Despite the arrival of Senate Bill 76 (SB76), designed to restructure litigation rules for disputed insurance claims in Florida, the number of new litigated claims reported by the state’s largest P&C insurers increased by 37% in January 2022 when compared with the prior month, according to the latest data from CaseGlide.
The analysis shows that this is the first significant increase since a fairly steady five-month decline from a high of 6,663 new litigated claims in July 2021.
CaseGlide, a provider of claims litigation management software, compiles numerous datasets including litigated claims specific to 17 of the largest property and casualty (P&C) insurance firms in Florida.
Their data reveals that while it’s still uncertain what impact SB76 will ultimately have on the state’s insurance market, all but one of the 17 insurers it regularly monitors showed a month-over-month increase in January when compared with December 2021.
In fact, five of the companies reported greater than 40% month-over-month increases, with only two showing an increase of less than 20%. One of the P&C insurers recorded a decline of 16% month-over-month, says CaseGlide.
Governor Ron DeSantis signed SB76 in June of last year in an effort to reform Florida’s insurance market. Among other aims, the bill restructures litigation rules for disputed insurance claims by reducing time limits associated with them and lowering insurers exposure to attorney fee lawsuits.
For legislators, the goal is to try to stop rising prices and reduce insurance related litigation that has been inflating claims.
“Although actual lawsuit volumes have decreased since Senate Bill 76 (SB76) became effective, Florida insurers’ litigation exposure is still concerning,” explained Wesley Todd, Chief Executive Officer (CEO) of CaseGlide.
“January’s steep increase could be the result of a return to normalcy following the holidays, or it could be that claims are now flowing through SB76’s new process and into litigation. It bears mentioning that these numbers alone likely aren’t enough to assess the state of the market.”
“Before initiating litigation, SB76 requires plaintiff’s attorneys to file pre-litigation notices. Should the notices be added to the lawsuits when calculating the total litigation? Based on our analysis, we think yes, for now. If you consider the total pre-suit notices and lawsuits, insurers may unfortunately still have a similar total exposure to what they had in 2020 when the legislature first started considering SB76,” he continued.
For reinsurers, a big challenge in Florida is the abuse of assignment of benefits (AOB), which involves an agreement that transfers the rights and benefits to an insurance claim to a third-party. The result has been inflated and fraudulent claims, which adds to loss costs for insurance companies.
In January 2022, CaseGlide finds that AOB cases as a percentage of all new litigated cases dipped to 31% from 33% in December 2021. However, for the second month running, AOB represents more than 30% of new litigation and has actually been rising steadily from the 17% – 20% registered in H1 2021.
“It’s still too early to tell if SB76 will lead to decreased litigation frequency and severity. Everyone is investing a lot into the new process to create a better insurance environment for all Floridians. As the data continues to develop, we will get a clearer picture,” said Todd.