In 2018, there were roughly 45,000 lawsuits filed against insurers, and the number of cases is expected to rise to 200,000 this year. With insurers facing a $1 billion deficit and the majority of lawsuit-related payouts going toward attorneys (only 8% of litigation-related costs are paid to policyholders), our Legislators have drafted a package to curb litigation costs as originally filed, consisting of HB 305, SB 212 and SB 76.
These bills would impose restrictions on how much money can be paid out to homeowners to repair a roof depending on its age, would adjust the statute of limitations to file a claim with the insurance provider, and lastly, would guarantee policyholders see the majority of money resulting from a lawsuit, instead of the plaintiff’s attorney.
Some have suggested these initiatives would shift more financial responsibility for roof maintenance and repair onto the consumer, but if we do not act quickly to repair the insurance market, consumers will be in a far worse position and will be paying higher premiums for less coverage options. This is an issue we’re already seeing across Florida.
Most would expect the tri-county area of South Florida to be Florida’s most troubled market. However in recent years, insurers have seen increased litigation from parts of Central Florida, including in communities further inland who are therefore more ‘protected’ from severe weather.
With inauthentic lawsuits being filed at a record rate, even in our ‘safer’ regions, insurers have become increasingly eager to pull out of Florida, which is limiting coverage options for homeowners and continuing to increase rates. Even worse, Citizens Property Insurance, the state’s insurer of last resort, is growing by 4,500 policies each week, further demonstrating the property insurance market is in disarray.
If we look at the cost litigation has added to insurance rates, we’d see in 2018 an estimated $656 of each premium went to covering legal costs. For 2020, that amount was estimated to be $800. The bills to be discussed this Session are critical to Florida’s insurance market recovery. Each step the market takes to recovering is a step toward lower rates and better coverage for homeowners.
Florida’s property insurance market is one of the most complex in the world, but the problems we’re experiencing today are curable. We just have to be willing to act and to act quickly.
Carolyn Johnson is the Senior Director of Business, Economic Development and Innovation Policy at the Florida Chamber, in partnership with the Stronger Safer Florida Coalition and the Consumer Protection Coalition.
Read in the Ft. Myers News-Press.