Florida is a hotbed for insurance litigation
Shocking new data shows how insurers are being disproportionately affected by lawsuits filed by Florida homeowners.
Florida’s property insurance market has endured many challenges in recent years, from large catastrophe claims and high reinsurance costs to an increasing amount of claims going to court. Now, a new analysis shines the spotlight on just how severe insurance litigation is affecting the Sunshine State.
In an April 2 letter to Florida House Commerce Committee Chair Blaise Ingoglia, Florida Insurance Commissioner David Altmaier pointed to data that shows that Florida accounted for 76.45% of all homeowners’ lawsuits opened against insurance companies in the U.S. in 2019 even though the state only accounts for 8.16% of all homeowners insurance claims filed that year.
The data was mined by the Office of Insurance Regulation (OIR) from the National Association of Insurance Commissioners (NAIC) Market Conduct Annual Statement (MCAS), which is a regulatory tool used to collect information from insurers to identify concerns regarding claims and underwriting.
The results for 2019, the most recent available data, “are not an anomaly,” Altmaier emphasized.
Since 2016, Florida has accounted for more than 60% of national homeowners insurance suits filed annually.
The MCAS data also reveals that Florida’s ratio of suits opened to claims closed without payment is 27.75%. That is eight times higher than Connecticut, the state with the second-highest ratio of suits opened to claims closed without payment at 3.4%, said the letter.
Altmaier didn’t explain why Florida is so disproportionally affected by insurance litigation. The OIR even analyzed the litigation to claims ratio of Florida-only and regional insurers to see if these companies were more affected than national carriers; however, the OIR did not identify such a trend.
“While we continue to explore these and other possibilities to explain the disparity, OIR does not have a readily available explanation for Florida’s outlier status other than to simply state that Florida is experiencing far more claims-related litigation than the 47 other reporting states,” wrote Altmaier.
Altmaier’s letter was sent to Chair Ingoglia just days before the Florida Senate passed SB 76, a bill that addresses litigation cost drivers in the property insurance market.
Currently, Florida allows plaintiffs to collect attorney fees when they prevail in cases against insurance companies, with the amounts typically set by calculating the number of hours spent on a case and a reasonable hourly rate. If signed into law, SB 76 would limit fees paid to attorneys who represent plaintiffs, which is expected to reduce litigation against insurers.
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