An approach of Reinsurance News’ industry contacts has found abusive litigation practices to be the biggest issue currently facing Florida’s insurance and reinsurance market.
For several years Florida’s property insurance market is perceived to have been plagued by abusive, even underhanded behaviour that has led to elevated loss and litigation costs, higher insurance rates, and shifting coverage availability throughout the state.
In fact, information from the National Association of Insurance Commissioners (NAIC) Market Conduct Annual Statement (MCAS) Data Call shows that Florida accounted for 76.45% of all homeowners’ lawsuits opened against insurers in the US in 2019, despite only accounting for 8.16% of all homeowners insurance claims that year.
The information was included in letter sent recently to Florida House Commerce Committee Chair Blaise Ingoglia, from Florida Insurance Commissioner David Altmaier, in an effort to underline the severity of the situation.
Without meaningful reform it’s likely millions of Floridians on low or fixed incomes will continue to pay higher prices on homeowners’ insurance.
Concurrently, insurance companies continue to be hit hard, leading to increased pressure on state-backed firm Citizens, who takes on policies from failed insurers. The insurer actually gained over 100,000 policies over this past year alone.
In fact, the issue regarding Citizens and concerns around it taking on too much Total Insurance Value was decided by 9% of our industry respondents to be the state’s biggest concern, although it’s worth noting that many seem to consider the problem a direct result of litigation abuse, and voted accordingly.
The same applies to the issue to rising reinsurance costs, which received 35% of the vote.
Thankfully, meaningful legislative reform appears to have taken hold with the recent passing of bill SB 76, which aims to curb the out-of-control insurance rates for homeowners.
Issues still remain with the bill, however, with its perceived implications for both policyholders and insurers much debated.