Injunction Highlights Questions About Property Reform
SB 76 adopted in the 2021 legislation drew a lukewarm reaction, even among some of the lawmakers who supported property insurance reform. One key advocate referred to the bill as accomplishing about 40% of what would be needed to improve Florida’s property insurance market.
And that was before part of the law was declared unconstitutional.
Part of the new law attempted to deal with the proliferation of solicited roof insurance claims. The frequency of roof claims and costs of those claims has increased dramatically. Solicited roof claims essentially have turned the homeowners’ insurance policy into a maintenance contract. The new law would have limited the ability of roofing contractors to use various forms of advertising to solicit jobs that entail insurance claims. However, roofing contractors challenged the new law and argued its restrictions violate their First Amendment rights. The state countered that the new law is a reasonable restriction on commercial speech in light of the state’s interest in combating consumer exploitation and fraud.
A federal district judge sided with the roofing contractors and enjoined the portion of SB 76 dealing with advertisements by roofing contractors. The judge noted that the state identified substantial interests worthy of protection, but found those interests are not directly implicated by contractors advertising their roofing repair services to homeowners and informing homeowners that they may have storm damage that may be covered by insurance.
The Florida residential insurance market has been plagued in recent years by increases in the number and dollar amount of claims. As the Florida Office of Insurance Regulation has demonstrated, Florida accounts for only about 8% of the nationwide homeowners claims but about three-fourths of all homeowners insurance litigation. The percentage of solicited, represented and litigated claims in Florida dramatically exceeds that of any other state. Steps such as attempting to limit the solicitation of roof insurance claims have been aimed at the symptoms of Florida’s flawed market but have not addressed the root cause of misaligned incentives. When attempts at aiding the market are not successful, the trend of increased losses, increasing rate levels, declining availability and growth in Citizens Property Insurance Corporation can be expected to continue.