As property insurance costs skyrocket, lawmakers
will consider these ideas to keep coverage affordable
Article Courtesy of The Sun Sentinel
By Ron Hurtibise
November 17, 2020
As Florida homeowners recover from shocking cost
increases for their next year of insurance coverage, pressure is
mounting on state lawmakers to step in and stem the bleeding.
Property owners have been waking up to
premium hikes as high as 30% to 40% for their upcoming
policy terms. Insurance insiders hope their anger will force
the Florida Legislature to adopt reforms aimed at quelling
runaway litigation costs during the 2021 legislative session
that begins March 1.
“We support legislative changes to address the litigation
environment in Florida. That’s the single greatest cost
driver we face,” said Michael Carlson, president of the
Personal Insurance Federation of Florida, a lobbying
organization that represents major property insurers in the
Among the areas that could be addressed:
Attorneys' fees that lead to more
Abuse of coverage to repair or
Long deadlines to file hurricane and
Public adjusters and “loss
consultants” who inflate claims costs.
Insurers will be working with allies in
the legislature. The question is, will they have enough
votes to override legislators loyal to plaintiffs attorneys
who want to maintain the status quo? Lawmakers who support
stabilizing the insurance market are confident.
“Prospects for meaningful enactment are
good because we’re at a critical condition,” said state Sen.
Jeff Brandes, a Republican from St. Petersburg and leader of
previous efforts to curb fraudulent claims and reduce costs
A homeowner installs a temporary awning after a
devastating hurricane in this archive photo. Insurance coverage for
homeowners is becoming prohibitively expensive in Florida, and the
insurance industry has a list of proposals they hope will bring down
costs if Florida lawmakers enact them next spring.
Costs for consumers have been rising for years. Insurers blame
skyrocketing litigation by attorneys who know they can reap far more
money for legal fees, they say, than what their clients ultimately get
to repair their damages.
Increasingly frequent hurricanes and tropical storms also bear much of
the blame, as those trigger claims and drive up prices for reinsurance —
insurance that insurers have to buy to ensure they can pay all claims
after a catastrophe. Insurers pass all of those increased costs to
Plaintiffs attorneys counter that most of the industry’s proposals would
erode coverage for policyholders.
Legislation would be unnecessary if insurers would properly pay out
claims, they say. Litigation would be unnecessary if insurers held up
their end of insurance contracts instead of refusing to cover claims,
low-balling customers on claims they agree to cover, or reflexively
fighting customers who enlist help from public adjusters or attorneys,
said Amy Boggs, chair of the property insurance committee for the
Florida Justice Association, a trade group for plaintiffs attorneys.
It’s insurers that drive up costs of legitimate claims by forcing them
into the court system, Boggs said. “They think the cost driver is the
attorney’s fee. We think it’s unnecessary litigation over claims that
should be paid. When [insurers] underpay by $30,000, $40,000 or $50,000,
where is the homeowner supposed to get that money from? When carriers
have to pay exorbitant legal fees, it’s because they lost the case.”
While the justice association acknowledges the existence of crooked
contractors and law firms operating as litigation mills, the state
should avoid eroding consumers’ insurance coverage and instead enforce
existing laws broken by fraudsters, Boggs said.
Regardless of which side bears the largest share of blame, it’s
undeniable that litigation against insurers has exploded over the past
several years. According to a state database, the number of lawsuits
filed against insurers of every type in Florida — including auto, health
and homeowners — more than doubled from 131,667 between Jan. 1 and Nov.
13 of 2015 to 336,029 over the same period this year.
Brandes, the state senator, expects insurance costs for consumers to
double over the next two to three years if the legislature fails to act.
Even if lawmakers enact substantial reforms, he said, costs will likely
rise another 30% next year before stabilizing. That’s because it
typically takes 18 months for effects of new laws to be reflected in
customers' policies and, as a result, how much they pay for coverage.
Boggs argues that insurers should hold off on major new reforms until
they get a clearer idea of the effects of 2019 legislation that
restricts what attorneys can earn when representing contractors who
persuaded homeowners to sign over benefits of their insurance claims.
Data complied so far indicates those reforms cut so-called “assignment
of benefits” lawsuits roughly in half, but insurers contend that
attorneys have simply switched their focus to representing policyholders
Policy costs and roof repair
Some proposed changes outlined by Brandes would lower costs for
customers while making their policies less attractive to plaintiffs
attorneys. But those customers would also have to accept reduced
For instance, consumers could lower their costs by opting to be insured
for the depreciated value of their roofs rather than the full
replacement value. Too many consumers have been able to get free roofs
from their insurers by allowing their repair contractor to find damage
and blame it on a recent hurricane or hail storm, when actually the roof
is at the end of its life and should be replaced at the homeowner’s
expense, he said.
“People have to recognize that insurance is there not for home
maintenance but for protection against catastrophic loss,” he said.
Boggs said the proposal would leave homeowners without substantial
savings and unable to replace roofs destroyed by hurricanes. “They need
to know if their roof is ripped off, they’re not going to be compensated
Another idea, Brandes said, would be to offer discounts to consumers who
agree to pay any deductible upfront. Typically insurers send a check for
what their adjusters estimate the damage will cost to fix — minus the
Brandes also proposes allowing homeowners to reduce policy costs by
agreeing to shorter deadlines for filing claims after hurricanes or
breaches, such as a pipe breaks or appliance ruptures, that caused the
covered loss. One reason reinsurance costs have increased so much is
that claims stemming from 2017′s Hurricane Irma — mostly for roof
repairs — continued to be filed at unexpected levels up to the
three-year deadline in September, Brandes said.
Current laws allow non-weather water loss claims up to five years after
the incident that caused the damage. “As the years go by, you get more
fraudulent claims,” he said.
The Florida Chamber of Commerce, which has lobbied the legislature for
several years for reforms aimed at reducing costs driven by fraudulent
contractors and greedy attorneys, favors reducing the deadline for
filing claims after hurricanes or other catastrophic events from three
years to one year.
“To say that you don’t know after a year that you have hurricane damage
is a little crazy,” said Carolyn Johnson, the chamber’s director of
business economic development and innovation policy.
Boggs, from Florida Justice Association, said that would hurt homeowners
who don’t discover hidden hurricane damage for years after storms, or
who ignore damage because they don’t think the claim would exceed their
steep hurricane deductible.
“Sometimes people with a little bit of damage might not realize it’s
significant,” she said. Roof damage, she said, is often hidden and
unknown to homeowners until it creates problems.
Johnson said that Brandes' ideas to allow homeowners to build their own
policies à la carte style would need to be studied.
“Whenever there are options, it’s probably a good thing,” Johnson said.
“Of course, we would also want homeowners to be protected and understand
what they are paying for.”
A industry proposal that died in the Senate last year would limit the
ability of plaintiffs attorneys to secure up to three times the legal
fees they bill insurers for work on cases they win. Under current law,
judges can multiply an attorney’s fee if convinced that the case was
particularly challenging or that the plaintiff would have been unable to
obtain competent counsel if the possibility of multiplied legal fees
Insurers say judges are too generous in awarding multiplied fees in
cases that end in settlements. “I’ve seen policyholders get $40,000 for
their claim while their attorneys get $700,000,” Brandes said. Who
ultimately pays the $700,000? Customers do, in the form of higher rates,
Insurers want the law to allow multiplied fees only in “rare” and
“exceptional” cases “as it is in 49 other states,” Brandes said.
But arguing against the proposal in the 2020 session, opponents in the
legislature said multipliers aren’t awarded as often as insurers claim.
Plus, the threat of a multiplier helps persuade insurers to continue
working toward resolving claims disputes rather than endlessly delaying
them, they said.
Brandes said he expects the proposal to succeed next year because
several senators who helped kill it in 2020 are no longer in the Senate.
Michael Carlson, of the Personal Insurance Federation of Florida, says
his organization would like to see Florida enact a reform modeled after
a 2017 Texas law that addressed hailstorm abuse. That law requires
notification to insurers before lawsuits can be filed so insurers have
an opportunity to address claims issues. Failure to provide notice could
make homeowners' attorneys ineligible to collect legal fees.
The federation also favors tightening restrictions on public adjusters,
who are independent agents hired by policyholders to represent their
interests in negotiations over damage costs. State law caps compensation
for public adjusters at 10% of claims paid for hurricane damage and 20%
of claims paid for non-catastrophe damage. That creates an incentive for
adjusters to overestimate the value of damage, insurers say.
The federation favors paying public adjusters based on whatever
additional money is secured beyond what insurers initially offer. For
example, if an insurer offers $100 and a public adjuster persuades the
insurer to pay $150, then the public adjuster should be paid a
percentage of only the additional $50, Carlson said.
Both the federation and chamber say some public adjusters have found a
way to circumvent restrictions on their activities by calling themselves
“loss consultants.” They sidestep laws barring kickbacks from
contractors and preventing collusion with plaintiffs attorneys, Johnson
said. The organizations would like to see loss consultants regulated in
the same manner as public adjusters.
Public adjusters are already among the most regulated professionals in
the state, says Nancy Dominguez, managing director of the Florida
Association of Public Insurance Adjusters. They are also “a
policyholder’s first line of defense against big insurance denials and
underpayments when they have a claim.”
She called on authorities to step up prosecution of what she called “the
real problem affecting insurance rates in Florida” — unlicensed loss
consultants and contractors who illegally solicit business, even
offering financial incentives to policyholders. “Public adjusters don’t
and legally can’t do that,” she said, adding, “Additional regulations
without enforcement is not the answer.”
Legislators will begin filing 2021 bills at some point after the House
and Senate convene their organizing session and begin scheduling
workshops and hearings. The 2021 legislative session begins on March 1.