The Governor of Florida Ron DeSantis has now issued an official proclamation calling for a special legislative session, specifically to address issues the state is facing in the property insurance and reinsurance marketplace.DeSantis said he is calling on the Florida Legislature to hold this special session to consider legislation related to property insurance, reinsurance, changes to the Florida Building Code that could improve the affordability of property insurance, the Office of Insurance Regulation, civil remedies, and appropriations.The proclamation states that, “The Legislature of the State of Florida is convened in Special Session commencing at 9:00 a.m., Monday, May 23rd, 2022, and extending no later than 11:59 p.m., Friday, May 27th, 2022.” Which takes it right down to the wire, as far as the mid-year reinsurance renewals go, with most Florida property insurance carriers needing to secure their reinsurance towers before June, it seems legislative changes won’t have a bearing on price and availability of reinsurance for Florida’s insurers until 2023 at least.That said, the legislative changes made last year have yet to have any significant bearing on reinsurance market discussions, as more meaningful reform to stem Florida’s litigation crisis are required if changes of any magnitude are to be felt.

DeSantis’ proclamation laid out the issues Florida’s property insurance market is facing: Florida’s general tort environment related to property insurance has led to thousands of frivolous lawsuits.Florida accounted for 79% of the nation’s homeowners insurance lawsuits over claims filed while making up only 9% of the nation’s homeowners insurance claims.Florida citizens are seeing the effects of this higher litigation in their rising premiums.

The Florida insurance industry has seen two straight years of net underwriting losses exceeding $1 billion each year.In 2021, four insurance companies writing homeowners coverage have either gone insolvent or required midterm cancelations, and in the last three months, three insurance companies writing homeowners coverage in Florida have gone insolvent and are either in liquidation or rehabilitation and numerous others have non-renewed policies or ceased writing new business, leaving tens of thousands of policyholders seeking coverage with limited options in the marketplace.Citizens Property Insurance, the State of Florida’s public insurer of last resort, has seen an increase of 399,822 policies since the beginning of2020 and is on track to be over 1 million policies by year end.

All of which means, “It is necessary for the State of Florida to act to stabilize the insurance market for Florida policyholders before the 2022 Atlantic Hurricane Season.” The chances of stabilising the market to any degree prior to the hurricane season beginning for anything but new policy sales, or stemming new litigation, are slim it seems.But even those would at least start Florida’s property insurance market down a road towards reform, which would work through insurers portfolios over the coming year.Legislation related to reinsurance is likely to involve greater use of the Florida Hurricane Catastrophe Fund (FHCF) it would seem and some lawmakers have been calling for much greater use of the FHCF, so as to reduce the costs of reinsurance for primary insurance carriers in Florida.

That could ultimately reduce demand for private market reinsurance, as carriers shift to use more of a subsidised state-backed alternative.But, right now, it’s impossible to predict how a special session on property insurance will go, with no guarantees anything meaningful gets enacted and a strong chance it sets the tone for more bills being floated through the next legislative session..

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