Florida lawmakers on Wednesday approved a bill aimed at addressing problems with the state’s property insurance crisis, and that measure is earning applause from representatives of the insurance industry..
The measure (SB 2A) now heads to Gov. Ron DeSantis for his signature.
“This is a pro-consumer bill that should drive down litigation abuse and put the property insurance market on a path to stability,” said Personal Insurance Federation of Florida (PIFF) President and CEO Michael Carlson.
“The Legislature is right to focus on lawsuits, and Senate Bill 2A includes bold provisions, including the prohibition of the one-way attorney fee, to fully address the property insurance litigation environment in Florida. We are hopeful this outcome will stop Florida from having to play whack-a-mole with new insurance schemes, and we are grateful for its swift passage as it heads to Governor DeSantis.”
If signed, the bill will eliminate assignment of benefits for property claims; do away with one-way attorney fees for property claims; reform the first-party bad faith law to require breach of policy to be proven before the claim can be made; reduce the initial claims filing period from two years to one; permit arbitration and other dispute resolution; and permit the use of proposal for settlement for multiple claimants.
Supporters of this method of property insurance reform believe costs have been passed on to consumers as a result of high litigation costs within the market. That, they argue, has also driven companies out of Florida or out of business entirely, limiting insurance supply even as demand soars.
In 2021, Florida represented 7% of property insurance claims nationwide, yet was home to 76% of insurance litigation, according to data from the Florida Office of Insurance Regulation.
“The Legislature is to be commended for taking aggressive action on this issue during a time of crisis, and we applaud Speaker (Paul) Renner, Chair (Tom) Leek, Chair (Bob) Rommel, President (Kathleen) Passidomo and Chair (Jim) Boyd for taking on this critically important issue,” Carlson said.
“These provisions will reduce the incentive to sue in order for attorneys to profit from fees, and provide relief to Floridians paying attorneys’ salaries through their higher insurance premiums.”
One-way attorney fees in Florida are meant to shield policyholders from legal bills if they need to sue an insurer, but critics say attorneys and contractors exploit the law to file unnecessary suits with the goal of collecting attorney fees. Critics say it has created an unstable insurance market, driven ratepayer fees higher, reduced coverage options, created insurer insolvency and burdened Citizens Property Insurance Corporation, the state’s insurer of last resort.
PIFF is an industry group advocating on behalf of Florida’s insurers, representing national carriers and their subsidiaries. PIFF members write more than $13 billion in premiums in Florida. The group’s mission is to advocate for “a healthy and competitive insurance marketplace for the benefit of Florida consumers.”