This is "Facing South
Florida" with Jim DeFede.
>>Welcome to "Facing South Florida."
I'm Jim DeFede and on Monday,
the Florida legislature will meet in a special session
to address the homeowner's insurance crisis.
In a moment you will hear from State Senator, Jeff Brandes,
about what we can expect out of Tallahassee next week.
What's not on the agenda is doing anything
to make condos safer by improving and requiring inspections.
Later in the show, you will hear why, and you will also hear
from the parents of someone who died in Surfside
about why they placed the blame on Governor, Ron DeSantis.
He was there every day, every day at the press conferences--
>>For three weeks. >>For three weeks.
>>And then there's crickets, have you seen him on the news
about Surfside, speaking about Surfside?
I've heard him speak about many things,
I have not heard him speak of Surfside.
>>You will hear more from them later
but we begin with the property insurance crisis
and my interview with Republican Senator, Jeff Brandes,
who pushed for this special session.
>>We've lost three companies in the last three months.
We've had a company just in the last few days announce
that it's gonna drop 70,000 policies just as we enter
hurricane season in order to try to stay alive,
and we're not even sure that's gonna work.
So, basically the Office of Insurance Regulation
is pumping the chest of about six to 12 companies
in the state right now, trying to keep them alive
because they're close to death.
>>Now, it's interesting you use that analogy,
close to death because when a company does die,
we now learn that the Department of Financial Services
actually performs an autopsy
to determine the cause of death.
>>They do perform an autopsy,
the problem is nobody reads it.
And what we found out is that even the Office of Insurance
Regulation doesn't even sometimes get a copy of it,
nor does the Consumer Advocate get a copy of it.
And frankly, only a couple of legislators, including myself,
have gotten copies of previous reports.
And so they do this autopsy
and it's shoved in a file someplace,
but this should be a document that lays out,
here was the problems, here's what caused it,
and frankly, here's what the solution is.
>>Well, as someone who has actually looked at these reports,
I think it was you who's requested them in the past.
I also think Representative, Ken Jenne,
from down here in south Florida,
he's tried to do his due diligence on some of these.
What do you learn from looking at those autopsy reports
of previous insurance companies that have failed?
>>Well, I think that the number one thing you've learned is
that we aren't asking the right questions
and we aren't diving deep enough,
and we aren't providing real actionable points
for the state to take in order to ensure
that failures don't occur in the future.
Listen, if a plane crashes anywhere in the country,
we're gonna send a team of FAA investigators
to do a deep dive into why that plane crashed
so that it never happens again.
Yet, in the state of Florida, we don't do anything like that
when a hundred million dollar property insurance crashes
and basically wipes out, and causes absolute havoc
for thousands and thousands of individuals' lives
who are now racing out and sometimes paying twice as much
for property insurance than they were before.
So to me, this is a really simple issue.
We should be able to call the executives in,
we should be able to do a deep dive in there
and within a reasonable time period,
like three to six months, we should be able to produce
a report that outlines and then lays out for legislators
steps to make sure that this never happens again.
>>Okay, but obviously we're now working under a much tighter
timeframe given that the special session
starts in a few days, starts on Monday of next week.
So what are some of the proposals
that you would like to see enacted moving forward?
>>Sure, a couple of things would be pretty simple.
One is stop all AOBs in Florida, stop --
>>Wait, wait, wait, don't don't talk, wait, be careful.
AOBs, what does that stand for?
>>The assignment of benefits.
So when somebody comes up to you and says,
Hey, we're gonna give you a free Autoglass replacement
and we'll take care of everything
with your insurance company, just sign this document
and move on down the road, that kind of thing is an AOB.
What's happening with roofs is hey, just sign this document
and we'll take over all the problems with your roof.
And we'll go sue your insurance company on your behalf.
That has just caused a wave of litigation
that is unlike any other state in the country.
And frankly, Texas and North Carolina
have shut off all assignment of benefits.
And so basically what it says is you, insurer
and insured have to work together to solve this problem.
You can't just bring in a third party
and let them file a lawsuit and move on down the road.
>>Well, let me push back a little bit there.
The insurance company has teams of lawyers.
They have experts, they have all the weight on their side
in terms of how to work or gain the system.
If I, as a consumer, am in a bad situation
because of a storm and I've got roof damage
and I'm a little overwhelmed, does it not benefit me
to have somebody fighting on my side to move forward?
>>You can absolutely have somebody fighting on your side.
We have public adjusters, we have other individuals
out there that can be advocates for individuals,
but frankly, it's the assignment of benefits though
that Florida tried to curtail a few years ago
with a major piece of legislation.
But now what we've seen is they've just gotten around it
by using directions to pay or other mechanisms
to get essentially to right back where we were
before the assignment of benefit law even passed.
In fact, there was more assignment of benefits this year
than there was back when we passed the law a few years ago.
>>So these essentially are law firms that make their
business out of filing lawsuits against insurance companies
by signing up as many people as possible.
>>They wanna go out and manufacture claims.
And so their job is to hire roofers
and public adjusters to come to your house
and go into homes that are all 20-years old,
have 20-year old roofs in the same subdivision
and go door to door to door
and say there was a storm two years ago,
we can replace your roof for a brand new roof
for just the price of your insurance deductible.
So what ends up happening is you and I
are buying our neighbors roofs
and we're paying for it in higher insurance premiums.
>>Well, again, let me push back.
It seems if when this idea came forward in the Senate
during the regular session, the House was pushing back
because one of the possible outcomes of this is
that if you start to require, for instance,
homeowners to start putting money away for roofs eventually,
at the end of the day it's going to end up being
the homeowner who pays more,
and the insurance company who has to pay less.
Is that really a system that we want?
>>Well, no, what we want is a system where both parties
are working out and really dealing
with catastrophic losses, not maintenance.
And what's happening in Florida now is people are seeing
their property insurance as a home maintenance agreement
and not as a catastrophic loss agreement
designed for hurricanes and other acts of God.
But if we're out replacing 20-year old roofs
on your insurance policy then we're in real trouble
because there's no way that you and I
are gonna be able to afford to live in our homes
because shortly we're gonna be paying more
in our insurance premiums to buy our neighbors roofs
than we are in our mortgage, that's just a simple truth.
>>I don't want to get into a big discussion
about reinsurance because I don't want the viewer's eyes
to glaze over but essentially, reinsurance is the insurance
that insurance companies buy, so that if there is
a catastrophic loss they've got some backup.
Right now, reinsurance is one of the most expensive things
driving up the cost of property insurance.
What can be done about bringing down,
helping insurance companies essentially
buy cheaper reinsurance themselves
which they could then pass the savings on to consumers?
>>Well, what reinsurers are telling Florida is
we don't wanna do business in the state
because it's not a good business to be in.
And so they're basically telling the state,
we're gonna take a pass this year
or you're gonna pay a lot more,
and they're just passing that on to their customers.
And so we've gotta be able
to deal with this insurance market.
But frankly, the insurance industry,
if we just fix the reinsurance piece
without dealing with the litigation piece,
ultimately, we're just gonna be subsidizing as a state
more and more of the reinsurance space
and that's gonna be a disaster in the future.
What we've gotta do is fix the underlying litigation issues.
So deal with AOBs, deal with actual cash value on roofs.
Listen, if you go out and get a car accident
in your 2010 Toyota Corolla, your insurance company
is not gonna buy you a brand new 2022 Toyota Corolla.
They're gonna give you the cash value for your old car.
And so, the same principle should apply with roofs.
If you chose that type of option but you should be able
to choose that type of option in Florida
and carriers should be able to offer you
that type of option in Florida.
Today, they have to offer you replacement cost.
They have to replace that 20-year old roof
with a brand new roof just like if you were buying
car insurance and you had to buy insurance
that bought you a brand new car for a 2010 Toyota Corolla,
every time your car got 10 or 15 years old
magically it would get into an accident
and you'd have to go get a brand new car
and your insurance company would pay for it.
This is the kind of fool's errand
that Florida's found itself in where we basically
have to incentivize people to commit fraud.
>>Well, will you end up with a bunch of people
after storms having not enough money
to actually replace their roofs
and being in a worse situation at the end of the day?
>>No, because if they have 20-year old roofs,
they should be reserving funds for the replacement of
that roof that should ultimately have to happen.
>>Oh, come on, Senator.
You and I both know homeowners, right now with cost
of everything from gasoline and all the complaints
about inflation, how are you saving money for roofs?
>>Here's the challenge.
You have an insurance company that says,
listen, we're only gonna ensure your property
if you put a brand new roof on.
I have constituents who are having to get a brand new roof
and their roof is not more than 10 years old.
So they're in the same boat.
The problem is there wasn't a storm.
It's just a Thursday and they're being forced to buy
a brand new roof just to get insurance coverage.
So you're gonna have to deal with this one way or the other.
And if you deal with it with assignment of benefits
or actual cash value, at least the incentives are aligned.
Right now, the incentives are the totally the other way.
The incentive is file a claim
versus reserve money for my roof,
which is ultimately gonna have to be replaced.
Listen, I'm somebody who believes
that we should treat adults like adults.
And if people are homeowners, they're adults,
and they should be able to make adult decisions
and if they choose to go get a replacement cost
on their house for their roof, that's their choice,
and they'll pay a little bit higher premium for that.
But if they choose actual cash value
and that's what's offered to them
and they choose to get that on their roofs,
then they should be able to do that as well.
But we shouldn't be forcing pacifiers into Floridian's mouth
and saying, listen, you're not responsible enough
to have an actual cash value policy.
We're going to force you to take
a replacement cost value policy.
That's just treating adults like children.
>>When we come back, we turn again to Surfside.