May 25, the legislature concluded Special Session D, called for the specific purpose of tackling Florida’s property insurance crisis and stabilizing a market that has been described as “on life support.” The fourth special session in less than a year, the legislature took initial but significant steps in addressing Florida’s bottom-5 lawsuit abuse climate that is resulting in increased property insurance rates for everyone.
Unlike previous special sessions to fix Florida’s property insurance market after major hurricanes, the crisis in today’s market is man-made and caused by a few unscrupulous vendors and overzealous trial lawyers manipulating the system. The proof is in the data. Florida accounts for roughly 7 percent of the national property insurance market, 9 percent of all homeowners’ insurance claims, but 79 percent of all homeowners’ lawsuits. Fifteen billion dollars has been paid out since 2013 to pay these litigated claims, with only 8 percent of that total going to the homeowner for their damages and 71 percent going to plaintiffs’ attorneys. This has driven insurers to request double digit increases, sometimes 50 percent or more, reduce their exposure, or go out of business altogether. Ultimately, this impacts Floridians’ quality of life and Florida’s competitiveness.
“I applaud Governor Ron DeSantis’ leadership in calling this special session to stand up for consumers and continue tackling the root causes driving up property insurance rates. As Governor DeSantis rightly pointed out in his proclamation, it is clear Florida has a litigation problem that is costing Florida ratepayers when they can least afford it. The necessary lawsuit abuse reforms the Governor forged consensus around and put forth by Senator Boyd and Representative Trumbull in SB 2D/HB 1D will help build the infrastructure for a more stable and competitive insurance market.” – Mark Wilson, Florida Chamber of Commerce President & CEO
The legislature also addressed the predatory roof solicitation practices that have been plaguing the property insurance market. Non-hurricane losses, like roof claims, have added to the litigation buffet that is driving up insurance costs for consumers.
Below are a few highlights contained within SB 2D, supported by the Florida Chamber:
- Assignment of Benefits (AOB) Reform: Builds on 2019’s AOB law by banning the transfer of the one-way attorney fee provision through an assignment to third parties and closes a loophole that some unscrupulous vendors were using to circumvent the law.
- Contingency Fee Multiplier: Overturns bad case law by returning the use of a contingency fee multiplier to “rare and exceptional” circumstances, reducing the chance of extraordinarily inflated attorney fee awards in run-of-the-mill cases.
- Notice of Intent to Litigate: Enforces the required notice of intent to litigate contained within 2021’s SB 76 by allowing the insurer to collect attorney fees if the case is dismissed because a notice was not properly filed.
- Civil Remedy Notice: Reins in “gotcha” bad faith lawsuits by requiring an actual breach of contract for extracontractual damages to be awarded.
- Roof Solicitations: Requires roofing solicitations to contain consumer-awareness language that the homeowner is responsible for the deductible under the insurance policy, and it is insurance fraud for the contractor to reduce or waive the deductible or file a claim with false or misleading information.
- Roof Deductible: Allows insurance companies to offer a policy at a reduced rate to consumers that includes a roof deductible of up to 2 percent, with certain circumstances like a total covered loss waiving the deductible.
For a full summary of the legislation that was passed during Special Session D, click here.
How We Got Here
The Legislature failed to pass property insurance reforms during the 2022 regular legislative session despite warnings that Florida’s insurance market was in “crisis” or on “life support.” Florida Chamber President and CEO Mark Wilson authored an op-ed before the legislature convened in January noting that Florida was “at a crossroads” due to the impact of frivolous litigation and urging policymakers to “put homeowners ahead of billboard trial lawyers.” Recent data shows that Florida’s property insurance market accounts for 9 percent of all national property insurance claims but 79 percent of all property insurance litigation. Stunningly, only 8 percent of all property insurance case awards went to consumers while 71 percent went to plaintiffs’ attorney fees. In the last five months, 5 insurance companies have become insolvent or were required to cease operations, with many other insurers taking steps to reduce its risk portfolio, causing the number of policies in Citizens Property Insurance, the state’s intended insurer of last resort, to expand rapidly.
The Governor issued a proclamation on April 26th for the purpose of considering legislation related to (a) property insurance, (b) reinsurance, (c) changes to the Florida building code to approve the affordability of property insurance, (d) the Office of Insurance Regulation, (e) civil remedies and (f) appropriations. This is the fourth special session since 2021 and the second special session since the legislature concluded the 2022 regular session on March 14th.
The Florida Chamber has a multi-decade history fighting for property insurance reform. More recent efforts include launching the annual Florida Chamber Insurance Summit after the 2004-2005 hurricane season, which convenes insurance executives, lawmakers, and stakeholders across the globe to discuss solutions. In 2016, the Florida Chamber launched the Consumer Protection Coalition (CPC), which is made up of trade groups, contractors, and consumer protection organizations with the mission of protecting citizens from unscrupulous vendors and trial attorneys that are driving up the cost of insurance for everyone. In 2019, the Florida Chamber and the CPC led advocacy efforts resulting in passage of HB 7065, long-sought assignment of benefits reform.