The Florida Supreme Court has approved the emergency suspended the law license of North Fort Myers attorney Jennifer Perez, who was in charge of a “mobile claim center” that was set up in a trailer in North Fort Myers about a week after Hurricane Ian passed through the region.
The high court unanimously approved the suspension that was recommended by the Florida Bar. The court ordered Perez, within 30 days, to cease representing any clients, cease acting as a personal representative or trustee and cease withdrawing money from any trust account.
The order also requires Perez to stop using the trailer labeled “mobile claim center” in Florida and provide a list of names and contact information for any persons that it had agreed to represent who were signed up at the mobile claim center.
Investigators for the Florida Bar alleged that Perez attempted to solicit customers by deceiving them into believing the mobile claim center was part if an insurance village set up by the state and the Federal Emergency Management Agency.
Jennifer Perez
Perez denies that was the intent. An attorney filed a motion to dismiss the Bar’s emergency petition last week, saying that the claims center was never used to solicit hurricane victims but was set up to provide office space for the Gauthier Murphy & Houghtaling law firm’s existing commercial clients. The law firm, headquartered in the New Orleans area, specializes in representing restaurant owners.
A lawyer who frequently faces off against the GM&H law firm in court spoke in defense of Perez on Monday afternoon. Steve Badger, a partner with the Zelle law firm in Dallas, said he is pleased to see the Florida Bar investigating allegations of barratry — the improper solicitation of clients.
“In this case, however, it appears the facts were not as they initially appeared,” Badger said in an email. “I understand that prior to the Florida Supreme Court’s action today, the Florida Bar had already reached an agreement with Ms. Perez to avoid the suspension based on her representation that there was no intent to retain clients through use of the mobile claims center and, in fact, no such clients were retained. I’m told this agreement should be publicly disclosed in a couple days.”
Perez’s attorney, Henry Cox III, with the Bedell Firm in Jacksonville, said he was in a lengthy meeting on Monday and did not immediately offer any comment.
Perez has worked for GM&H since obtaining a juris doctor from Loyola University in New Orleans in 2018. She was admitted to the Florida Bar in 2020 and named a partner with the firm specifically to represent Florida clients, according to the petition to dismiss filed by Perez’s attorney. The Bar’s website shows her having an office in North Fort Myers.
Attorneys for the Florida Bar are responsible for investigating and prosecuting lawyers who violate its rules. The Florida Supreme Court appoints a circuit or county court judge to preside over disciplinary proceedings as referees. The referee makes findings and recommendations to the Florida Supreme Court, which has ultimate authority to determine if an attorney should be disciplined. Potential penalties range from a reprimand to permanent disbarment.
The court appointed Judge Charles Roberts with the 12th Judicial Circuit in Sarasota to act as referee in Perez’s case.
Every attorney who is suspended from practicing law must wind down their practice within 30 days, according to Bar rules. Any suspension for longer than 90 days requires the lawyer to petition the court for reinstatement.
The Supreme Court ordered Perez’s suspension to continue indefinitely.
Spiking insurance costs are impacting the real estate market in south Florida, causing some developers to put major projects on hold – despite booming demand for residential and commercial property.
The Wall Street Journal reported Tuesday that a number of developers behind high-rise buildings and apartment communities have pulled the plug on projects due to the sharp rises in insurance premiums, alongside the cost of inflation and higher interest rates.
One San Antonio development executive who had planned large apartment buildings in south Florida told the newspaper that the insurance costs alone, up 30% in recent months, can kill a deal.
While insurance costs three years ago were about 2% of total project costs, now they can be about 8%. That includes builders’ risk insurance, covering damage while the building is under construction; liability insurance; construction defect coverage; and property insurance after construction is finished.
Florida is notorious for its insurance claims litigation, which has been called a driving factor behind rising property insurance premiums and insurer insolvencies. But the state also has seen an increase in construction defect litigation, the Journal reported. In the wake of the collapse of the Champlain Towers South condominium building in 2021, condo associations find themselves under new pressure. After a building is completed, many condo boards now hire engineers to inspect and if any defects are found, and developers don’t correct them, the associations are prone to sue, one construction attorney told the newspaper.
The Champlain Towers collapse that killed 98 people also has affected insurers and costs in another way: One lawsuit argues that the construction of a high-rise building next to the collapsed condominium destabilized the structure. Now, insurance carriers have to be prepared not only for claims from the insured property, but for adjacent properties as well, New York-based developer Ian Bruce Eichner explained.
Many developers have had to resort to using multiple insurers to cover one property. And the problem could soon worsen, as property insurance premiums are expected to rise in the wake of Hurricane Ian, which caused an estimated $40 billion in insured losses, and insurers pull back from vulnerable coastal areas, according to some estimates.
An insurance broker at Lockton, Fred Zutel, told the newspaper that all of the factors have made Florida the single-most difficult environment in which to procure insurance.
A special session of the Florida Legislature, set for Dec. 12-16, may address some of the cost factors for insurers, including litigation and reinsurance. But industry analysts have said it could take more than a year for any changes to make a difference.
Photo: The collapsed Champlain Towers South building in 2021. (AP)
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It hasn’t been made official by the governor’s office, but Florida legislative leaders have set a date for a second special session to tackle property insurance issues – Dec. 12 through Dec. 16.
Memos from newly sworn Senate and House leadership show the date coincides with already-planned plenary and organizational meetings for the 2023 regular session of the Legislature, which starts in March. A formal proclamation on the special session is expected this week.
Renner
The memos did not address what reforms may be on the agenda, but insurance industry lobbyists, news reports and comments from legislative officials suggest that lawmakers may squash one-way attorney fees altogether in claims litigation; may further limit assignment-of-benefits agreements; provide a layer of state-backed reinsurance for carriers; and make some adjustments to the Florida Hurricane Catastrophe Fund, perhaps allowing easier access to the fund’s reinsurance.
New House Speaker Paul Renner, R-Palm Coast, last week said he is aiming for “systemic reform” that will shore up the private market and steer policyholders away from the ballooning, state-created Citizens Property Insurance Corp., according to Florida Politics news site.
He also did not rule out using tax dollars to provide lower-cost reinsurance for insurers, which are now facing another round of double-digit price increases from private reinsurance firms.
Many in the insurance industry have advocated for a lower cat fund retention level, or lower deductible, for carriers, to allow them to access the fund sooner, saving them significantly on reinsurance costs. But after Hurricane Ian hit Florida in September, the cat fund may be forced to go to the bond market and borrow billions of dollars to replenish its statutorily required reserve funding.
Now, an influential business group is reiterating its warning to lawmakers to stay away from tinkering with the fund.
“Expanding the size and scope of the Florida Hurricane Catastrophe Fund sends an unfortunate signal to private reinsurance markets that their capital is unwelcome,” reads a special session priorities briefing from Associated Industries of Florida, which represents a range of manufacturers and other businesses.
“Policymakers should guard against efforts to adjust its coverages at the expense of depleting its cash build-up,” which could make it more likely that Floridians and business owners could see another surcharge or “hurricane tax.”
If the session is anything like the first insurance-dedicated special session, held in May, the reform package will be crafted by legislative leaders and the governor’s office shortly before the session begins. In May, the proposed bills were unveiled less than 48 hours before the Capitol opened, and the bills sailed through in three days with almost no changes.
Roof claims abuse (leading to excessive litigation), increasing replacement costs, and limited legislative oversight are causing havoc for Florida homeowners, leading to an accelerated market collapse. https://lnkd.in/eP7uy2Be
Home insurance is not a warranty policy. It is intended to make you whole again after you experience sudden and/or accidental damage to your home. Unfortunately, some unscrupulous contractors are promising “free” roofs to Florida homeowners for “damage” that is simply wear and tear.
There are some trial attorneys who file lawsuits for this “damage.” They’ve created a toxic environment that has driven Florida’s property insurance market to the brink of collapse and caused rates to skyrocket. Nine Florida Insurance carriers have become insolvent in two years.
Sounds bleak, but because this is a manmade crisis, it can be fixed. We need legislative reform for the following changes:
Repeal the one-way attorney fee statute.
Address the fallout caused by the 2016 Sebo ruling. Unscrupulous contractors use this ruling to get a “free” total roof replacement for their customers.
Allow insurance companies to offer a roof value schedule in their home insurance policy: Just as vehicles depreciate due to wear and tear, so does a home’s roof.
Let’s hope legislators will address all the issues that have led to this crisis, so we can finally make the market viable and healthy again.
TALLAHASSEE, Fla. – As Florida lawmakers try to stabilize the troubled property-insurance system next month, they could face worsening problems with reinsurance, a critical part of the system.
Fitch Ratings released an analysis Wednesday that said overall reinsurance prices are expected to increase by more than 10 percent in 2023, pointing to losses from disasters such as Hurricane Ian and “increasing frequency and severity of natural catastrophe claims.”
“Price rises will be most pronounced in the regions worst affected by natural catastrophe events in 2022, including Australia, Florida and France,” the ratings agency said. “Hurricane Ian is likely to have caused between ($35 billion and $55 billion) of insured claims, making it one of the costliest natural catastrophe events ever.”
In the analysis posted online, Fitch also said it expects tighter restrictions when reinsurance policies are renewed in 2023, while raising the possibility that Florida property insurers will not be able to buy all of the reinsurance they need.
“Nevertheless, we believe demand for property catastrophe reinsurance during the 2023 renewals season will be broadly met, except for Florida,” the analysis said.
Reinsurance, which is sold in a global market, is essentially backup coverage for insurers. It plays a crucial role in Florida, as evidenced by the projected tens of billions of dollars in damage from the Category 4 Hurricane Ian, which made landfall Sept. 28 in Southwest Florida before crossing the state.
When property insurers’ losses reach certain thresholds, reinsurance coverage is triggered to help pay claims. Costs of reinsurance are baked into policyholders’ rates.
Florida property insurers rely on a combination of reinsurance bought in the private market and from the state-run Florida Hurricane Catastrophe Fund. As an example of the importance of reinsurance, the Florida Hurricane Catastrophe Fund estimated last month it would have $10 billion in losses from Ian.
Reinsurance costs and availability were a problem in the Florida market before Ian. During a May special legislative session, lawmakers agreed to spend $2 billion in tax dollars to temporarily provide additional reinsurance coverage to insurers.
Gov. Ron DeSantis called the May special session amid widespread problems in the insurance industry that have included homeowners losing policies and seeing massive rate hikes. Meanwhile, some property insurers have gone insolvent, and policies have flooded into the state-backed Citizens Property Insurance Corp., which was created as an insurer of last resort.
Problems, however, have persisted, and lawmakers will hold another special session the week of Dec. 12 that is expected to include making additional changes to try to bolster insurers.
House Speaker Paul Renner, R-Palm Coast, said Tuesday that lawmakers will look at a “kitchen sink of options” during the special session to try to stabilize the market and expand private coverage. He indicated those options could involve spending additional money to help with reinsurance.
“It would be temporary, and it has to be contingent on getting major reforms so we actually fix the situation,” Renner told reporters. “I do not want to be in a situation where we make any kind of new long-term taxpayer commitment to underwrite insurance. That is not the goal. The goal is to have a healthy private market, to then begin depopulating (removing policies from) Citizens so that we get back to where we were not so many years ago, which is a healthy, vibrant market where people can not have a cardiac arrest when they get their renewal bills.”
Hurricane risk might seem like the obvious problem, but there is a more insidious driver in this financial train wreck.
Finance professor Shahid Hamid, who directs the Laboratory for Insurance at Florida International University, explained how Florida’s insurance market got this bad – and how the state’s insurer of last resort, Citizens Property Insurance, now carrying more than 1 million policies, can weather the storm.
What’s making it so hard for Florida insurers to survive?
One is the rising hurricane risk. Hurricanes Matthew (2016), Irma (2017) and Michael (2018) were all destructive. But a lot of Florida’s hurricane damage is from water, which is covered by the National Flood Insurance Program, rather than by private property insurance.
Another reason is that reinsurance pricing is going up – that’s insurance for insurance companies to help when claims spike.
But the biggest single reason is the “assignment of benefits” problem, involving contractors after a storm. It’s partly fraud and partly taking advantage of loose regulation and court decisions that have affected insurance companies.
It generally looks like this: Contractors will knock on doors and say they can get the homeowner a new roof. The cost of a new roof is maybe $20,000-$30,000. So, the contractor inspects the roof. Often, there isn’t really that much damage. The contractor promises to take care of everything if the homeowner assigns over their insurance benefit. The contractors can then claim whatever they want from the insurance company without needing the homeowner’s consent.
If the insurance company determines the damage wasn’t actually covered, the contractor sues.
So insurance companies are stuck either fighting the lawsuit or settling. Either way, it’s costly.
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Other lawsuits may involve homeowners who don’t have flood insurance. Only about 14% of Florida homeowners pay for flood insurance, which is mostly available through the federal National Flood Insurance Program. Some without flood insurance will file damage claims with their property insurance company, arguing that wind caused the problem.
How widespread of a problem are these lawsuits?
Overall, the numbers are pretty striking.
About 9% of homeowner property claims nationwide are filed in Florida, yet 79% of lawsuits related to property claims are filed there.
The legal cost in 2019 was over $3 billion for insurance companies just fighting these lawsuits, and that’s all going to be passed on to homeowners in higher costs.
Insurance companies had a more than $1 billion underwriting loss in 2020 and again in 2021. Even with premiums going up so much, they’re still losing money in Florida because of this. And that’s part of the reason so many companies are deciding to leave.
INSURANCE INFORMATION INSTITUTE VIA THE CONVERSATION
Assignment of benefits is likely more prevalent in Florida than most other states because there is more opportunity from all the roof damage from hurricanes. The state’s regulation is also relatively weak. This may eventually be fixed by the legislature, but that takes time and groups are lobbying against change. It took a long time to pass a law saying the attorney fee has to be capped.
Thirty more are on the Florida Office of Insurance Regulation’s watch list. About 17 of those are likely to be or have been downgraded from A rating, meaning they’re no longer considered to be in good financial health.
The ratings downgrades have consequences for the real-estate market. To get a loan from the federal mortgage lenders Freddie Mac and Fannie Mae, you have to have insurance. But if an insurance company is downgraded to below A, Freddie Mac and Fannie Mae won’t accept it.
Florida established a $2 billion reinsurance fund in May that can help smaller insurance companies in situations like this. If they get downgraded, the reinsurance can act like co-signing the loan so the mortgage lenders will accept it.
But it’s a very fragile market.
Ian could be one of the costliest hurricanes in Florida history. I’ve seen estimates of $40 billion to $60 billion in losses. I wouldn’t be surprised if some of those companies on the watch list leave after this storm. That will put more pressure on Citizens Property Insurance, the state’s insurer of last resort.
Some headlines suggest that Florida’s insurer of last resort is also in trouble. Is it really at risk, and what would that mean for residents?
Citizens is not facing collapse, per se. The problem with Citizens is that its policy numbers typically swell after a crisis because as other insurers go out of business, their policies shift to Citizens. It sells off those policies to smaller companies, then another crisis comes along and its policy numbers rise again.
Three years ago, Citizens had half a million policies. Now, it has twice that. All these insurance companies that left in the last two years, their policies have been migrated to Citizens.
Ian will be costly, but Citizens is flush with cash right now because it had a lot of premium increases and built up its reserves.
Citizens also has a lot of backstops.
It has the Florida Hurricane Catastrophe Fund, established in the 1990s after Hurricane Andrew. It’s like reinsurance, but it’s tax-exempt so it can build reserves faster. Once a trigger is reached, Citizens can go to the catastrophe fund and get reimbursed.
More importantly, if Citizens runs out of money, it has the authority to impose a surcharge on everyone’s policies – not just its own policies, but insurance policies across Florida. It can also impose surcharges on some other types of insurance, such as life insurance and auto insurance. After Hurricane Wilma in 2005, Citizens imposed a 1% surcharge on all homeowner policies.
Those surcharges can bail Citizens out to some degree. But if payouts are in the tens of billions of dollars in losses, it will probably also get a bailout from the state.
So, I’m not as worried for Citizens. Homeowners will need help, though, especially if they’re uninsured. I expect Congress will approve some special funding, as it did in the past for hurricanes like Katrina and Sandy, to provide financial aid for residents and communities.
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Florida officials this week announced the hard launch of My Safe Florida Home, a program that provides up to $10,000 grants for wind-mitigation efforts for homeowners in vulnerable areas. Once completed, the fortification work can result in significant discounts on property insurance premiums.
The Florida Legislature approved the program in May, along with $150 million – enough funding for about 140,000 to 145,000 grants, state Chief Financial Officer Jimmy Patronis said in a statement Monday. Homeowners can apply here. If accepted, homes will be inspected free of charge, and owners can then apply for matching grants.
Similar programs had existed in some parts of the state in years past, but this one covers most of the coastal areas. Sales-tax exemptions also are available for materials used for home hardening, through June of 2024.
Not everyone in the hurricane-plagued state is eligible for the wind program, and some strings are attached. The home must be in a wind-borne debris region of the state. A map provided on the program’s website suggests the area (with expected winds of 140 mph or greater) runs roughly from Pasco County on the west coast, southeast to Highlands County, then due north to Volusia County. Parts of counties in the Panhandle also are eligible.
Homeowners also must match half the grant amount. For every $1 the owner provides, the program will provide $2 in grants. To receive the maximum grant amount of $10,000, an eligible homeowner would have to provide $5,000 of their own funds, Patronis’ office said. Patronis’ Department of Financial Services did not say how much the retrofitting would reduce HO insurance premiums, but for one Pensacola home that is not in a flood zone, for example, recent wind mitigation work cut the annual premium from about $6,600 to about $2,500.
Contractors who want to participate in the program can also apply here to become approved for the work, which may include hurricane straps or clips from roof to walls, hurricane shutter systems, and impact-resistant doors and windows.
The speed of the program’s roll out has met with some criticism, after two hurricanes hit the state this fall, four months after the plan was approved by lawmakers. An editorial in the Tampa Bay Times newspaper last week asked, “What is taking so long?”
The Department of Financial Services said it pushed out a “soft launch” of the program earlier this month, and has already received more than 400 applications. The office said in October it directed the program to be expedited during the procurement process for home inspectors.
Inspector contracts went into effect on Oct. 31. The MSFH program initiated a soft launch on Nov. 18, to begin accepting applications for inspections and to test program online systems, before officially launching on Monday.
The newspaper also called for the Legislature, which is set to meet again in special session next month, to expand the program. The paper noted that under existing funding, only about 12,000 homes would be fortified, if each homeowner received the maximum amount.
“When hardened homes stand up to a hurricane, there are fewer insurance claims,” the editorial reads. “That’s good for both private insurance companies and state-run Citizens” Property Insurance Corp.
Wind-mitigation, now baked into Florida building codes, can make a significant difference, reports have indicated. After Hurricane Ian slammed southwest Florida Sept. 28, many newer homes were left standing, with minimal wind damage to roofs and windows, photographs show. Many older homes, most of which were not elevated to newer required levels, were wiped out by the flooding or suffered huge amounts of wind damage.
Photo: Tim Mullen, 47, and Michael Brissette, 11, cover their windows with hurricane shutters in preparation for Tropical Storm Elsa, in 2021 in Tampa. (Arielle Bader/Tampa Bay Times via AP)
TALLAHASSEE – Nearly a month after Gov. Ron DeSantis said he would be calling state lawmakers back to the Florida Capitol for a second time this year to address the state’s property insurance crisis, the specific dates of the legislative session have not yet been publicly announced.
Some lawmakers believe the special session could occur in mid-December, when legislators are already planning to be in Tallahassee for other scheduled meetings.
“The governor announced in October that he is working with legislative leadership to convene a special session in December to pass additional reforms to further stabilize Florida’s property insurance market that will introduce more competition and policies designed to lower the prices for consumers,” the governor’s spokesperson told News 6 Monday. “We will continue working with President-Designate [Kathleen] Passidomo and Speaker-Designate [Paul] Renner to find innovative solutions to address these issues and look forward to announcing additional details regarding the planned special session soon.”With Florida’s property insurance crisis worsening after Hurricane Ian, Gov. Ron DeSantis is calling legislators back to Tallahassee to address the issue, as well as looking at offering property tax relief to those who lost their homes and businesses to the storm.
“I think you’re going to get things accomplished [during the special session]. The question is, is it enough?” Brandes told News 6 earlier this month. “The industry as a whole has stage 4 terminal cancer right now.”
The Federal Housing Administration (FHA) has announced regulations to allow mortgagors the option to purchase private flood insurance on FHA-insured mortgages for properties located in Special Flood Hazard Areas.
Beginning Dec. 21, the FHA will allow mortgagors to purchase private flood insurance in satisfaction with the mandatory purchase requirement of the Flood Disaster Protection Act of 1973.
“We know borrowers face affordability challenges right now, yet a flood can be devastating to a family who is not properly insured,” Julia Gordon, federal housing commissioner, said in an FHA press release. “The choice to select a private flood insurance option may enable some borrowers to obtain policies that are less expensive or provide enhanced coverage.”
The FHA requires insured mortgages for properties in Federal Emergency Management Agency (FEMA)-designated SFHAs to have flood insurance. Previously, only flood insurance obtained through the National Flood Insurance Program (NFIP) was permissible for FHA-insured mortgages – which limited choices for consumers.
Advocates have long argued opening SFHA’s to private insurers would increase affordability and options for buyers. When commenting during the rulemaking process, some said private flood insurance gives more individuals and families the opportunity to own or refinance homes, along with the ability to save money.
“Home buyers across the nation will benefit from this long-awaited rule,” said Craig Poulton, CEO of Salt Lake City-based Poulton Associates, which sells its own type of flood and catastrophe insurance.
Poulton highlighted the timing of the amended rule’s debut. He explained that had it been approved, say, six years ago, when a separate rule calling for lenders to accept private market flood policies was implemented, it would have had a greater practical benefit for mortgagors. More people were building and buying homes at that time, whereas the housing market is now in a severe slump.
The now-approved changes were formally proposed in November 2020.
As of Sept. 30, 2021, the FHA had active insurance on more than 7.8 million single-family forward and reverse mortgages, with a total unpaid principal balance of more than $1.2 trillion.
“We are grateful that the FHA has finally decided that accepting private flood insurance is just as wise as accepting private homeowners’ insurance,” Poulton said. “We wish it had not taken them so long.”
Per the press release, ensuring that borrowers are protected against flood risk is a key component of the U.S. Department of Housing and Urban Development Climate Action Plan.
The Home Insurance Guru 