Progressive stops renewing some Florida housing policies as lawmakers target roof claims
TALLAHASSEE — Progressive Insurance is cutting about 56,000 policies covering Florida homes with roofs over 15 years old, putting pressure on homeowners who are already finding it difficult — and expensive — to insure their homes.
This is the latest sign of trouble in Florida’s turbulent property insurance market.
“It’s a situation where everyone is on deck,” said Sen. Jeff Brandes, R-St. Petersburg, fellow senators warned last week. “We’re not far from homeowners paying more for their insurance premium than they pay for the mortgage.”
Last week, Farm Bureau Insurance announced it would no longer write home insurance policies in the state, joining at least a dozen other insurers that have recently suspended new business, limited the types of homes they cover or void the policies altogether. A handful of property insurers have already gone out of business. Those who haven’t asked for it are asking for double-digit rate increases – last month one asked for a 111% increase.
Lawmakers’ solution, so far, is to target what insurers say are hammering at their business: fraudulent roof claims. The way lawmakers are going about it could make it more expensive for homeowners to replace damaged roofs.
Insurers and legislators say roofers went door to door asking to go up to homeowners’ roofs to inspect the damage. Businesses then tell the owners that their insurance can replace the entire roof, and if the claim is denied, the owners can sue their demands.
Lawmakers are now considering legislation that could remove the incentive to replace the entire roof.
Currently, insurers must offer policies that cover the cost of replacing a roof. Senate Bill 1728 would allow insurers to offer policies that would only pay the depreciated value of the roof, or “actual cash value” — amounts that would almost certainly leave homeowners footing a large portion of the bill.
Companies could still offer policies that cover replacement value – which is often required by the banks that hold the mortgage – but at a higher price.
The bill would have a few exceptions. Regardless of the policy, the insurer will always have to cover the replacement of the roof if it is less than 10 years old, if the house is declared a total loss, or if the roof is damaged by a hurricane named National Hurricane Center.
Insurers, including Progressive, publicly support the idea. Sen. Jim Boyd, the bill’s sponsor, said more Florida homeowners are treating their homeowners’ policies as collateral, rather than something that’s used after a disaster. He said it’s a mentality that needs to change.
“After 15, 20, 25 years, most people have to replace their roof, and that’s something that’s unfortunately a cost of homeownership,” Boyd, R-Bradenton, said last week.
But some lawmakers have noted that the policy could disproportionately affect owners of older homes.
“I believe the victim here is the owner,” said Sen. Darryl Rouson, D-St. Petersburg. “They are caught between a battle between an insurer unwilling to pay the full replacement cost of a home that might need it and unscrupulous roofers.”
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Progressive is one of many companies that in recent years has refused to insure homes with older roofs. Boyd, an insurance agency owner, said he’s seen some carriers refuse to underwrite policies for homes with roofs over five years old.
A Progressive spokesperson said the company was not renewing the 56,000 policies because they “do not meet our underwriting guidelines and losses have a disproportionate impact on our loss ratios.”
Filings show the company’s guidelines changed last year, from requiring composition shingle roofs to be 15 years or newer to now requiring all roofs to be 15 years or newer.
“While we know this is not good news for those affected,” spokesman Jeff Sibel wrote in a statement, “we are committed to doing business in the state and taking this inevitable step. now to make sure we can continue to offer hospitality policies in Florida.”
A spokesperson for the state’s Office of Insurance Regulation encouraged affected customers to shop around and use its online comparison tool.
The spokesperson did not say whether the state agency supported the legislation.
While insurers have complained of a sharp rise in litigious claims and lawmakers have followed suit by passing laws to end such lawsuits in recent years, that hasn’t stemmed a rapid rise in insurance rates. property insurance.
Last year, lawmakers passed a law banning roofers from soliciting homeowners to file roof damage claims through ‘prohibited advertising’, such as emails, door hangers, flyers and pamphlets. But a federal judge temporarily barred the state from enforcing the law last year, and the case has yet to go to trial. (To circumvent the judge’s concerns, Senate Bill 1728 would require contractors to include disclaimers in their advertisements instead.)
Allowing this provision to apply would go a long way to ending fraud, said Nancy Dominguez, chief executive of the Florida Association of Public Insurance Adjusters, which represents adjusters who work with consumers in insurance claims cases. assurance.
Dominguez said his organization isn’t opposed to the legislation, but they’re concerned lawmakers’ solutions will essentially force homeowners to pay more for worse coverage.
“We just don’t want to see policyholders bear the full burden of this situation,” Dominguez said.
The crisis in government property insurance has several causes. The Office of Insurance Regulation cited company underwriting practices as well as factors such as excessive litigation and door-to-door solicitation.
The Department of Financial Services said it deployed two teams to Tampa and Orlando to investigate property insurance fraud and had received more than 2,600 consumer complaints since July.
The actual financial situation of many property insurers is also unclear. Florida-based insurers are allowed to divert revenue to side businesses. This often takes away money that would pay claims and makes the financial situation of insurers weaker. Legislation last year allowed the Office of Insurance Regulation to request more data on these secondary companies.
Brandes, who was warning of the state insurance crisis for years, said this year’s insights were not enough to save homeowners or the industry. He proposed tapping into the state’s $15 billion disaster fund to cover more storm-related losses — an idea the Florida Chamber of Commerce adamantly opposed.
He also said Governor Ron DeSantis needed to “engage” on the subject “at a level that he has not, to date, been engaged in.”
DeSantis spokeswoman Christina Pushaw said Governor “recognizes that we must continue to reduce the cost burden on Florida families” and follows the proposed legislation.
“Floridians will be kicked out of their homes,” Brandes said. “The poor will be forced to build roofs they cannot afford.”
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