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The Demotech rating agency has joined the relatively small number of voices calling for a special session of the Florida Legislature to enact changes that insurers hope will help curtail fraudulent roof claims, deter excessive litigation and address other needs.

In a letter last week to Gov. Ron DeSantis and legislative leaders, Demotech President Joe Petrelli wrote: “The conditions of the property insurance marketplace in Florida are unsustainable and, without the necessary corrective action, many Florida insurers will struggle to maintain adequate surplus, efficient capital sources will avoid the market, private reinsurance costs will become prohibitively expensive, and consumers will ultimately bear the cost.”


Petrelli, who co-founded Demotech in 1996, said that the firm’s ratings in recent years have been predicated on the expectation that the Legislature would address reforms to Florida’s rather unique claims procedures, practices and protocols. No significant measures passed in the 2022 regular legislative session that ended March 11, leaving many to warn that more insurer insolvencies and steep rate increases will soon follow.

“Based upon the most recently reported operating results, as well as historical operating results of the insurers we review and rate, and if current market conditions remain in place, we anticipate that we will downgrade the Financial Stability Ratings® assigned to a number of companies in the coming weeks,” Petrelli wrote.

One milestone that some insurance carriers are dreading comes in June, when many must renew their reinsurance, and prices are expected to jump.

“We believe that certain meaningful and significant legislative reform, if enacted during a special session prior to the most common renewal date for reinsurance treaties, June 1, may create circumstances permitting us to maintain ratings for some of those insurers currently expected to be downgraded,”

He urged lawmakers, if called into session, to address ways to minimize claims litigation and contingency fee multipliers, and to ease the retention requirements of the Florida Hurricane Catastrophe Fund, which would provide some relief to insurers.

DeSantis has said he is open to a special session, if legislative leaders call one. State Sen. Jeff Brandes, R-St. Petersburg, also has urged the governor to convene an insurance-focused session. So far, though, House and Senate leaders have not joined the call.

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Florida’s constitution and statutes allow the governor to call a non-scheduled session together. The president of the Senate and the speaker of the House of Representatives also can issue a joint proclamation convening the Legislature. Another method: 20% of legislators can petition for a session, then three-fifths of both chambers must approve and set the date, statutes read.

Demotech’s nudge comes amid more bad news about Florida’s distressed property insurance market. Another rating firm, AM Best, said it had downgraded the financial strength rating of Florida Farm Bureau insurance companies from “A- (excellent)” to “B++ (good),” thanks in part to unfavorable reserve amounts.

Farm Bureau announced in late January that it would stop writing new homeowner policies in Florida, making it one of five carriers to take similar action.