Auto, home insurance reform bills fail in Legislature

Article Courtesy of The Sun Sentinel

By Ron Hurtibise

Published March 21, 2018


Consumers hoping the Florida Legislature would agree on bills to slow rate increases for homeowner and auto insurance coverage will have to wait until next year.

The legislative session ended Sunday with two hotly disputed topics unresolved:

How to stop runaway home insurance rate increases stemming from third-party claims assignments and excessive litigation against property insurers.

Whether Florida’s decades-old, no-fault auto insurance system needs to be scrapped and replaced by a requirement that all drivers purchase liability coverage.

Both proposals failed to get out of the Senate following passage of related legislation by the full House of Representatives. But stalemates between senators loyal to either insurers or trial attorneys ensured neither made it to the governor’s desk.

By failing to act on reforms tied to “assignment of benefits” abuse by third-party contractors and plaintiff attorneys, “the Legislature just approved average rate increases of 15 percent to 30 percent for many Floridians — especially those in the tricounty, Tampa-area and Interstate 4 corridor counties,” said Dulce Suarez-Resnick, vice president of sales and marketing for NCF Insurance Associates, a Miami-based agency.

This year’s marked the fifth straight session that proposals to restrict claims abuses were left on the table, resulting in progressively larger rate increases. This latest session followed a year of rate hikes for South Florida homeowners of up to 25 percent by the state’s largest insurers.

For a second year, plaintiff attorneys persuaded supporters in the Senate not to advance a bill that would restrict attorneys’ access to so-called, one-way attorneys’ fees. Insurers blame the crisis on attorneys’ abuse of a law that allows policyholders who sue their insurers to collect their legal fees from the insurers if they win but bars insurers that win suits from extracting their legal fees from policyholders.

When policyholders sign over their claim benefits to contractors, their risk-free right to sue insurers transfers with them, and that has triggered thousands of suits each year against carriers who say they have no choice but to settle and pass along the lucrative legal fees to their customers.

Attorneys and contractors supported a competing bill that would have included some reforms sought by insurers, such as requiring contractors to provide written estimates of work to be performed, requiring contractors to notify insurers of assignments within five days, and giving policyholders seven days to rescind assignments.

But ultimately, attorneys refused to accept any restrictions on one-way fees, while insurers refused to accept any bill without them. Each side blames the other.

“Unfortunately for consumers, the insurance corporations and their advocates had one mission, and that was to limit prevailing consumer attorney fees,” said Ryan Banfill, spokesman fo the Florida Justice Association, a plaintiff attorneys trade group. “Apparently, their ‘our way or the highway’ approach to the issue showed how the insurance corporations and their big business champions are more interested in complaining about AOBs instead of solving the problem in a way that benefits policyholders.”

Echoed Jimmy Farach, president of the Florida Association of Public Insurance Adjusters: “It is very disappointing that the insurance industry did not get these common sense fixes, that everyone agrees with, passed. Instead they were focusing on passing legislation that would limit legal representation in claim disputes.”

Insurers and their allies countered with statements warning that rates would continue to rise by double digits until legislation is enacted. Liz Reynolds, Southeast regional vice president for the National Association of Mutual Insurance Cos., called Monday “a sad day for Florida insurance consumers,” adding the Legislature “had the opportunity to right a terrible wrong” but “special interests took control” of the issue. “This lack of action will only increase the rampantly growing incidents of insurance abuse that are costing Floridians millions of dollars.”

Failure of the auto insurance reform bill followed a debate that was almost a mirror image of the property insurance fight.

The plaintiff attorney lobby pushed the bill to repeal the personal injury protection (PIP) mandate as a way to ensure at-fault parties were held responsible for injuries caused in crashes, but insurers opposed it by saying it would lead to more lawsuits and higher rates for drivers.

No-fault auto insurance repeal appears dead in Senate

A bill that passed the House would have dropped a requirement for all drivers to buy PIP insurance and instead require minimum coverage for at-fault coverage, which most drivers already buy. That would have resulted in savings for most drivers, according to a state-funded study. But a Senate version would have required drivers to buy additional coverage to cover emergency medical payments for their own injuries. Critics called that “PIP light” and said it would increase coverage costs for drivers who carry minimum coverage.

Ultimately, insurers demanded the bill also include restrictions on plaintiff attorneys’ ability to sue insurers for “bad faith violations,” which they said have become a cost driver much like one-way attorneys’ fees on the property side.

So in a reverse of the claims assignment fight, attorneys blame insurers for blocking reforms. “Florida drivers deserve a system that rewards responsibility,” Banfill said in a statement. “Instead, insurance corporations fought tooth and nail to protect the status quo.”

Insurers countered that the status quo is preferable. “We’re pleased the PIP legislation being pushed by [plaintiff attorneys] did not pass this session,” said Logan McFaddin, regional manager for the Property Casualty Insurers Association of America. The Senate bill “did not address fraud, bad-faith and other legal environment challenges. Had it passed, it would have wiped away years of cost-saving reforms and hurt Floridians.”