New Florida Law Has Potential to Reduce
Insurance Costs |
Article Courtesy of Business Wire
By Mark Friedlander
Published
February 25, 2023
ST. JOHNS --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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