Here’s some good news for shingle-payers.
Palmetto-based insurance broker Jim Cirillo said state legislation passed in May is “a step in the right direction” to softening a property insurance market that is “harder” than ever.
State legislators convened for a special session in May to hammer out remedial laws for the insurance crisis, a statewide supply-and-demand problem.
Boyd
They passed Senate Bills 2D and 4D — sponsored by Sen. Jim Boyd, R-Bradenton, that would:
- Authorize $2 billion for a reinsurance fund that carriers can access if they reduce customer premiums;
- Forbid carriers from denying coverage based on a roof’s age if the roof is less than 15 years old or if an inspection shows an older roof has five or more years of viability;
- Change state building code to permit homeowners to repair rather than replace roofs that are more than 25% damaged;
- Discourages attorneys from pursuing frivolous lawsuits and Floridians from making unscrupulous roofing claims.
In recent years, global catastrophes, as well as lawsuits related to Hurricanes Irma and Michael, have drained the coffers of “reinsurance” outfits — entities that provide insurance for insurance companies.
The reinsurance shortage has forced many carriers out of business. Survivors have instituted more stringent underwriting policies related to the age of roofs and composition of buildings and many carriers have stopped writing policies for properties in high-risk areas, namely barrier islands.
DeSantis
To make matters worse, Citizens Property Insurance Corp., an entity that receives special reinsurance privileges from the state, tightened its underwriting guidelines, leaving many Floridians without an “insurer of last resort,” Cirillo said June 8.
Island condo associations that employ Cirillo — including Runaway Bay and Coquina Moorings in Bradenton Beach, as well as Island Village of Holmes Beach — have faced non-renewals in the past two years.
Like other property owners across the state, the associations have scrambled to obtain insurance, and the rates have escalated.
Runaway Bay, for example — which received a non-renewal letter from American Coastal Insurance Co. in July 2021 due to the age of its roofs — purchased a $581,260 layered insurance package, up from $172,152 the year before.
Last year, Coquina Moorings faced non-renewal from Citizens, also due to the age of its roofs, before Cirillo secured private wind insurance in late December 2021 for $30,000, nearly double what the association paid the year before.
Following an early 2022 non-renewal, Island Villages was facing an annual rate increase from $75,000 to $250,000 before Cirillo secured a $164,000 package for the association in April on the back of risk mitigation documentation.
Cirillo said the new insurance legislation — signed into law by Gov. Ron DeSantis days before hurricane season began June 1 — likely will not have an immediate impact on the island market.
“None of these carriers are going to jump back into the market in the middle of hurricane season but I think if we’re lucky and we have a slow season, we’re spared from any major storms, you’ll start to see the benefit of it by the end of this year,” he said.
Since more carriers write insurance for individual homes and condos than condo associations, the $2 billion reinsurance fund will do more to stabilize the individual property insurance market, he said.
“People don’t realize that reinsurance represents the bulk of your insurance premium that you pay as a consumer to your carrier,” Cirillo said. “So, what this (fund) does is provide cheap and readily available reinsurance at much cheaper rates with a much lower deductible threshold to the insurance carriers than they could get in the private market and that savings is passed down to the consumer.”
Thanks to the new roofing rules, condo associations that have maintained their roofs and compiled documentation will no longer be unfairly excluded from the market, the 20-year broker said.
SB 2D, which limits or bans attorney fees and deters fraudulent claims, is critically important, he said.
“The claims that were in the gray area or just outrightly did not quality, those are the ones that hurt the industry,” Cirillo said. “And it’s not even the claim itself. For every $1 spent on the claim there was up to $11 in attorney fees and other soft costs that the insurance carriers had to pay that really cost consumers millions of dollars and the industry billions in losses.”
While the market remains hard, consumers should implement the insurance-hunting strategies Cirillo and Runaway Bay Condo Association treasurer Mark Douglas are employing to reduce the organization’s premium by its Oct. 1 renewal deadline, Cirillo said.
As chair of the association’s insurance finance committee, Douglas prepared a “portfolio of good behavior,” a collection of documents detailing roof and structural inspections and repairs, in preparation for negotiations with carriers in the fall.
Cirillo and Douglas also are seeking a 15-month package to shift the association’s annual insurance hunt into the winter, well ahead of hurricane season and before carriers reach “capacity” in island zip codes.
To mitigate risk, carriers have limits on the amount of insurance they write in a year in any given area.
With a portfolio of good behavior in hand, Cirillo hopes to save Runaway Bay about $181,000 this year, no small feat given current market conditions.
“And it could’ve been even worse if we didn’t put in the work to show the quality of the risk and to convince the carrier to take it on,” he said.