HOUSE OF REPRESENTATIVES STAFF FINAL BILL ANALYSIS
BILL #: CS/HB 1D Property Insurance
SPONSOR(S): Appropriations Committee, Trumbull
TIED BILLS: IDEN./SIM. BILLS: CS/SB 2-D
FINAL HOUSE FLOOR ACTION: 95 Y’s 14 N’s GOVERNOR’S ACTION: Approved
SUMMARY ANALYSIS
CS/HB 1D passed the House on May 25, 2022, as CS/SB 2-D.
The bill makes the following changes regarding property insurance:
 Reinsurance to Assist Policyholders (RAP) Program – Creates the RAP Program within the State Board of
Administration to authorize $2 billion of reinsurance coverage to qualified property insurers at no cost to the insurers;
the participating insurers must reduce rates to policyholders as a result of this reinsurance coverage.
 My Safe Florida Home (MSFH) – Appropriates $150 million to the MSFH Program to provide hurricane mitigation
inspections and grants for retrofitting single-family homes that meet certain criteria.
 Roof Damage Coverage and Claims – Prohibits an insurer from refusing to issue policies for homes with roofs less
than 15 years old solely because of the roof’s age; if a roof is at least 15 years old, insurers must allow homeowners
to have a roof inspection before requiring the replacement of a roof in order to receive a policy; prohibits an insurer
from refusing to issue or renew a homeowner’s insurance policy solely based on roof age if an inspection shows 5
years or more of useful life left on the roof; allows an insurer to offer an optional roof deductible if it meets certain
criteria; prohibits contractors from making communications that encourage consumer to contact a contractor or public
adjuster to make a property insurance claim for roof damage unless the communication provides certain notices.
 Bad Faith – Establishes that a policyholder may not prevail in a property insurance bad faith suit unless he or she
establishes that the property insurer breached the insurance contract.
 Insurer Annual Statement – Directs the Office of Insurance Regulation (OIR) to make statewide data detailing the
number of policies, amount of premium, number of cancellations, and other data for each property insurer publicly
available on a statewide basis; establishes that such information is not a trade secret.
 Claims Investigation – Requires property insurers to notify the policyholder that an insurer must send a copy of any
detailed estimate of the amount of loss generated by an ins urer’s adjuster within 7 days of a request by the insured;
requires insurers to provide a reasonable written explanation to the policyholders of the basis for the payment, denial,
or partial denial of a claim, if the payment is less than the detailed estimate; if an insurer wants to inspect non-
hurricane damage in person, the insurer must send an adjuster within 45 day of the claim.
 Assignment Agreements (AOB) – Revises the definition of AOB to include AOBs executed by a party that inspects
property; clarifies that public adjuster fees are not an AOB; also clarifies requirements regarding the notice of intent to
litigate that must be served before filing a lawsuit regarding a claim where the policyholder has signed an AOB.
 Attorney Fees – Limits the application of contingency risk multipliers in property insurance litigation by only allowing
them to be awarded in rare and exceptional circumstances; eliminates attorney fee awards in litigation involving a
property insurance claim where the policyholder signed an AOB; allows an insurer to recover attorney fees and costs
associated with securing the dismissal of a lawsuit when a first -party claimant’s lawsuit is dismissed for failure to
provide a notice of intent to litigate; eliminates the transfer or assignment of the right to receive attorney fees in
property insurance litigation.
 Property Insurance Stability Unit (Unit) – Creates the Unit within OIR to increase regulatory oversight for property
insurers; requires an investigation when consumer complaints suggest a trend in the marketplace rather than an
isolated incident by an insurer; requires referrals to the Unit if certain provisions of the Insurance Code are triggered.
 Property Insurer Insolvency – Requires the Department of Financial Services (DFS) to begin an analysis of a
property insurer’s insolvency upon the appointment of DFS as the receiver and prepare an initial report, followed by
annual reports, and a final report at the end of the proceedings.
The bill has no impact on local government revenues or expenditures or state revenues. It has an impact on state
expenditures related to the RAP and MSFH Programs. It will likely have a positive direct economic impact on the private
sector.
The bill was approved by the Governor on May 26, 2022, and became effective on that date.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives .
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 I. SUBSTANTIVE INFORMATION
A. EFFECT OF CHANGES:
Florida Residential Property Insurance Market
From 2017 through the second quarter of 2021, Florida domestic property insurers (domestic insurers)
had cumulative net underwriting losses 1 that resulted in a cumulative net income loss in excess of $1
billion.2 Since at least early 2021, the Florida Office of Insurance Regulation (OIR) has reported an
increasing trend in domestic insurers filing for rate increases. In 2020, domestic insurers submitted 105
rate filings in which they requested rate increases of 10 percent or more. 3 OIR approved 55 of those
filings. In contrast, OIR approved only six rate increases in excess of 10 percent in 2016. 4 Additionally,
between December 2019 and May 2022, OIR has held 16 rate hearings for domestic insurers seeking
rate increases in excess of 15 percent.5
The Florida Insurance Commissioner has attributed the net underwriting losses, combined ratios 6, and
resulting rate increases to several trends and behaviors present in Florida’s domestic property
insurance market:
 Claims litigation;
 Claims solicitation; and
 Adverse loss reserve development.7
OIR conducted a 2020 data call of domestic insurers, which showed that the cost of non-weather water
claims with litigation is nearly double that of claims that are closed without litigation. 8 The increased
cost of claims involving litigation is driving adverse loss reserve development that leads to an increased
number of rate filings asking for significant rate increases.9
The impact of the troubled property insurance market is being felt across the state. Seven property and
casualty insurance companies are in liquidation because they were unable to maintain the statutorily-
required policyholder surplus of at least $15 million.10 OIR approved the early cancellation of policies
and restructuring plans for five property and casualty insurers. 11 Several insurers, including United
1 Underwriting losses are losses experienced by insurance companies over a particular period of time or related to a particular activity
because they had to pay more in claims than they expected to pay. Cambridge Dictionary,
https://dictionary.cambridge.org/us/dictionary/english/underwriting-loss (last visited May 18, 2022).
2 David Altmaier, Florida Office of Insurance Regulation (OIR), Overview of the Florida Insurance Market, pg. 6 (Sept. 22, 2021 ).
https://www.flsenate.gov/Committees/Show/BI/MeetingPacket/5252/9419_MeetingPacket_5252_2.pdf (last visited May 18, 2022).
3 Florida Senate, Meeting of the Committee on Banking and Insurance (Jan. 12, 2021) (statement of David Altmaier, Commissioner,
OIR). https://www.flsenate.gov/Committees/Show/BI/MeetingPacket/4966/8842_MeetingPacket_4966.pdf.
4 Id.
5 S. 627.0629(6), F.S., establishes that no rate filing for residential property insurance that is based on data from a computer model
may exceed a 15 percent increase unless OIR holds a public hearing.
6 The combined ratio is used an indicator of underwriting profit or loss. A combined ratio below 100 percent is indic ative of an
underwriting profit. The combined ratio is the sum two ratios. One ratio calculated by dividing incurred losses plus loss adjustment
expenses by earned premiums (the calendar year loss ratio) and another ratio calculated by dividing all other expenses by either written
or earned premiums. IRMI, Comb ined Ratio, https://www.irmi.com/term/insurance-definitions/combined-ratio (last visited May 18, 2022).
7 Loss reserve development is the difference between the original loss as initially estimated or reserved by an insurer and its
subsequent evaluation later or at the time of final disposal. Loss development occurs because of inflation and time lags bet ween claims
occurrence and claims reporting. IRMI, Loss Development, https://www.irmi.com/term/insurance-definitions/loss-development (last
visited May 18, 2022). When adverse loss reserve development occurs, claims cost more than their reserves were originally estimated
to be by insurers.
8 Florida Senate, supra, note 3.
9 Id.
10 DFS is the court-appointed receiver for American Capital Assurance Corporation, Avatar Property and Casualty Insuran ce Company,
Florida Specialty Insurance Company, Gulfstream Property and Casualty Insurance Company, Sawgrass Mutual Insurance Company,
St. Johns Insurance Company, and Sunshine State Insurance Company. See Florida Department of Financial Services, Division of
Rehabilitation & Liquidation, Companies in Receivership, Companies in Receivership (myfloridacfo.com), (last visited May 19, 2022).
11 Capitol Preferred Insurance Company cancelled 27,500 policies and merged with Southern Fidelity Insurance Company, which
subsequently cancelled 2,300 policies and did not renew 19,000 policies; FedNat Insurance Company will cancel 68,000 policies ;
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 Property and Casualty, have announced that they no longer write new business in Florida. 12 People’s
Trust Insurance is not accepting new business from eight south and central Florida counties. 13 And
Progressive Insurance will not renew 56,000 policies for homes with shingle roofs that are 16 years or
older.14
On April 15, 2022, rating agency Demotech downgraded FedNat Insurance Company from an “A
exceptional” to “S Substantial.” An “A” rating is required to write policies for homeowners that rely on
federally-backed mortgages from Fannie Mae or Freddie Mac. The downgrade prompted FedNat to
cancel 68,000 policies and restructure under a plan approved by OIR. 15
As the voluntary market struggles, an increasing number of homeowners are obtaining policies through
Citizens Property Insurance Corporation (Citizens) 16 and in the unregulated surplus lines market.17
Citizens is a not-for-profit, tax-exempt government entity that provides property insurance to those who
are unable to find affordable coverage in the private market. Applicants are eligible for coverage if no
admitted private carrier will write them a policy for a premium that is less than 20 percent greater than
what Citizens would offer for comparable coverage.18 Citizens will cover homes if the cost of replacing
the dwelling, or the dwelling and its’ contents, is no more than $700,000. In Miami-Dade and Monroe
counties, Citizens may insure structures valued up to $1 million so long as OIR continues to determine
that these counties are not competitive.19
Homeowners who cannot obtain coverage in the voluntary market or from Citizens may find coverage
in the surplus lines market, which is not regulated. Policies written in the surplus lines market do not
have the backing of a guaranty fund that covers claims if an insurer becomes insolvent. 20
The Florida Insurance Commissioner attributed the financial losses to several trends and behaviors
present in Florida’s property insurance market, including but not limited to, claims solicitations and
litigation.21 Claims solicitations allegations include solicitations related to roofs and the fraudulent use of
the 25 percent rule.22 It is reported that in such cases, roofers and roofing contractors go door to door
asking homeowners if they can inspect their roof for damage. The contractors then advise homeowners
their property insurance may replace the entire roof if the homeowners file a claim.
Universal Insurance Company of America cancelled 13,294 policies; and Weston Insurance Company cancelled 1,500 wind-only policies.
See Florida Office of Insurance Regulation, Recent Company Actions, Recent Company Actions (floir.com) (last visited May 19, 2022).
12 Insurance Journal, Another Big Insurer Stops Writing Homeowners Policies in Florida , Feb. 21, 2022, Another Big Insurer Stops
Writing Homeowners Policies in Florida (insurancejournal.com) (last visited May 19, 2022).
13
Id.
14
Id. Also see Insurance Journal, Florida insurance market needs strong medicine, April 7, 2022 (last visited May 19, 2022).
15 Office of Insurance Regulation, In the Matter of FedNat Insurance Company, Maison Insurance Company, and Monarch National
Insurance Company, Case No. 295625-22-CO, May 13, 2022, SKM_80822051317530 (floir.com) (last visited May 19, 2022).
16 An analysis of market data published by OIR shows that Citizens’ share of the homeowners’ insurance market has fluctuated from a
low of 2.53 percent in the fourth quarter of 2016 (when the corporation wrote 5 percent of all new policies), to a high of 27 percent in
fourth quarter of 2021 (when the corporation wrote 52 percent o f all new policies. Market data for commercial and residential property
insurance is available on OIR’s website, at https://apps.fldfs.com/QSRNG/Reports/ReportCriteriaWizard.aspx
17 An analysis of market data published by the Florida Surplus Lines Service Office (FSLSO) shows that surplus lines insurers ha ve
increased their presence in Florida’s homeowners’ insurance market. In the fourth quarter of 2011, 23 surplus lines insurers wrote
11,108 policies with premium of $27,728,710. In the fourth quarter of 2021, 31 surplus lines insurers wrote 20,708 policies w ith
premium of $89,732,534. Market data for surplus lines insurance is available on the FSLSO website, at
https://www.fslso.com/Florida/MarketData/home.
18 S. 627.351(6)(c)5.a, F.S. The 20 percent threshold applies to personal lines residential risks. Commercial lines residential risks are
not eligible for coverage by Citizens if a private carrier will write them a policy for a premiums that is less than 15 perce nt greater than
what Citizens would offer for comparable coverage.
19 S. 627.351(6)(a)3, F.S.
20 See ss. 626.921-626.939, F.S.
21
Altmaier, supra note 2.
22 Not more than 25 percent of the total roof area or roof section of any existing building or structure shall be repaired,
replaced, or recovered in any 12-month period unless the entire roofing system or roof section conforms to the
requirements of the Florida Building Code. Ch. 6, s. 611.1.1, F.B.C.
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 Hurricane Activity in Florida
Between 1980 and 2021, hurricanes in the United States caused approximately $1.1 trillion in damage,
including an average cost of $20.5 billion per event and 6,697 deaths. 23 In Florida, Hurricanes Irma and
Michael, in 2017 and 2018, respectively, caused approximately $43 billion in insured losses. 24 The
current forecast for hurricane activity in the Atlantic Basin for 2022 indicates above-normal activity,
including 19 named storms, nine hurricanes, and four major hurricanes. 25
State Reinsurance Coverage
Background
In 1993, the Legislature created the Florida Hurricane Catastrophe Fund (FHCF), a tax-exempt trust
fund administered by the State Board of Administration (SBA), which is governed by a three member
Board of Trustees: the Governor, who serves as chair, the Chief Financial Officer, and the Attorney
General.26 The FHCF was created in response to the problems that developed in the residential
property insurance industry following property losses incurred through a series of catastrophic events,
including Hurricane Andrew in 1992.27 It was determined that state action was required to correct the
inability of the private sector insurance and reinsurance markets to maintain sufficient capacity.28 The
program is intended to provide a stable and ongoing source of reimbursement to insurers for a portion
of their catastrophic hurricane losses, creating additional insurance capacity for the state. 29
The coverage provided by the FHCF is similar to private reinsurance except it is limited to hurricane
losses for residential properties.30 Historically, the FHCF has generated significant premium savings for
Florida policyholders by making FHCF protection available to insurers, typically at a lower cost than the
market price for comparable reinsurance.31 The FHCF is able to provide coverage at a lower cost than
private market prices because it does not include a profit factor or risk load in its rates and because it is
exempt from federal taxes.32
As a condition of doing business in Florida, property insurers are required to obtain FHCF coverage by
entering into reimbursement contracts with FHCF.33 The contract year runs from June 1 to May 31.34
The FHCF charges insurers the actuarially indicated premium 35 for the coverage it provides, based on
the insurer’s relative exposure to hurricane losses. The FHCF reimburses an insurer for a
selected percentage of the insurer’s hurricane losses above the insurer’s retention (similar to a
23
NOAA, Fast Facts, Hurricane Costs, https://coast.noaa.gov/states/fast-facts/hurricane-costs.html (last visited May 16, 2