The National Association of Mutual Insurance Companies (NAMIC) has commented on Florida’s special session on the property insurance crisis, which it sees as an opportunity for the Legislature to pass critical reforms to address some of the most pressing issues that have led to the current crisis in the state’s insurance market.
The special session commenced yesterday and will run through this week, with government officials to consider legislation related to property insurance, reinsurance, changes to the Florida Building Code that could improve the affordability of property insurance, the Office of Insurance Regulation, civil remedies, and appropriations.
Florida’s Chief Financial Officer (CFO), Jimmy Patronis, has already revealed five initiatives that will be tabled during the session that are designed to tackle fraud and litigation in the state.
“The package, while not perfect, makes much-needed progress in substantially reforming the litigation environment that has allowed rampant lawsuit abuse in Florida in recent years and has sent the marketplace into a slow-motion collapse,” said Caitlin Murray, NAMIC regional vice president – Southeast said.
Florida currently represents only 9% of property claims, but accounts for 79% of insurance lawsuits in the U.S.
The bill seeks to correct that by canceling attorney fee multipliers and one-way attorney fee awards under an assignment of benefits, eliminating the incentive for attorneys to push fraudulent claims, while also seeking to reform Florida’s problematic bad faith laws that have enriched a select few attorneys at great cost to consumers.
“As the bill currently stands, we believe it will improve the property insurance climate and will leave Florida policyholders in a better place than they are today, particularly in reforming Florida’s broken bad faith and attorney’s fees statutes that incentivize unnecessary litigation and drive costs upward,” Murray said.
“NAMIC anticipates this session will lead to fewer lawsuits and, as those costs fall, insurers will be encouraged to do business in a more stable litigation environment in Florida.”
However, NAMIC remains concerned about certain claims handling and underwriting restrictions in the bill that restrict insurers’ ability to set appropriate rates that reflect risk, particularly in deciding which properties and roofs to insure.
Property insurance options are still shrinking for Floridians as insurers have lost more than $1 billion in each of the last two years in the state, the Association notes, and several insurers have become insolvent and gone out of business, further exacerbating the problem for those that remain and their policyholders.
“While not all of the market’s problems were addressed in the bill, we commend the Governor’s Office and the bill sponsors for taking this bold step toward improving the insurance marketplace in Florida,” Murray continued.