Guest Author
As evidenced in today’s House Commerce Committee and last week’s House Judiciary Committee hearings, while some members of Florida’s Legislature have good intentions in proposing changes to current insurance regulations, certain proposals may lead to adverse consequences for both the marketplace and consumers.
Case in point is PCS HB 947 and prevailing party attorney fees. Passage of this bill and the award of prevailing party attorney fees will lead to increased litigation and destabilize Florida’s insurance marketplace. In particular, passage of HB 947 will have a chilling effect on Florida’s insurance market AND reinsurance market, which will see this as a precedent that makes Florida’s process automatically adversarial.
Simply put, the prevailing party standard will, at this time, create uncertainty in the marketplace, which will ultimately lead to increased premiums and put the Florida property market recovery at risk.
Similarly, PCS for CS/HB 643 seeks changes that are not needed. As a former Florida Insurance Commissioner, I continue to have serious concern with certain provisions in this proposed legislation. While determining “fair and reasonable” fees is undoubtedly a worthy endeavor, passing vague legislation BEFORE gathering industry, staff, and OIR input and direction on how to gauge what is “fair and reasonable” is less than optimal. Changes of this magnitude need to be made with thoughtful input from stakeholders to implement these reforms.
Again, I believe this legislation would also have a devastating impact on the appetite of capital investment in Florida’s property insurance market — an unnecessary impediment at a time when the industry is finally showing early signs of recovery.
Florida has seen a recent infusion of capital, the formation of new companies, stabilization in reinsurance pricing, and a significant reduction in the number of Citizens Property Insurance Corporation policies. These are positive indicators that the reforms passed over the last several years are beginning to bear fruit. But capital markets are watching Florida closely and what they are looking for is certainty and consistency. Several of the provisions in these proposed bills, if enacted, would signal to investors, reinsurers, and startups that Florida is becoming a more hostile environment for capital deployment.
As a former Insurance Commissioner of the state of Florida with 27 years in public service through the Department of Insurance and the Office of Insurance Regulation, I have experienced a lot of tumult in the property insurance market, through some good times and bad.
Between my current private sector experience and my long history of public sector leadership, I have unique insights and perspective with regard to the sensitivities of the investor market to the changes that are happening in Florida.
I urge Florida’s leaders to recognize that now is not the time to undo the reforms made in 2022 and 2023 – from systemic changes to enhancing the regulatory framework — including the ability of the Office of Insurance Regulation to hold insurance companies “feet to the fire” when necessary – let these reforms work.
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Kevin M. McCarty served as Florida Insurance Commissioner from 2003 to 2016; he is currently a manager for Celtic Global.
