The avalanche of lawsuits triggered by roof scams has plunged Florida into a property insurance crisis that has forced dozens of companies to close their doors, drop customers, raise fees or leave the state. This is a slow-motion crash that lawmakers have known for years but have failed to fix.
This chaos has made it difficult for people to protect their homes in a state that is frequently hit by high winds, heavy rains and hail and is vulnerable to climate change. Experts say things will only get worse if the state is hit by a major hurricane that has not happened since 2018.
Florida’s reputation for enduring natural disasters and living cheaply is in jeopardy.
“Florida is the most volatile prop insurance market, and it’s on the verge of collapse,” said Mark Friedlander, a spokesman for the Confederation of Insurance Information Agency.
Republican Gov. Ron Desantis last month acknowledged the state of emergency when he ordered the state legislature to come up with a solution before the start of the hurricane season on June 1st. The lawmakers will begin their special session on Monday.
The crisis is the result of a plague of roof scams fed by loopholes in state law and a string of court rulings that insurers and government officials say have allowed it to escalate.
This scam works: Contractors knock on doors to inspect homeowners’ roofs for storm damage. They claim that insurance can help replace the roof, and they urge homeowners to sign the rights to file their own claims. The contractors then file fraudulent damages, and when the insurance companies block, the contractors sue. Insurance companies usually settle disputes claiming many times more than the original claim. Most of that money goes to contractors’ lawyers in the form of a “contingency fee multiplier.” Some lawyers file hundreds of such cases each year.
The homeowner can get a free roof, but everyone pays for it with raised fees.
“Ultimately, every Floridian victim buys the roofs of their neighbors,” State Sen. Jeff Brandes, a Republican from St. Petersburg, criticized the state legislature for not acting fast.
In December, Andre Hall found himself in the middle of a scam after offering to inspect his roof at his home in St. John’s for damage. They found some and asked him to sign a document he did not understand – then he learned that his insurance company had to pay for the roofs. But Hall backs down, trying to prevent roofs from falling on his property, saying he would take a stand on policy.
“They are strong enough to use you. They are strengthening the insurance company,” Hall, 56, said.
Attempts to reform litigation procedures in the state legislature are putting the insurance industry against another politically powerful group of investigative lawyers. The Florida Justice Association, which represents prosecuting attorneys, says insurance companies’ claims about fraud and petty lawsuits are exaggerated and that companies are to blame for poor financial management. The panel alleges that regulators are exploiting the issue by eroding consumer rights to pursue legitimate claims and poor supervision of insurers.
Tyler Chase, an Orlando insurance lawyer and representative of the Florida Justice Association, said: “Many of these are being brought against them.
Legislators passed measures restricting projects in 2019 and 2021. But the net losses of the insurance sector have risen in each of the last five years. Will surpass $ 1 billion in 2021According to state officials.
Eight Insurance companies operating in Florida Have left the industry Since 2021, including three in the last three months. The rest have demanded a rate hike of 15 per cent to 96 per cent and have become highly selective about who they will compensate; Some people ask homeowners to change the roof of their house to get a new policy. Others abandon customers; A company recently announced that Cancels 56,000 policies.
The Insurance Information Agency estimates that average premiums in Florida could rise by as much as 40 percent this year.
Losses have made the Florida insurance industry even more turbulent, with “reinsurance” companies charging higher fees against sudden increases in claims. This makes insurers even more trembling.
“We have no doubt that there will be many failures if we see significant hurricane activity,” Friedlander said. “Every policyholder pays for failures.”
If an insurance company goes out of business, its claims will be taken over by government-run funds.
If those funds run dry, homeowners pay to fill them.
“When these companies go downhill, hundreds of people will lose their jobs,” said Joseph Petrelli, president of Demotech, a company that evaluates insurance companies. He warned earlier this year that his company would downgrade the financial stability ratings of many insurance companies doing business in Florida if the state legislature does not pass significant reforms.
Closures, rate hikes and abandoned policies have prompted homeowners to rush to the state-run insurance company, which will be a last resort. The insurer, Citizens Property Insurance Company, said it was signing More than 5,000 new policies per week And has doubled its rolls to more than 800,000 in two years. If the company is large, and the state is hit by a major hurricane, the risk of not being able to pay the claims is high.
“I blame the government for allowing this to happen,” said Adrian Almeida, whose home premium in Sebastian doubled last year from $ 2,400 to $ 4,900 without his personal insurer’s explanation.
Almada is 60 years old and enjoys Social Security disability benefits. After receiving the announcement of the fee increase, he joined the state-run insurer. Her premium rate was lower than it was before the increase. But the Citizens’ Property Insurance Company has demanded an 11 percent increase in premiums from the state government.
“It’s not fair to the people,” Almeida said.
Next week, the job of fixing things, again, will fall to state lawmakers.
State Sen., Chairman of the Banking and Insurance Committee. Introduced by Jim Boyd Collection of bills On Friday, there will be stricter rules for replacing roofs, restrictions on advertising by contractors and a ban on insurers refusing to close homes with roofs under the age of 15. The law would restrict attorneys’ fees and insurers would have to elaborate on their decisions on damages claims. Boyd proposed providing additional access to insurance companies for the state-run Hurricane Disaster Fund.
If the legislature does not implement the meaningful change, experts said, more companies will leave the business and property insurance will be harder and more expensive.