Florida lawmakers convened Monday for a special legislative session in a bid to rescue the state’s crumbling home insurance market.

A slew of insurance companies are near bankruptcy after years of losses, and after two hurricanes hit the Sunshine State this season.

At least six Florida carriers became insolvent this year — including one, Fednat Holding Company, which filed for bankruptcy today. This summer, Demotech, an insurance rating agency, downgraded the ratings of 27 companies, suggesting they could be facing a similarly dire fate. Already most large carriers have either dropped policies or fled the state altogether. Floridians pay the highest insurance premiums in the country, as much as four times more than homeowners in other regions, according to the Insurance Information Institute, an industry group.

In place of insolvent carriers, Citizens Property Insurance, the state-backed carrier created as a last resort for Florida homeowners, topped 1 million policies this summer — a number not seen since 2014. 

This year’s onerous hurricane season further complicated the picture. Hurricane Ian, which slammed into the Gulf Coast as a Category 4 storm in September, could become the state’s most expensive disaster, costing between $35 billion and $55 billion, according to estimates from Fitch Ratings. Hurricane Nicole became one of the nation’s strongest storms to make landfall in November, the tail end of the hurricane season in Florida. 

Both the Florida House and Senate, ahead of this week’s session, released similar bills, which are both over 100 pages long. They include proposals that would make it easier for Citizens Property Insurance to drop policies, limit claimholder lawsuits, and levy a hefty bill on Florida taxpayers to shore up the reinsurance market.

Under the proposal, those covered under Citizens would not be able to renew their coverage if they receive a policy offer that’s within 20 percent of the cost of Citizens’ premiums, and would be forced to buy flood insurance, of which the federal government is the largest provider.  

The bill also calls for the creation of a taxpayer-funded, $1 billion program to offer reinsurance, policies that cover insurance companies themselves. Instead of holding cash reserves large enough to cover most claims, insurance companies in Florida have heavily relied on their reinsurance policies to pay for homeowner claims.  

Rates for reinsurance are typically renegotiated each year. This year, they’re expected to rise by more than 10 percent, especially in regions like Florida hard hit by natural catastrophes, according to Fitch Ratings.

The $1 billion program would likely be on top of another $2 billion reinsurance program that lawmakers approved earlier this year. Critics have lambasted the move as a bailout for the insurance industry, rather than relief for homeowners. When the initial bill covering the reinsurance program passed this past spring, state Sen. Janet Cruz, a Democrat from the Tampa area, described the provision as “a tax giveaway” for insurers.

In the latest proposal, lawmakers are also eyeing ways to limit lawsuits brought by contractors and homeowners. The insurance industry has long complained of so-called Florida roofer scams, whereby contractors offer new roofs to homeowners — even if there was little damage — and sue insurance companies in hopes of getting a payout. Despite Florida representing only 9 percent of homeowners insurance claims nationwide, it accounts for 79 percent of all insurance lawsuits, per data from the Insurance Information Institute. 

The proposed bill would also hasten the timeline for when homeowners can file claims and when insurance companies would be required to respond to them.

The legislature is expected to be in session through Friday and, given that Republicans dominate the legislature, the bills could well pass. If so, it would represent the largest overhaul of Florida insurance laws in years. That said, this is not the first time change has been promised on the insurance issue, and not delivered.

Julia Echikson can be reached at jechikson@commercialobserver.com.