Triple-I: New Florida Law Has Potential to Reduce Insurance Costs

For Immediate Release
Contact: Mark Friedlander, 904-806-7813, markf@iii.org 

ST. JOHNS, Fla., Feb. 16, 2023—A new Florida law and proposals announced this week have the potential to reduce the cost of homeowners insurance in the state, according to a just-released Issues Brief from the Insurance Information Institute (Triple-I).

“Reforms put in place in the closing weeks of 2022 and proposed in the first quarter of 2023 suggest Florida is now quite serious about fixing the fraud and legal system abuse that have contributed to the state’s insurance crisis,” stated Addressing Florida’s Property/Casualty Insurance Crisis, a Triple-I Issues Brief which built on one Triple-I released about Florida’s homeowners insurance market in August 2022. “It will take years for the impacts of fraud and legal system abuse to be wrung out of the system and for policyholders to experience premium benefits.  Job 1 is to “stop the bleeding” as insurers fail, leave the state, or stop writing critical personal lines coverages like auto and homeowners.”

The Florida state Legislature passed Senate Bill 2A in December 2022.  It was signed into law soon thereafter by Gov. Ron DeSantis.  Florida’s governor 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.

Florida accounts for nearly 80 percent of the nation’s homeowners’ insurance lawsuits yet only 9 percent of all U.S. homeowners’ insurance claims are filed within the state, according to Florida’s Office of Insurance Regulation. It 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, the Triple-I Issues Brief notes. 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 reported.

“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 Triple-I’s latest Issues Brief continued.  “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.”

Triple-I’s Issues Brief explains how Senate Bill 2A took effect in 2023 and its provisions are not retroactive. As such, the disputed insurance claims resulting from 2022’s hurricanes Ian and Nicole will be processed under the laws which were in place at the time those storms made landfall in Florida.

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Video:  Dale Porfilio, Triple-I’s Chief Insurance Officer, Discusses Florida’s Market Reforms