Florida Banking November 2023

CHAIR’S MESSAGE

FLORIDA’S PROPERTY INSURANCE CRISIS: THE FBA IS ASKING FOR YOUR HELP

BY JOSE CUETO, FBA CHAIR

F or many years, the issue of unavailability in Florida’s property insurance market was largely one that was limited to Florida’s coastal areas. However, more recently, the issue has expanded into a full-blown insurance crisis for not only Florida’s coast but for our state and the country as a whole. As FBA Chair, I have spoken to many of you who are concerned about the double digits raises in premiums for lesser coverage. Bankers tell me that their clients are now asking for the bank to issue forced place insurance because it’s the only somewhat affordable option. I’ve heard stories of homeowners who have gone bare in hopes of saving enough in their own coffers to try and cover the next catastrophic event. As bankers, our property insurance needs are simple. We desire property insurance to be affordable and available. At the current moment, Florida’s market is neither. Florida has been hit routinely by catastrophic storms, discouraged reinsurance investments in our market, and seen domestic insurers go bankrupt or major carriers pull out of our state. And on top of everything, statistics clearly show that Florida has, by far, the most challenging legal environment within which to settle insurance claims. The Florida Legislature took some important steps last session to pass major reforms that are expected to signal to the insurance and reinsurance markets that Florida has the political will to make the changes necessary to begin addressing the problem. During 2022, legislators had two special sessions to address the property insurance crisis. In May 2022, the legislature passed SB 2A and 2D which focused on funding hurricane home hardening grants, reforming contractor solicitations, allowing insurers to offer separate roof deductibles and requirements to mandate that insurers move faster in their processing of hurricane claims. The legislature also convened another Special Session in December 2022 to put in place additional and historical reform. During that special session, legislators passed SB 2A repealing the one-way attorney fee provisions

for property insurance claims, leaving both parties responsible for paying their attorney fees; prohibited the assignment (in whole or in part) of any post-loss insurance benefits for policies issued after January 1, 2023; established the Florida Optional Reinsurance Assistance Program which allows Florida insurers to purchase reinsurance at near/reasonable market rates; limited policyholders from entering Citizen’s Insurance Company, including a requirement to remove policies where renewals or take out offers are within 20 percent of the Citizen’s premium and established additional regulatory provisions to make certain that insurers resolve claims and pay those claims faster. In addition to FBA supporting these historic reforms, it gives me great pleasure to report that the FBA hears your concerns and is seeking to create a forum to formally discuss them. Last month, under the direction of our CEO and with the support of FBA member Diane P. McNeal of Canadian Imperial Bank of Commerce Private Wealth, the FBA initiated an FBA Property Insurance and Condominium Task Force. While we are not directly in the business arena of insurance, the FBA hopes to better understand the challenges we face with the current market. The task force will be surveying Florida’s banks to come up with those using the best practices and creative solutions to offer our clients. We plan to liaise with regulatory agencies and policy makers to offer up constructive criticism of where there is a lack of guidance regarding insurance compliance issues. And while we do not expect to discover a silver bullet solution, what we do hope to achieve is to communicate our concerns to those who can impact this crisis and provide them with our unique perspective as major providers of the capital that moves our economy. As your chair, I’m asking for your help. When you receive the survey from the FBA’s task force, please respond in a timely manner. We need to hear how each bank in each part of the state is addressing the problem. I thank you in advance for your time in helping us address this crisis.

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