance, but there are many who use it because they have expensive homes and condominiums on the beach where the risk is too high for the private market.
For those Florida property owners who can obtain insurance to cover what are often huge losses from catastrophic hurricane events, it’s essential that they actually receive adequate payment for their damages, or they can risk losing everything just trying to rebuild their lives.
As reported by Abby Vesoulis for Mother Jones, insurers can and do “lowball” their estimates of such damage when determining what they’ll actually cover and what they won’t. The difference between those determinations, as Vesoulis’ reporting confirms, can be extreme, with insurers agreeing to pay as little as one-tenth of estimates submitted by independent contractors. Historically, in such cases Floridians had the option to sue their insurers for bad faith in arriving at inadequate reimbursement and payout figures.
But thanks to legislation signed by Gov. Ron DeSantis in December, many Florida homeowners no longer have that option.
As Vesoulis reports, even as Florida struggles to manage the increasing frequency and severity of hurricanes with the expectations of its sun-loving residents, politics continues to play a dominant role in determining the cost and availability of property insurance throughout the state.
The state’s Republican-dominated legislature framed the legislation as a way to shore up insurers’ viability. That “overhaul” of the state’s insurance code included a provision “eliminating one-way attorney fees for property insurance claims,” thus purportedly “realigning Florida’s market to best practices that will promote more market competition in the private insurance industry.”
As Vesoulis reports:
The sweeping revisions makes it more difficult for homeowners to sue their property insurance companies for acting in “bad faith” and removes the right of homeowners to recover attorney’s fees, even in lawsuits they ultimately win. Additionally, the adjustments to Florida’s insurance laws allow insurance companies to create new policies with mandatory binding arbitration agreements in exchange for a premium reduction, which will also thwart many homeowners’ option to take insurers to court.
“It’s now economically absurdly risky for a consumer to file a lawsuit, and it’s going to be incredibly hard to find a good lawyer,” says Amy Bach, the executive director of United Policyholders, a nonprofit that advocates for insurance holders.
Not coincidentally, DeSantis himself has been a huge beneficiary of insurance company largesse. Vesoulis observes:
Insurance industry employees donated at least $3.9 million to his gubernatorial race and to the “Friends of Ron DeSantis” political committee between January 2018 and December 2022. Additionally, a Heritage Insurance subsidiary and People’s Trust Insurance together donated a total of $125,000 to DeSantis’s 2023 inaugural celebration, according to a May 2023 report by the American Federation of Teachers union and three other advocacy groups.
The legislation also makes it more difficult for Florida residents to take advantage of the state-run Citizens insurance coverage. A provision in the legislation makes a homeowner ineligible for the Citizens plans if he or she receives an offer from a private insurer that is less than 20% more expensive than the premium offered by Citizens. As Vesoulis reports, it also requires Citizens policyholders to purchase their insurance on the private market between 2023 and 2027, based on the value of their home.
But perhaps the most significant change imposed by DeSantis’ new law is the repeal of a longstanding provision of Florida insurance law, which allowed insured homeowners to recover attorney’s fees in successful suits against property insurance companies. As Vesoulis notes, DeSantis justified the inclusion of this provision by pointing to the prevalence of “scams” in which, for example, roofing contractors provide high estimates in exchange for the homeowner signing over their right to sue. The contractor would repair the roof at a lower cost and then could then proceed against the insurance company, usually forcing a settlement. The legislation eliminated the right of the homeowner to transfer his or her claims, but (significantly), it also eliminated the right to attorneys’ fees for anyone who successfully sues for bad faith.
Vesoulis also notes that such dubious litigation was concentrated among a small number of insurers and that, according to insurance industry experts, its purported cost may not have been a significant factor at all in causing insurance companies to raise their rates.
What eliminating the threat of litigation does, however, is provide property insurers extra incentive to “lowball” their repair estimates. Vesoulis cites a Washington Post investigation that showed Florida insurers were doing exactly that in the wake of Hurricane Ian, sometimes reducing their own adjusters’ estimates as much as 97%. She also notes that while Florida passed legislation (in response to the Post’s investigation) requiring insurers to retain records of any changes made to adjusters’ claims, the requirement that they provide such regulatory compliance data to Florida’s insurance regulators is dependent upon the willingness of the regulators themselves to enforce the legislation. Vesoulis observes that such willingness is tempered by the fact that working in the state’s insurance department often serves as a rung on the ladder to a far more lucrative position as an insurance company lobbyist.
But perhaps most importantly, the continued capacity of insurance companies to offer home insurance protection in increasingly disaster-prone zones of Florida and other states is necessarily tied to the prevalence and severity of climate-related catastrophes themselves. As explained by Mother Jones’ Henry Carnell, the process of predicting and pricing property insurance historically relied on observing what disasters had occurred in the past to adequately prepare for future. But that model is no longer viable: predicting risk is now an uncertain exercise of guessing just how bad things can get.
And as Vesoulis writes, it’s going to take a lot more than conservative, industry-friendly measures like DeSantis’ limitations on consumer lawsuits against property insurance companies to address the catastrophic property losses caused by human-induced climate change:
Experts say improving the system would require taking climate change much more seriously; passing laws that force insurance companies to offer premium reductions for weather-proofing modifications homeowners make; setting up a reinsurance program run by the federal government that provides a backstop against mega-catastrophes, such as the reinsurance program the government created for terrorist events after the September 11, 2001 attacks; and enacting stricter accountability laws for insurers.
But none of those things will ever occur as long as Republicans are the ones making the decisions. Not in Florida, nor anywhere else.