Here's what the legislative special session on insurance means for you

MIAMI - A significant shakeup to property insurance has those in the insurance industry feeling optimistic. One expert tells us "groundbreaking legislation" is in the works up in Tallahassee.  

Still, the current situation remains dire, and it is uncertain if and when you'll see savings passed along.

"The market is still in a very treacherous position," said Mark Friedlander, Director of Communications for the Insurance Information Institute.

He points out that this year seven insurance companies in Florida went insolvent or are being supervised by the state. The chief culprit, he says, is litigation.

"Most liberal one-way attorney provision in the country," added Friedlander. "One-way attorney fees have been the driver of this insurance crisis."

The proposed legislation eliminates the guarantee that insurance companies must pay 100% attorney fees if a policyholder wins a lawsuit against them.

"Six insurance companies this year were litigated out of business because of one-way attorney fees," continued Friedlander.

Closed doors provide fewer insurance options, increasing costs for the homeowner.

"A policy that should be $1,500 is now, five, six, seven-thousand dollars because insurers are losing so much money on that stuff," said Alex Ray with John Galt Insurance.

He helps pair consumers with insurance plans. He says the current market conditions make writing policies for his clients challenging.

"We work with about 50 different companies," added Ray.  "It used to be five-six years ago, we'd quote it, and through the system, you'd get about 30-40 options. Now, you get back three or four."

Less choice equals a higher price tag. His customers now scale back on coverage, mentioning premiums have risen 10-15% on average since May.

"Not as comprehensive of a policy as they would have had years ago because that's all they can afford," said Ray.

Friedlander believes litigation reform in Tallahassee can stabilize the market in the coming years.

"It's not going to change dynamics," said Friedlander. "Your insurance is likely going to go up next year. You're going to pay more for home insurance in 2023 than in 2022. Hopefully, beyond that, we'll begin to see some stability in the market.  Rates will moderate a bit, and we will see more choices."

Friedlander adds the legislature also looks to block the assignment of benefits on property insurance claims. It means one could not hand over control of a claim to a lawyer or contractor.  He believes this could stabilize what currently is, as he said, a "treacherous" marketplace.

Wait, there's more!  

People commonly refer to Citizens Insurance as the "insurance of last resort."  Well, now it's the insurer of only choice for many. If the proposed legislation in Tallahassee passes, people will no longer have a choice on whether or not to purchase flood insurance.

"Varies on the risk range from 400-500 hundred dollars a year to on the coast ten thousand dollars a year," said Ray.

News of mandatory flood insurance could be costly for those living near waterways.

"Houses on the intercoastal, brand new construction, your flood insurance is going to be 8-10 thousand dollars for the year," mentioned Ray.

Mark Friedlander from the Insurance Information Institute explains the potential new requirements, even if you don't live in a flood zone for Citizen policyholders.

"Must purchase flood insurance on par with the national flood insurance program, FEMA backed NIFP," continued Friedlander.

They can buy from the private market, according to the provisions.  

It's one of many changes state lawmakers are proposing for Citizens. The state ran insurance company is on pace to have 1.2 million policyholders by year's end.

"They've become the number one property insurer in Florida," said Friedlander.  "They want to go in the other direction because it's a very unhealthy state."

"Joe, if they deplete their reserves, Citizens depletes its reserves, all consumers in Florida will be paying to replenish those."

The proposed legislation intends to drive people off Citizens. At renewal time for current policyholders, Friedlander says they would need to seek quotes from the private market. The policyholder must switch to the other insurer if the premium is within 20% of the Citizens' estimated rate.

"So it does not grow at uncontrollable rates as it has been," said Friedlander.

Citizens welcomes these proposed changes. President and CEO Barry Gilway said in part, "It will attract more capital to the market and eventually improve the reinsurance picture."