With the passage of Senate Bill 2A in 2022, Florida homeowners will face a new reality when it comes to property insurance. The bill seeks to reform the state’s current system of providing coverage for residential properties by introducing a number of changes and reforms intended to make premiums more affordable while also protecting consumers from predatory practices. This article will provide an overview of these changes and how they are likely to affect Floridians who purchase or renew their policy in 2023 and beyond.
Major Provisions of SB-2A and its Impact on Homeowners
Senate Bill 2A is set to bring dramatic changes to Florida’s property insurance system. Aimed at making premiums more affordable while protecting consumers from predatory practices, this legislation contains a number of provisions that will have direct implications for homeowners across the state. This article will provide an overview of these reforms and their potential impact on those who purchase or renew their policy in 2023 and beyond.
Florida Optional Reinsurance Assistance (FORA) Program
One of the most significant changes proposed by SB-2A is the creation of the Florida Optional Reinsurance Assistance (FORA) Program. FORA, established for the 2023 hurricane season, offers optional hurricane reinsurance to insurance companies at reasonable/near-market rates. Reinsurance is insurance purchased by insurance companies that can often lead to premium increases if the rate goes up by 50% or more. By providing lower reinsurance rates through FORA, it is hoped that insurance companies can avoid having to increase premiums charged to policyholders.
In addition to FORA, SB-2A seeks to improve the claims process. Amendments to Fla. Stat. 627.70131, effective March 1, 2023, have drastically changed deadlines related to an insurer’s claims handling requirements. Notable changes include:
- the reduction of communication and investigation acknowledgment times from 14 days down to 7 days;
- physical inspections reduced from 45 days to 30 days if required;
- estimates must be produced within 7 days after generated;
- detailed claim records for communication, proof of loss, requests for information, inspections, estimates, and more must be maintained by insurers;
- and finally, payment or denial of initial reopened or supplemental claims is reduced from 90 days to 60 days.
Assignment of Benefits
Another big change is related to the Assignment of Benefits contracts. Effective January 1, 2023, the assignment of any post-loss insurance benefit under any residential or commercial property insurance policy is prohibited in whole or in part. This means that “Assignment of Benefits” is no longer an option to be used in property insurance claims and third parties will not be able to receive insurance benefits if the policy was issued on or after this date.
Citizens’ Property Insurance Program
Finally, the new law is aiming to get more Floridians off of the state-created Citizens Property Insurance program, which was created as an insurer of last resort for those who can’t afford private market prices. If a policy exists that costs no more than 20% than the cost of a Citizen’s policy, then owners must purchase flood insurance and make the switch to a private policy.
Potential Benefits for Homeowners from the Reforms
The reforms proposed are expected to have a number of significant benefits for homeowners across Florida. The FORA program should help to significantly reduce the amount of expensive hurricane coverage that insurers need to purchase in order to protect their policyholders, resulting in potentially lower premiums for residential property insurance. Also, the changes to the claims handling process should ensure that the claims process is more efficient, with insurers having to respond more quickly and efficiently. Finally, the Assigned Benefits prohibition could help to protect homeowners from being taken advantage of by unscrupulous third-party providers who have been taking advantage of unsuspecting policyholders in recent years. All these changes should make property insurance coverage more affordable and accessible for Floridians looking to purchase or renew their policy in 2023 and beyond.
The passage of SB-2A is a major victory for homeowners and insurance companies across the state of Florida. The reforms proposed are expected to make property insurance coverage more affordable, efficient, and accessible for residents throughout the Sunshine State. With FORA providing reinsurance at near-market rates, changes to the claims process making it more efficient, and the Assigned Benefits prohibition helping to protect policyholders from unscrupulous third parties, these reforms should create much-needed relief for Floridians looking for a property insurance policy.
Contact First Beaches Insurance for more details on this groundbreaking legislation and how it could affect you.