Florida governor signs more property insurance reforms into law
Under the new law, insurers will be protected from excessive jury awards in lawsuits involving property damage or personal injury.
The Florida governor signed a sweeping property insurance bill on Friday that he said is aimed at keeping the property damage claims process from being resolved in the courtroom.
In signing the bill in Fort Myers, Florida, Gov. Ron DeSantis remarked that the “property insurance market was very good for lawyers,” but the status quo was not in the public’s best interest.
“The issues in Florida’s property insurance market did not occur overnight, and they will not be solved overnight,” DeSantis said. “The historic reforms signed today create an environment which realigns Florida to best practices across the nation, adding much-needed stability to Florida’s market, promoting competition, and increasing consumer choice.”
The bill marks the second series of property insurance reforms that have been enacted in Florida this year. In May of this year, DeSantis signed a series of bills, which he said at the time were the most significant reforms enacted by the Florida legislature in generations.
Christopher Tidball is an insurance claims process expert. Tidball said the new law, SB 2-A, does not account for the hundreds of thousands of property lawsuits clogging courts in the Sunshine State, a jurisdiction in which 80% of all U.S. property-related litigation occurs while accounting for 10% of nationwide property insurance premiums.
And Tidball explained that while the Legislature, in sending these bills to DeSantis’ desk, claimed that it had stabilized the market by eliminating one-way attorney fees and curbing assignments of benefits, this legislation will not reduce policyholders’ current premiums in the near future. Still, he said the bill is a step in the right direction, even if it means a lot of “unhappy trial lawyers.”
“The insurance lobby won the day, but the question is what the trial lobby will do,” Tidball said. “As is usually the case, Floridians will foot the bill for all of the premiums.”
Under the new law, insurers will be protected from excessive jury awards in lawsuits involving property damage or personal injury, allowing insurance companies to provide affordable coverage to Florida residents while keeping premiums stable, according to the American Tort Reform Association.
For instance, in 2016, insurers paid $1.5 billion defending these lawsuits, which doubled to $3 billion by 2021. The ATRA claimed that 71% of litigation costs went to the pockets of plaintiff attorneys, while their clients reaped a mere 8% of those monies and defense attorneys collected 21% of that amount. And as of August, five insurance companies have gone out of business, after four exited the market in 2021. Additionally, FedNat Holding Co., a regional insurance holding company, along with several of its wholly owned subsidiaries voluntarily entered Chapter 11 bankruptcy in a Florida court in mid-December 2022.
The new law will enhance the Office of Insurance Regulation’s ability to “complete market conduct examinations of property insurers” following a hurricane to hold insurance companies accountable while preventing the abuse of the property appraisal process, according to the Florida governor’s office.
DeSantis’ office noted that the new law would reduce timelines for insurers to get payments out the door and back into the hands of policyholders as they rebuild their lives from the devastation inflicted by recent and future hurricanes. The Republican governor also signed into law SB 4-A on Friday, which provides property tax relief for homes rendered uninhabitable due to the storms.
However, at the state Senate hearing Monday, Democrat Geraldine Thompson argued that insurers have minimal problems with Citizens Property Insurance rates, litigation or reinsurance. SB 2A, in part, mandated that Citizens return to its pre-2007 policy of being “noncompetitive” with private insurers’ rates, who have faced soaring prices on the private reinsurance market.
“We have insurance companies that operate as subsidiaries in the state of Florida and send the money out of Florida, then claim that they are insolvent,” Thompson said, adding that the companies still “pay their executives millions of dollars. Until we deal with that, we’re really not solving the insurance problem.”
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