After six years of
stalemate, property insurance reform heads to governor
Article Courtesy of The Sun Sentinel
April 28, 2019
A bill aimed at stemming costly lawsuits between
repair contractors and property insurers has finally passed both the
Florida House and Senate after six years of stalemate and steep rate
increases for homeowners.
The bill passed the Senate 25-14 on Wednesday and now
heads to Gov. Ron DeSantis, who said he plans to sign it.
Only time will tell if the changes,
slated to take effect July 1, will roll back rate hikes that
insurers have blamed on abuses by contractors and
But Sen. Gary Farmer, D-Fort Lauderdale, who voted against
the bill, said it does not ensure that policyholders will be
treated fairly by insurers. He also said supporters failed
to prove whether the rise in lawsuits resulted from abuses
by contractors or poor claims handling by insurers.
Sen. Keith Perry, a Republican from Alachua and Putnam
County and part of Marian County, said the bill will fix a
“predatory practice” allowing a few attorneys to make
millions of dollars “off the backs of ratepayers.”
When enacted, the bill, which passed in the House on April
11, will prevent plaintiffs’ attorneys from automatically
collecting legal fees when property insurers agree to settle
lawsuits over claims disputes for any amount — even $1 —
over their original offers.
The so-called one-way attorney’s fee law, in place for more
than a century in Florida, was originally written so
insurance customers could sue their carriers and recover
their legal costs if they won but would not be obligated to
pay their insurers’ legal fees if they lost.
A bill aimed at curtailing costly lawsuits against
property insurance companies has been approved by the state House
and Senate and now heads to the governor. Insurance companies blame
repair contractors and plaintiffs attorneys for filing excessive
lawsuits, driving up rates.
Well-meaning as that law was, it resulted in
excessive lawsuits, which increased from 27,416 in 2013 to 82,663 in
2018, according to advocates for reform, including the state’s insurance
commissioner and chief financial officer.
Repair contractors directed customers to sign over benefits of their
insurance claims as a condition of commencing repairs, usually for water
damage caused by broken pipes and appliances, insurers said. Standing in
the policyholders’ shoes, the contractors routinely overbilled insurers
and filed suit when insurers balked at paying the inflated invoices,
reform supporters claimed.
Bombarded with hundreds of lawsuits, insurers said they had little
choice but to settle, opening the door for attorneys to collect the
A small number of law firms, mostly from South Florida, were responsible
for the majority of abuses, insurers said. While most of the suits were
once confined to South Florida, the problem recently began spreading
across the state.
Yet over six years of debate, lawmakers remained divided between
insurers and repair contractors with plaintiffs’ attorneys on their
side, arguing that insurers routinely underpaid or refused to pay
legitimate bills, leaving them with no choice but to sue
The bill passed by the Legislature preserves policyholders’ rights to
collect one-way attorney’s fees when they sue their insurers and win.
Third-party assignees, however, must adjust to reforms intended to
remove incentives to sue, including:
Requiring assignees to notify insurers of
assignments within three days, and submit itemized work estimates.
Allowing policyholders to rescind assignment
agreements with no penalty within 14 days. It gives them even more
time to rescind assignments if substantial work has not commenced.
Requiring assignees to indemnify and hold
harmless the policyholder from all liabilities if the insurance
policy prohibits the assignment.
Capping emergency repairs performed under
assignments at $3,000 or 1 percent of the dwelling coverage limit of
The law also will require assignees to work more
closely with insurers by providing records and documents as requested,
participate in alternative dispute resolution, and answer questions
Assignees must also notify policyholders prior to filing suit against
The law will impose a formula for awarding attorneys’ fees in any
lawsuit involving a claims assignment, with fees being distributed based
on the difference of a final award and the insurers’ initial offer.
Still, the new law will also require insurers to assume more
responsibilities. They would have 10 days to respond to assignees’
presuit notification with a settlement offer or requirement that the
assignee participate in appraisal or other method of third-party dispute
State-run Citizens Property Insurance Corp., the insurer of last resort,
will be required to lower 2019 all perils rates by the amount of revenue
saved by passage of the legislation.
Citing claims abuses, Citizens last year proposed an average 8.2 percent
increase on its customers statewide. Under that proposal, 97 percent of
the company’s policyholders face an increase.
Citizens spokesman Michael Peltier said proposed rates would be
recalculated and resubmitted for approval by the state Office of
Insurance Regulation. While he said that he couldn’t project specific
numbers, “more folks will see their rates go down.”
In December, Citizens had 427,397 policies statewide. Of them, 216,832
were in Broward, Palm Beach and Miami-Dade counties.