We got the headline on Tuesday's Citizens' rate increase story wrong. It wasn't the abuses that forced a 5.3 percent average increase in Citizens' insurance policies in Miami-Dade, Broward and Palm Beach counties. It was the Florida Legislature, pure and simple.
As Barry Gilway, Citizens' president and CEO told his Governing Board Tuesday -- on his fifth anniversary with the Florida corporation -- "It's not like we didn't try.
"Some 92,000 emails went out to customers in the three South Florida counties. Of 157 articles written in the media, all but two of them were positive. And we met with seven editorial boards and all seven came out on our side.
"Even after all the homeowners association visits we made," Gilway said glumly, "there was no meaningful legislation."
The 2017 Legislature simply opted to turn its back on the tough stuff.
They spent plenty of time passing HB 989, making it easy for parents to nose into school teaching materials they don't like, but they couldn't fix assignment of benefits?
They passed HB 937/SB 1370, proudly mandating a "gambling is addictive" label on lottery tickets, but they couldn't fix assignment of benefits?
They wasted umpteen dozens of hours railing against Enterprise Florida and Visit Florida, then made a backroom deal with the governor to fund both -- much ado about nothing in the end -- but they couldn't spend enough time on assignment of benefits to fix it?
What happened? Was it too hard? I know it's not as sexy as fighting for a reservoir or stomping on the governor's neck, but assignment of benefits (AOB) abuse makes owning a home less affordable for a lot of people. And failing again to fix it keeps the spiral trending upward.
An AOB is a document signed by a policyholder that allows a third party -- a water extraction company, a roofer, a plumber, for example -- to “stand in the shoes” of the insured and seek direct payment from the insurance company. It has become prevalent in water and roof claims across the state.
AOBs have been around in Florida’s marketplace for more than 100 years. But loopholes in the way it's being used are driving up costs for homeowners -- all due to unnecessary litigation associated with certain AOB claims. Chief Financial Officer Jeff Atwater has shown that in 2006 there were 405 AOB lawsuits across all 67 counties in Florida; 10 years later, in 2016, that number had risen to 28,200.
Attorneys sticking it to insurance companies falls back on middle class Floridians trying to achieve home ownership. Increasing insurance premiums is certainly not in the plan of a governor who has made one of his top priorities returning money to the people of this state.
Gilway said the House this past session was further along with a fix than the Senate. But it doesn't matter now. Another year, another failure to act, another increase.
The problem has been worsening since 2015. Look at the statewide average rate increases for homeowners’ multiperil insurance -- or HO-3 in insurance-speak. This is coverage for single family homes for all perils: fire, water loss, you name it.
In 2015, Citizens dropped its rates, and they have been climbing ever since:
- 2015. -6.1 percent
- 2016. 1.1 percent
- 2017. 6.9 percent
- 2018. 6.7 percent
Look at the average multi-peril policy currently in Miami-Dade, $3,421; in Broward, $2,842; and in Palm Beach County, $2,631. Compare those numbers to the Citizens' policy in force in Leon County, $929 (and if the new rates are approved, it will go down to $840).
Citizens is trying to mitigate the damage for next year by introducing a $10,000 cap on water loss repairs for customers who decide not to participate in the Citizens Managed Repair Program, which links customers with a network of vetted contractors. That voluntary program, coupled with a free emergency water removal service, will become available to new Citizens policyholders after July 1, and for existing customers when their policies renew.
But this is all stopgap stuff.
As Gilway said Tuesday, "Assignment of benefits will never be reformed without legislative reform."
It's going to take steely resolve and real leadership to get it accomplished in 2018 and beyond. Next year is an election year -- that's challenge enough. After that, Rick Scott, the business governor, won't be in Tallahassee to lean into the hard stuff; and even if the governor's race goes to Republican Adam Putnam, there's no saying the GOP will have the numbers in the Legislature it has today.
My hope is that the governor, this year's ultimate winner-and-still-champion, will put his toe behind it in 2018 as a parting shot on behalf of Florida families. We're going to need him.
Reach Nancy Smith at nsmith@sunshinestatenews.com or at 228-282-2423. Twitter: @NancyLBSmith
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