According to an Issues Brief from the Insurance Information Institute (Triple-I), a new Florida law and proposals announced this week have the potential to reduce the cost of homeowners insurance in the state.
Addressing Florida’s Property/Casualty Insurance Crisis, the Triple-I Issues Brief states that reforms put in place in 2022 and the ones proposed this year suggest Florida is serious about fixing the fraud and legal system abuse that has contributed to the state’s insurance crisis.
According to Florida’s Office of Insurance Regulation, the state accounts for nearly 80% of the nation’s homeowners’ insurance lawsuits yet only 9% of all U.S. homeowners’ insurance claims are filed within the state.
Triple-I Issues Brief suggests that this is one of the main reasons Florida’s homeowners insurers cumulatively incurred net underwriting losses of more than $1 billion in both 2020 and 2021.
Further, six insurers who conducted business in Florida became insolvent in 2022 and others either left the state or limited the number of new homeowners insurance policies they sold.
Triple-I says that the first job is to “stop the bleeding”, adding that it will take years for the impacts of the abuse to be wrung out of the system and for policyholders to experience premium benefits.
The Florida state Legislature passed Senate Bill 2A in December 2022, and it was signed into law soon thereafter by Governor Ron DeSantis.
Triple-I’s Issues Brief writes, “Legislation approved during Florida’s late 2022 special session eliminated “one-way attorney fees” for property insurance claims.
“Before the reform, state law required insurers to pay the fees of policyholders who successfully sued over claims, while shielding policyholders from paying insurers’ attorney fees when the policyholders lose.”
The Brief continues, “The legislation also eliminated AOBs [assignment of benefits] – agreements in which property owners sign over their claims to contractors, who then work with insurers. AOBs are a standard practice in insurance, but in Florida, this consumer-friendly convenience has long served as a magnet for fraud.
“The state’s legal environment – including some of the most generous attorney-fee mechanisms in the country – has encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conduct unnecessary or unnecessarily expensive work, then file lawsuits against insurers that deny or dispute the claims.”
DeSantis was joined this week by Senate President Kathleen Passidomo and House Speaker Paul Renner to announce additional reform proposals aimed at reducing instances of fraud and legal system abuse.
