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Small businesses in the United States struggled with uninsured damages and lost revenue following a record-breaking year of hurricanes and wildfires, according to a Federal Reserve survey published on Tuesday.

The report by the Dallas, New York, Richmond, and San Francisco Fed banks examined 1,800 businesses with fewer than 500 employees in zip codes with disasters designated by the Federal Emergency Management Agency. It found, 40 percent of small firms in these areas had natural-disaster related losses, and 35 percent lost more than $25,000 in revenues.

The report paints a worrisome picture for local economies after a record-breaking year of weather and climate-related disasters that cost the United States an estimated $306 billion in 2017, the third-warmest year on record, according to the U.S. National Oceanic and Atmospheric Administration.

“Small businesses are primary drivers of job growth and their ability to rebound from disasters is critical to regional economic recovery,” said Claire Kramer Mills, assistant vice president at the New York Fed.

Small businesses employ half of private-sector workers and are the primary creators of new jobs in the United States, according to a 2015 U.S. Census Bureau study.

The survey found last year’s storms hit minority communities particularly hard. Some 54 percent of Hispanic-owned firms in affected areas reported natural disaster-related losses, compared to 40 percent of White-owned firms and 35 percent of Black or African American-owned firms.

The storms hit lodging and retail businesses hardest. Some 52 percent of leisure and hospitality firms and 47 percent of retail firms in affected areas reported natural disaster-related losses, the highest shares of all industries.

Small and young businesses are especially vulnerable to extreme weather and other natural disasters compared to their larger counterparts. Financing options are limited: federal relief funds can take months to reach communities and few small business are insured against such storms.

If you’re driving right now, it’s far more likely you are reading this on your phone than you would have been a year ago.

Despite a harrowing surge in traffic fatalities, American drivers appear to be getting worse at avoiding Instagram, e-mail and other mobile-phone distractions while driving. More people are using their phones at the wheel, and for longer periods of time, according to a study published by Zendrive, a San Francisco-based startup that tracks phone use for auto insurers and ride-hailing fleets.

“As you have more young drivers on the road, and as people increasingly become addicted to their smartphones, it will continue being a major health issue—almost an epidemic—in this country,” said Zendrive founder Jonathan Matus.

From December through February, Zendrive technology monitored 4.5 million drivers who traveled 7.1 billion miles, comparing the results with the year-earlier period. Roughly two out of three of those people used a mobile phone at least once. Among those who picked up their phones, they used them for an average of almost four minutes—a 5 percent increase from last year.

“It might not seem like a lot, but even 10 seconds is very significant when you look at the number of people on the road,” Matus said.

Phone use increased dramatically across the country, including in 14 states that have banned handheld phones behind the wheel. Phones were being used more often in California, Oregon and Washington, where lawmakers drastically strengthened regulations last year, allowing only hands-free use of mobile phones. Vermont was the only U.S. state in which Zendrive recorded a decline in drivers on phones.

In Mississippi and Rhode Island, the worst states for distracted driving, subject drivers spent almost 8 percent of their time on the phone. Rhode Island, in particular, may provide an interesting test case when its hands-free law takes effect this summer.

Phone use peaks around 4 p.m., when three out of four drivers, on average, are stealing a peak at their screens, perhaps trying to beat traffic and finish work at the same time. It drops steadily through the night, though drivers who use phones just before midnight tend to stay on them the longest, more than four minutes at a time. Those with iPhones used their devices far more often, and far longer, than those on Android-based handsets.

One of the few bright spots of the study is that drivers tend to use their phone as they first start out on a trip, perhaps ending a message thread before settling in for the journey. While that window of time isn’t any safer than any other moment behind the wheel, Matus believes it may present an opportunity for changing behavior. A publicity campaign urging drivers to finish screen work, or just catch up on Instagram, before setting out could produce results.

“Legislation, by itself, is clearly not enough,” he explained.

Dog bites and other dog-related injuries accounted for more than one third of all homeowners liability claim dollars paid out in 2017, costing almost $700 million.

That’s according to the Insurance Information Institute (I.I.I.) and State Farm, the largest writer of homeowners insurance in the United States.

An analysis of homeowners insurance data by the I.I.I. found that the number of dog bite claims nationwide increased to 18,522 in 2017, compared to 18,122 in 2016, which was a 2.2 percent increase.

The average cost per claim increased by 11.5 percent. The average cost paid out for dog bite claims was $37,051 in 2017, compared with $33,230 in 2016.

“The increase in the 2017 average cost per claim could be attributed to an increase in severity of injuries,” said Kristin Palmer, chief communications officer with the I.I.I. “But the average cost per claim nationally has risen more than 90 percent from 2003 to 2017, due to increased medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs.”

A typical premium charged by the National Flood Insurance Program is slated to rise about eight percent in the coming year, with the estimated average premium going from $866 to $935.

When various surcharges are added, the total average amount billed a policyholder will increase to $1,062.

However the premium hikes are likely insufficient to keep the program from sinking into debt, according to a recent government report.

The higher premiums and other changes for new businesses and renewals began April 1, according to the Federal Emergency Management Agency (FEMA) in a bulletin summarizing NFIP program changes effective April 1, 2018. The changes bring the NFIP in line with provisions of flood insurance reform laws including the Biggert Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014.

The 2012 and 2014 flood insurance laws’ requirements behind the premium and surcharge increases include:

• Premium rates for four categories of Pre-FIRM subsidized policies – non-primary residential properties, business properties, Severe Repetitive Loss (SRL) properties (which includes cumulatively damaged properties), and substantially damaged/substantially improved properties – must be increased 25 percent annually until they reach full-risk rates;
• The average annual premium rate increases for all other risk classes are limited to 15 percent while the individual premium rate increase for any individual policy is simultaneously limited to 18 percent; and
• The average annual premium rate increase for all other Pre-FIRM subsidized policies not covered by the 25 percent category above must be at least 5 percent.
• There are some limited exceptions to the 18 percent cap on premium rate increases for individual policyholders. These include policies on the properties that are subject to 25 percent annual premium rate increases.

The surcharges are not considered premium and, therefore, are not subject to the premium rate cap limitations. As a result, the increase in the total amount charged a policyholder may exceed 18 percent in some cases.

On March 23, the NFIP was reauthorized until July 31, 2018. The extension was included in the $1.3 trillion omnibus spending bill signed by President Donald Trump.

The disasters of 2017 created one of the busiest years for the NFIP to date —by the end of last year, FEMA said the NFIP had paid out more than $8 billion in flood insurance claims during 2017.

Last October, Congress passed and President Trump signed into law a hurricane and wildfire disaster relief bill that provided $16 billion in debt relief to the NFIP, which was about to run out of money to pay claims from hurricanes because it had reached the $30 billion limit on its ability to borrow form the U.S. Treasury.

According to a Congressional Budget Office (CBO) report issued last fall (National Flood Insurance Program Financial Soundness and Affordability), these latest premium increases are unlikely to keep the NFIP from eventually falling into the red again. That’s because the NFIP’s current approach to setting premiums has underestimated how much its claims will cost by about $1.1 billion and legislated surcharges are about $300 million shy of covering the premium discounts given to certain properties, according to the CBO.

CBO concluded that the overall NFIP shortfall is largely caused by underpricing in coastal counties, which account for three-quarters of all NFIP policies nationwide. The difference is largely due to legislated subsidies built into the NFIP and FEMA’s rate-setting system, both of which it says favor coastal policyholders.

Yet despite being favored in pricing, the number of coastal homes with flood insurance has been falling, according to a report by The Associated Press. Why the decline? The report cited rising premiums and banks not enforcing the requirement that any home with a federally insured mortgage in a high-risk area have flood coverage.

The House has passed several reforms of the NFIP but the Senate has not advanced any measures.

With over 900 items on the Florida legislative docket and only 60 days to consider them, it’s not surprising that many bills simply die in committee or are never seriously considered. Add to that a tragic event right in the middle of the session and what you get are shifted priorities. What was important becomes now relegated by something new.

The shooting that happened on Feb. 14, 2018 at Marjory Stoneman Douglas High School in Parkland, Fla., that left 17 people dead led to an uprising of popular support for changes to gun laws in Florida and created this shift in priorities for the Florida Legislature.

Suddenly, the problems in the Florida insurance market became much less important than other issues.

“We had one of the worst tragedies in Florida history drop in our lap,” said Democratic Rep. Jared Moskowitz, a Stoneman Douglas graduate and a lawmaker who was key in helping pass a school safety bill, as reported by The Associated Press. “What happened in the first five weeks of session, I don’t even remember.”

In light of that, there are several insurance-related bills that didn’t make it this year, though they also faced stiff opposition from outside the industry as well.

Assignment of Benefits

For a sixth straight year, the Florida legislature failed to consider reform for assignment of benefits (AOB) abuses associated with water loss claims (not related to weather events).

A homeowner has a water leak and they call a company that promises to repair the leak and all of the damage that the leak created. That’s when they ask the customer to sign the assignment of benefits.

An assignment of benefits allows a contractor to get paid directly by the insurance company, rather than the money being paid to the insured customer. In theory, this system should make the completion of repairs and payment of claims faster. What actually happens at times is that the contractor makes repairs beyond what the insurance company would normally agree to pay. The numbers indicate that there is a rise in these claims and the amounts that are being paid out because of them.

This year’s bill, SB 62, was first introduced to the Senate in August. It was sponsored by Sen. Dorothy Hukill (R-Port Orange) and had the support of both the Florida Property & Casualty Association and the Florida Office of Insurance Regulation.

The bill created several requirements for an assignment of benefits agreement to be considered valid by an insurer, including a provision that allows named insureds to rescind the agreement within seven business days of signing it and a provision that required the assignee (contractor) to provide a copy of the agreement to the insurer within three business days of executing the agreement.

It also made several fee provisions of assignment agreements unenforceable, including a penalty or fee for rescinding the agreement, administration fees and check or mortgage processing fees.

Another assignment of benefits bill, SB 1168, sponsored by Sen. Greg Steube (R-Sarasota) made it out of the Banking and Insurance committee, but died in the Rules committee. This bill included several of the same provisions as SB 62, including the seven-business day rescission period and prohibition on certain fees.

The bill went farther than SB 62 in stating that insurers may not restrict the assignment of post-loss benefits; may not require that a particular vendor make repairs; may not recommend or suggest a particular vendor for repairs unless requested by an insured.

What Does This Really Mean?

It means that for another year, the insurance consumers of Florida will be asked to absorb the rising costs of these claims.

According to a policy study completed by R Street, “AOB lawsuits in Florida are up 90,000 percent since the turn of the 21^st century.”

The Consumer Protection Coalition, a group of business leaders, consumer advocates, real estate agents, construction contractors, insurance agents and insurance trade groups fighting for reforms to AOB abuse, said the number of lawsuits involving an AOB grew from 405 in 2006 to more than 28,000 in 2016 – an increase of more than 6,800 percent. Last year, 20,000 lawsuits were filed as of July.

“Without a legislative remedy, this problem will lead to an increase in homeowners insurance premiums and lack of consumer choice as insurers stop writing or renewing policies in areas with high water losses,” Florida Insurance Commissioner David Altmaier said in January.

Auto Insurance

Two bills related to windshields were introduced this year – SB 396 and HB 811 – were both written to address different problems with coverage for damage to windshields, a form of AOB abuse that the industry has dubbed “auto glass.”

Florida law requires that auto policies provide comprehensive coverage without a deductible.

HB 811, sponsored by Rep. Rene Palsencia (R-Titusville), would have allowed insurers to require an inspection of the windshield before authorizing repair or replacement.

SB 386, sponsored by Sen. Rene Garcia (R-Hialeah), was originally filed for a similar purpose, but after several amendments in committee, it was rewritten to address incentivizing customers to file fraudulent auto glass claims.

Both of these bills were designed to reign in auto glass claims fraud and lawsuits that have been rising at an alarming rate.

According to the Florida Department of Financial Services, in 2006, approximately 400 auto glass AOB lawsuits were filed against auto insurers. In 2016, nearly 20,000 lawsuits were filed.

No-Fault Repeal

SB 150, introduced to the Senate by Sen. Tom Lee (R-Brandon), would have repealed the Florida No-Fault Law. Currently, vehicle owners are required to maintain personal injury protection (PIP) coverage, but not liability for bodily injury.

This bill would have changed that requirement so that owners would have to maintain coverage for bodily injury and property damage, removing the requirement to maintain personal injury protection and replacing it with a requirement to maintain medical payments coverage.

SB 90, sponsored by Sen. Keith Perry (R-Gainesville), would have made amended the law related to texting and driving. Currently, a police officer cannot stop a driver just for texting. It is considered a secondary offense. This bill would have allowed officers to stop drivers specifically for texting and driving.

Is This That Important?

Florida lawmakers have been working on personal injury protection (PIP) reform for the last several years. A significant change within the last few years has been to place a time limit to make the first claim for PIP benefits.

Florida law currently allows most drivers to only carry PIP coverage and property damage liability, where most states require a minimum amount of liability coverage for bodily injury as well as property damage. Since this bill did not pass, the old system is still in place.

Many of these bills had made it past one committee or another and ended up stalling in part because of the shift in legislative focus.

But while the events of February 14 played a part in the legislative priorities, it may not be the only reason that these insurance reforms were not passed. After all, the legislature did pass the Daylight Savings Time bill to keep Florida on Daylight Savings Time.

The typical premium charged by the National Flood Insurance Program is slated to rise about eight percent in the coming year, with the estimated average premium going from $866 to $935.

When various surcharges are added, the total average amount billed a policyholder will increase to $1,062.

However the premium hikes are likely insufficient to keep the program from sinking into debt, according to a recent government report.

The higher premiums and other changes for new businesses and renewals began April 1, according to the Federal Emergency Management Agency (FEMA) in a bulletin summarizing NFIP program changes effective April 1, 2018. The changes bring the NFIP in line with provisions of flood insurance reform laws including the Biggert Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014.

The 2012 and 2014 flood insurance laws’ requirements behind the premium and surcharge increases include:

• Premium rates for four categories of Pre-FIRM subsidized policies – non-primary residential properties, business properties, Severe Repetitive Loss (SRL) properties (which includes cumulatively damaged properties), and substantially damaged/substantially improved properties – must be increased 25 percent annually until they reach full-risk rates;
• The average annual premium rate increases for all other risk classes are limited to 15 percent while the individual premium rate increase for any individual policy is simultaneously limited to 18 percent; and
• The average annual premium rate increase for all other Pre-FIRM subsidized policies not covered by the 25 percent category above must be at least 5 percent.
• There are some limited exceptions to the 18 percent cap on premium rate increases for individual policyholders. These include policies on the properties that are subject to 25 percent annual premium rate increases.

The surcharges are not considered premium and, therefore, are not subject to the premium rate cap limitations. As a result, the increase in the total amount charged a policyholder may exceed 18 percent in some cases.

On March 23, the NFIP was reauthorized until July 31, 2018. The extension was included in the $1.3 trillion omnibus spending bill signed by President Donald Trump.

The disasters of 2017 created one of the busiest years for the NFIP to date —by the end of last year, FEMA said the NFIP had paid out more than $8 billion in flood insurance claims during 2017.

Last October, Congress passed and President Trump signed into law a hurricane and wildfire disaster relief bill that provided $16 billion in debt relief to the NFIP, which was about to run out of money to pay claims from hurricanes because it had reached the $30 billion limit on its ability to borrow form the U.S. Treasury.

According to a Congressional Budget Office (CBO) report issued last fall (National Flood Insurance Program Financial Soundness and Affordability), these latest premium increases are unlikely to keep the NFIP from eventually falling into the red again. That’s because the NFIP’s current approach to setting premiums has underestimated how much its claims will cost by about $1.1 billion and legislated surcharges are about $300 million shy of covering the premium discounts given to certain properties, according to the CBO.

CBO concluded that the overall NFIP shortfall is largely caused by underpricing in coastal counties, which account for three-quarters of all NFIP policies nationwide. The difference is largely due to legislated subsidies built into the NFIP and FEMA’s rate-setting system, both of which it says favor coastal policyholders.

Yet despite being favored in pricing, the number of coastal homes with flood insurance has been falling, according to a report by The Associated Press. Why the decline? The report cited rising premiums and banks not enforcing the requirement that any home with a federally insured mortgage in a high-risk area have flood coverage.

The House has passed several reforms of the NFIP but the Senate has not advanced any measures.