Hurricane Irma left the side of Overseas Highway piled high with debris from Key Largo to Key West. BARRY GAUKEL/Keys Weekly

Republicans and Democrats agree on nearly nothing these days, except when it comes to property insurance in Florida. On that topic, politicians — including the two who want to represent the Florida Keys in Tallahassee — are unanimous in their opinion: the industry itself is as big a disaster as a hurricane. 

Insurance premiums are skyrocketing. The industry is plagued by lawsuits that absorb funding that should be spent on claims to repair homes after a storm. 

Both candidates for the Florida House who want to represent the Florida Keys — incumbent Republican Jim Mooney and Democrat Adam Gentle — have repeated their frustrations with Florida’s property insurance industry and its state-run Citizens Property Insurance at multiple candidate forums.

Recently, Shahid Hamid, a finance professor at Florida International University, who directs the Laboratory for Insurance at FIU, wrote an article for The Conversation outlining the problems with Florida’s insurance industry. 

The Keys Weekly takes a look at Hamid’s explanation, as well as the local candidates’ positions about needed changes to the industry in Florida.

Hamid writes on Oct. 5 that Florida’s insurance premiums have nearly doubled in the past five years, yet private insurance companies are still losing money and going out of business. 


“The biggest single reason is the ‘assignment of benefits’ problem, involving contractors after a storm,” Hamid writes. “It’s partly fraud and partly taking advantage of loose regulation and court decisions that have affected insurance companies.

“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 to $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.”

Homeowners also can decide to sue over the amount of damage an insurer will cover.

Another issue is flood insurance. Remember, windstorm insurance only covers wind damage, not damage caused by storm surge flooding, which has been increasing in recent years. According to Hamid, only about 14% of Florida homeowners pay for flood insurance.

“Some without flood insurance will file damage claims with their property insurance company, arguing that wind caused the problem,” Hamid writes. “How widespread of a problem are these lawsuits? … About 9% of homeowner property claims nationwide are filed in Florida, yet 79% of lawsuits related to property claims are filed in Florida. 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.

“…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.”

Hurricane Irma ripped the roof off a home on Sugarloaf Key in September 2017. KEYS WEEKLY FILE PHOTO

What do Keys candidates say about the problem?

Florida Keys State Rep. Jim Mooney echoed Hamid’s frustration with the insurance industry and the costly lawsuits during an Oct. 3 candidates forum hosted by Hometown.

“The insurance industry is just an absolute disaster,” Mooney said at the forum. “There’s nobody in Florida that doesn’t recognize that. … The reality is, every bill we’ve passed to make the insurance companies drop rates a bit, has all been brought into litigation. All the bills that passed, bipartisanly, are now in litigation. We stepped on the wrong toes. We stepped on the attorneys’ toes. And until we can figure out how to get past the lawsuits, there is not going to be a quick fix in Tallahassee, there’s not gonna be a quick fix in Washington. We have to take the legalese out of it. And that’s not gonna be an easy task.”

At the same candidate forum earlier this month, Democrat Adam Gentle, an anti-corruption attorney by trade, told the audience, “The first issue is, we don’t have an insurance market anymore … because Citizens, our insurer of last resort, has become the insurer of first resort for many Floridians. And we’ve squeezed the private market so that Citizens is undercutting the market by 50%. We have to reinvigorate our market, introduce competition and make sure Citizens truly is the insurer of last resort.”

Gentle also discussed the problem of lawsuits and corruption in the insurance industry.

“The real problem is corruption. … Corruption in claims. Corruption in rackets between builders and insurance companies. That needs to be investigated. … There are things we need to do to make our system less corrupt and also have a more vigorous market.”

Gentle also pointed out at a July candidates forum “the news about $100 million in litigation fees that Citizens pays due to fraud in our marketplace. As your state representative, I would appoint a commission to investigate that fraud so our insurance dollars are actually used to pay for repairs when there’s a storm and not to settle out fraudulent litigation.”

Plenty of people in Tallahassee and elsewhere throughout Florida seem able to define the problems with Florida’s insurance industry, but few seem able to solve them without lawyers and lawsuits getting in the way. And the catastrophic costs caused by Hurricane Ian aren’t making reform any easier.

Mandy Miles drops stuff, breaks things and falls down more than any adult should. An award-winning writer, reporter and columnist, she's been stringing words together in Key West since 1998. "Local news is crucial," she says. "It informs and connects a community. It prompts conversation. It gets people involved, holds people accountable. The Keys Weekly takes its responsibility seriously. Our owners are raising families in Key West & Marathon. Our writers live in the communities we cover - Key West, Marathon & the Upper Keys. We respect our readers. We question our leaders. We believe in the Florida Keys community. And we like to have a good time." Mandy's married to a saintly — and handy — fishing captain, and can't imagine living anywhere else.