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To counteract this exponential growth, new policy eligibility requirements have been put in place. Private-market premiums for comparable plans must be 20% greater than that offered by Citizens to be eligible for a policy. This is an increase of five percentage points. This comes with a push to make Citizens rates more actuarially sound instead of merely competing with the market. The legislation outlines rate increases occurring for Citizens policies until they reach status. Additionally, personal residents must hold flood insurance covered by another insurer to qualify for a Citizens policy. These measures are an attempt to curtail the taxpayers’ increasing exposure to risk, create a more competitively priced market and reestablish Citizens as a residual market only for use when insurance is not available in the private market.
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Creation of Florida Optional Reinsurance Assistance Program (FOR A)
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Reinsurance is essentially “insurance for insurance companies.” It helps insurance firms continue to write policies and protects them in extreme situations, such as hurricanes. Unfortunately, many reinsurers have been exiting the Florida market, which pushes insurers to make a choice: raise rates or exit as well. The state created FORA for the 2023 hurricane season. This optional reinsurance program can act as a backstop for insurers and incentivize them to stay in the Florida market or return.
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How will this affect my business and/or home?
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Property tax relief for homeowners
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For those that suffered damages from Hurricanes Ian and Nicole that left their homes uninhabitable, the state is providing tax refunds on ad valorem property taxes and is extending the suspension of payments of certain taxes and assessments on such properties.
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More competitive pricing
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By allowing primary insurance carriers to purchase reinsurance (i.e., insurance for insurance companies) from the newly established FORA Fund at a reasonable price, the state has opened the door for primary carriers to enter or re-enter the Florida insurance market. Added competition in the market should promote more competitive pricing on homeowners and commercial property insurance.
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Faster claim payments
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Insurers must now acknowledge receipt and review submitted claims within seven calendar days of receipt. Within 60 days of receipt, an insurer must pay or deny a claim or a portion of a claim along with reasonable explanation should a claim be denied.
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Changes to attorney fees
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The elimination of certain attorney fees that incentivize law firms to pursue litigation on your claims with insurance carriers will likely lead to a drop-off in litigation. It will be important for you to take an active role in the handling of your claim and work with counsel and your insurance company representatives to understand the details of your claim and come to the optimal resolution.
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Assignment of benefits
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You as a property owner (residential or commercial) will no longer be able to assign rights to third parties (i.e., contractors, electricians, etc.) to file claims and receive payments for work done on your property. All claim activity from submission to payment will be your responsibility.
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As a business or homeowner, what should I do?
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Talk to an independent agent
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Agents should be well-versed in the state of the property and casualty insurance market and the impact this legislation will have for their clients. Lean on their expertise to guide you in finding the optimal coverage for your needs, and do not be afraid to get opinions from multiple agents.
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Obtain several quotes
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Some insurers are intentionally quoting at excessively high rates to deter new business. They are happy to take it on, however, for exorbitant prices. Make sure to obtain multiple quotes to avoid paying excessive premiums when a better offer might be out there.
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Understand your coverage
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Knowing the intricacies of your coverage will save you from any surprises in the event of a claim. When signing on with a new insurer or even if renewing with your current provider, be sure to comb through the policy details (i.e., binding arbitration clauses, policy exclusions, coverage limits, etc.) For example, if you opt for the minimal level of coverage, the amount you are entitled to recover from your insurer after a covered loss would be unlikely to meet the replacement cost value of your home or business.
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Protect yourself from floods
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Flood and storm surge damage are not typically covered under a standard homeowners or commercial property insurance policy, while wind damage normally is. In a hurricane-prone geography, having separate flood coverage is vital to protecting your home or business.
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To counter this exponential growth, new policy eligibility requirements have been put in place. Private-market premiums for comparable plans must be 20% higher than what Citizens offers to qualify for a policy. This is a five percentage point increase. This comes with a push to make citizen rates more realistic rather than just competing with the market. The law outlines rate increases for civil policies until they reach status. Additionally, private residents must hold flood insurance covered by another insurer to qualify for a civil policy. These measures are an attempt to reduce taxpayers’ cumulative exposure to risk, create a more competitively priced market, and re-establish a residual market for citizens to use only when insurance is not available in the private market.
Creating the Florida Optional Reinsurance Assistance Program (FOR A)
Reinsurance is basically “insurance for insurance companies.” This helps insurance companies continue to write policies and protect them in extreme situations such as hurricanes. Unfortunately, many reinsurers are exiting the Florida market, forcing insurers to make a choice: raise rates or exit. The state created the FORA for the 2023 hurricane season. This optional reinsurance program can act as a backstop for insurers and encourage them to stay in or return to the Florida market.
How will this affect my business and/or home?
Property tax relief for homeowners
For those affected by hurricanes Ian and Nicole who left their homes unclaimed, the state is providing tax refunds on valuable property taxes and extending certain tax and assessment moratoriums on such properties.
More competitive price
By allowing primary insurance carriers to purchase reinsurance (ie, insurance for insurance companies) at a reasonable price from newly established FORA funds, the state opened the door for primary carriers to enter or re-enter the Florida insurance market. Added competition in the market should promote more competitive pricing for homeowners and commercial property insurance.
Fast claim payment
Insurers must now acknowledge receipt and review submitted claims within seven calendar days of receipt. Within 60 days of receipt, an insurer must pay or deny a claim or part of a claim and deny the claim with a reasonable explanation.
Modification of attorney fees
Eliminating some attorney fees that encourage law firms to litigate your claims with insurance carriers will likely lead to a drop-off in litigation. It will be important for you to take an active role in managing your claim and work with your insurance company representatives and counsel to understand the details of your claim and arrive at the best solution.
Allocation of benefits
As a property owner (residential or commercial) you can no longer assign third parties (eg contractors, electricians, etc.) the right to claim and pay for work done on your property. All claim activity from submission to payment will be your responsibility.
As a business or home owner, what should I do?
Talk to an independent agent
Agents should be well versed in the state of the property and casualty insurance market and the implications of this law for their clients. Rely on their expertise to guide you in finding the best coverage for your needs, and don’t be afraid to get opinions from multiple agents.
Get several quotes
Some insurers are deliberately quoting excessively high rates to deter new business. They are happy to take it, however, for exorbitant prices. Be sure to obtain multiple quotes to avoid paying extra premiums when a better offer may be available.
Understand your coverage
Knowing the intricacies of your coverage will save you from any surprises when making a claim When signing with a new insurer or even renewing with your current provider, be sure to comb through the policy details (eg, binding arbitration clauses, policy exclusions, coverage limits, etc.), for example, if you opt for a minimum level. coverage, the amount you are entitled to recover from your insurer after a covered loss is unlikely to meet the replacement cost standard for your home or business.
Protect yourself from flooding
Flood and storm damage are generally not covered under a standard homeowner or commercial property insurance policy, while wind damage usually is. In hurricane-prone geographies, having separate flood coverage is essential to protect your home or business.